This is referred to as the unit cost trap. Poor performance, which is actually viewed as "waste" in the Japanese automotive industry, offers opportunities for improvement. Seven categories of waste have been identified: -waste resulting from overproduction -waste caused by idle time and downtime -waste during material transport -waste during processing -waste resulting from WIP stock -waste caused by unnecessary movement -waste resulting from errors Because costing is focused on performance-(material consumption, production assets and labor), non-performance is often overlooked. An undetected drain on resources takes place in production ("black holes"). If this waste could be avoided, the associated costs would not have to be added to the product cost as undifferentiated overhead, and the product price could be significantly more attractive. This hidden potential is sometimes referred to as the hidden factory.
Most businesses still have many weak points in their production processes. Such weak points could, for instance, be [1]: -Exceeding cycle times -Insufficient machine and plant productivity -Inadequate personnel productivity -Poor adherence to delivery times -Excess work in progress -Inadequate product flexibility -Insufficient flexibility -Other requirements that are not yet met, e.g. batch tracking, standards, certification While the majority of companies know where their weak points are, many are hesitant about exactly what they entail and how these weak points can be systematically reduced. Here, the benefits of Manufacturing Execution Systems (MES) become obvious. By their functionalities in production, personnel and quality management, they do not only provide the necessary transparency (by revealing the current status), but also offer functions that enable the existing situation to be continuously improved.