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Hidden Factory

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Definition

The activities associated with reprocessing the waste in a process. When rejected materials must be reworked or scrapped, additional labor, equipment, production capacity, physical space and inventory are required to produce at the desired output level. When the hidden factory is understood, the sources of the waste can be uncovered and eliminated.

Examples

Hidden factories exist in all types of processes. Here are a few examples:

Human Resources Example: Conducting multiple interviews because the selection criteria were not clearly established before people were brought in for interviews.

Engineering Example: Redesigning a product to correct quality or producability problems found after the product was launched.

Finance Example: Preparing multiple versions of budgets because all the requested information was not received by the due date.

Manufacturing Example: Reworking or scrapping defective products or components.

Retail Example: Restocking returned merchandise.