Six Sigma Fundamentals: A Complete Introduction to the System, Methods, and Tools

The hidden factory is the hidden cost of a process, due to unaccounted and unrelated costs associated with the standard process. Examples are inspection, delays, rework, and extra processing. The hidden factory deals with throughput in the process and tries to calculate the probability of an item passing through the process the first time without any defects. Anything else is a loss, and therefore should be counted as the hidden factory.