The Track Records Blog

Benefits of Business Management Software

According to quality control guru, Armand V. Feigenbaum, every company has inside it what is called a "hidden plant." The "hidden plant" (or "hidden factory") is the sum of all the time spent producing and correcting mistakes, engaging in wasteful tasks, or otherwise producing nothing of value; time that could instead be spent meeting the organization's mission and goals and ultimately delivering its bottom line. When Feigenbaum spoke of this, it was no small matter -- he estimated it was anywhere from 15-40% of the company's output! While the terminology of a hidden plant may appear to be referring to a manufacturing plant, where tangible products are produced, it is not limited to that concept. The notion of a hidden plant is especially true in professional and knowledge-based service industries. But it can be eliminated.

Where is the hidden plant in the service industry? It's the employee given tasks to be performed ad hoc and informally. It's the inconsistent tools, typically consisting of a cobbled-together array of spreadsheets, e-mails, telephone calls, paper schedules, sticky-notes, and incompatible desktop software applications. It's the lack of standards in those tools, causing conflicts and inconsistencies between co-workers, departments, management, or even on a person's own desk. It's the people waiting on one another to complete processes, often leaving them helplessly idle.

In addition, the elements of the hidden plant compound one another. They lead to activities being done reactively, in a crisis-driven fashion. This is especially true with "crunch time" processes, where limited windows of opportunity exist to perform tasks, such as billing and payroll. For the employees involved, these tasks mean long working hours, stressful deadlines, and often costly amounts of high turnover. The environment these overburdened employees are in facilitates mistakes that will inevitably be made during "crunch time." When mistakes are inevitably made, the rework required compounds the amount of value-added time lost to the hidden plant; waste begets waste, so to speak.  The mistakes are not the result of "bad" or "careless" employees, either; they're a problem of the environment the employees work in, an environment that encourages these mistakes to be made.

The first step to eliminating the hidden plant is becoming aware of it, followed by a top-down commitment to address it. Often times, employees see their own inefficient processes merely as the necessary cost of doing business, and furthermore cannot be expected to improve them without proper support.  Unfortunately, traditional management thinking portrays a structured take on process improvement only as a cost, not as an investment.  Even worse, this mode of thinking often views efficiency as best improved by managers acting more authoritarian toward their employees and merely pushing a bad process harder.  Instead, they should all be evaluating their processes for improvement and helping mold a more productive environment. Applying technology is a key way to do this, such as by investing in and adopting business management software. While business management software isn't a turn-key solution, and one shouldn't rely on technology alone to combat the hidden plant, it can certainly help in streamlining and automating a number of time-consuming tasks.

Managers in the service industry should look for the hidden plant in their company and ask themselves a few questions. What if the employees, who were focused on tasks that could be done by business management software, were allowed to do what they do best and take great pride in their work? What if they were able to focus on the quality of services provided to their clients and customers to achieve better outcomes and satisfaction? What if the existing staff were to expand their current value-added hours by 15-40%, which is the estimated output of Feigenbaum's "hidden plant?" Customers, entry-level employees, and managers all have the responsibility of becoming aware of the hidden plant and finding ways of eliminating it.

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