ERP Conversation: ‘Hidden’ Manufacturing Capacity and Smart Technologies

Most manufacturers have a “hidden factory” that runs in parallel to their primary manufacturing plant. It’s the unused capacity caused by quality issues, process inefficiencies, rework, schedule loss, availability loss, and performance loss.

This production shortfall is tremendously expensive. In fact, quality guru Armand Feigenbaum, who coined the “hidden factory” term and devised the concept of Total Quality Control, estimated the loss at as much as 40%.

How can you find and access hidden capacity? The answer: With data and insight delivered by Industry 4.0 technologies.

In advance of our June 30 webinar, “Unleash Your Hidden Capacity with Smart Technology”, Ultra’s Michael Chesin spoke with Andrew Robling, Principal Product Manager at Epicor Software Corp., about Industry 4.0 technologies in manufacturing. Here are edited excerpts from the conversation:

Michael Chesin (MC): To start, give us your definition of the term “smart technology,” and help us understand the role it can play in manufacturing.

Andrew Robling (AR): Smart technologies in manufacturing are technologies that help improve efficiency and help eliminate manual steps of work – technologies like the internet of things (IoT), artificial intelligence, machine learning, manufacturing execution systems (MES).

Here’s how I illustrate the potential of smart technologies: A friend of mine had smart watch that monitored and tracked various health data. One day it alerted him that he was experiencing atrial fibrillation. And what I think is cool is that the watch told him this, and that prompted him to go to the hospital, where doctors had to shock his heart back into rhythm. Without his watch alerting him to the problem, who knows what would have happened?

It’s the same with a machine. A machine can have a sensor that monitors critical performance data and alerts operators that something is wrong, and a small problem can be fixed before it becomes big trouble.

MC: What is the “hidden factory” and why is it important?

 AR: The “hidden factory” is a concept that’s been around since the 1970s. It’s not a physical place. The hidden factory is the untapped capacity of a manufacturing plant. Think of it as the maximum amount of additional production that can be unlocked without capital investment. You gain that “hidden” production by reducing waste, eliminating rework, cutting downtime and improving efficiency.

MC: Can manufacturers calculate their “hidden factory”?

AR: The easiest way to calculate it is to think of a single resource – an injection press, for example. First, calculate fully productive time by multiplying the number of good pieces by ideal cycle time (the fastest cycle time the resource can achieve).

Second, calculate your “hidden factory” by subtracting fully productive time from all time (24/7).

MC: What kind of financial impact will shrinking the “hidden factory” have?

AR: Over the course of a year, you could have a thousand hours of hidden capacity for just one resource running one shift. So, if you look at the number of resources you have, and let’s assume they’re all operating the same way, that can add up to significant “lost” hours of production really fast.

Small, incremental improvements can easily add up to hundreds of thousands of dollars – or even millions of dollars, depending on what the improvement is. Just doing something simple like improving cycle efficiency by a small percentage can come out to a real win.

MC: How does smart technology come into play when you talk about uncovering the “hidden factory”?

AR: With technology available now, we have never been in a better position to take advantage of smart technology to uncover the “hidden factory.”

I was recently speaking with a customer about how not having smart technology in place left them in a tough spot. In their case, they had a machine that supplied hydraulic fluid to a couple of CNC machines. One night, when they had limited staff, and those CNC machines were running, that pump developed a leak. And when they came into the plant the next morning, they found fluid all over the floor and, more important, they had some critical component failures on the CNC machines. That left them in a difficult situation from a customer point of view – they couldn’t get out what they needed to get out on time – and from a financial point of view because of the expense of fixing the machines and the downtime required to repair them.

Immediately afterward they started looking at IoT technology as an answer. They realized they could have a simple sensor monitoring the fluid level, and then receive an alert, or maybe even create a maintenance order too, if it went below a certain amount. If they’d had that solution in place, the leak wouldn’t have been that big of a deal.

Landing Page Snapshot_Intent

Software selection and implementation processes often present challenges of their own. To steer you around trouble and help you drive success, Ultra’s experts compiled a list of pain points and solutions to be aware of as you embark on this journey.

Scroll to Top