Operating cost hidden

The more that can be done on the prevention side of the formula in managing any pollution problem, not just air pollution, the lower are our operating and hidden costs, and hence, the higher our profit margin. These cost saving categories can represent an enormous motivation for doing pollution prevention. 

Space and energy requirements as well as investment and operating costs frequently render an otherwise perfectly feasible process uneconomical. Incorrectly, these factors also sometimes direct interest toward methods, which after superficial investigation seem to offer cheaper alternatives because indirect or hidden costs are not recognized. 

Said with some cynicism, a typical pharmaceutical operation produces both products and paper. The paper production is the "hidden factory" which some people estimate to be as costly as the "real factory". Documentation of an operation must be an integral part of the operation itself. This is, of course, a huge simplification, but it illustrates a very important point. The physical input and output from an operation not only includes raw materials and finished products but also documentation. Inside the operation, the "hidden production" of paper have many similarities to the "real production" of products (Figure 1.1). 

As consumers of ERP systems, manufacturers and their trading partners face the risk of being stranded when their systems do not interoperate. The lack of interoperability in manufacturing supply chains can create significant costs (Brunnermeier and Meutin 1999), tmd those costs tend to be hidden. More accurate cost structures must be developed for information goods, particulady for buy-configure-build software applications. Unlike off-the-shelf software applications, ERP systems are more like traditional assets, in the business sense, with capital costs and ongoing operational costs. 

Operability. Hidden costs may result from changes in the way a process operates as a result of a control. For example, enclosure and isolation may diminish the abiUty of workers to observe the process. Upsets and dismptions resulting from this loss of intelligence are expensive and generate resistance to the use of these controls, no matter how effective. 

It is up to the laboratory operator to make such realistic cost estimates. If he does not, he will sooner or later find himself in a serious bind. The main challenge is to make practical estimates of those hidden costs and distribute them in the proper manner. 

Type II Costs Indirect and hidden costs Reporting Monitoring Regulatory (e.g., operating permits and fees)... 

Table 2.4 summarizes the above in terms of a shopping list for new items. It is once again emphasized that the numbers are to be understood as indicative (e.g., not for use in grant proposals). And recall that old spectrometers are not necessarily inferior at all to new ones, and they can be very cheap if standing in someone s way. Also, items such as frequency counters up to X-band appear regularly as second hand offers on the Internet for a fraction of their new price. And finally, the table does not show possible hidden costs, that is, of items that are taken for granted because they already happen to be around, but whose budgeting may be prohibitive when they have to be acquired, for example, square meters of lab space or dedicated operators. 

For this industry then, is risk necessary The short answer must be yes, but the flow of that risk is unevenly realized. The hidden costs of chemical hazards are home primarily by those who apply chemicals. Unsurprisingly then, while some (owner-operators) deny personal or environmental threats from these chemicals, others (wage laborers) are more likely to acknowledge ecological and personal peril. 

Experience shows that adopting the principles of lean manufacturing from assembly industries can be a powerful operational improvement lever. Lean management, first introduced by Toyota, appeals because it holds out a promise no other approach can make not only does it cut costs and improve quality, but it also stabilizes operations and matches supply with demand. A companywide lean transformation program structured around the improvement of Overall Equipment Effectiveness (OEE) may unearth a hidden capacity that is equivalent to adding another plant to the manufacturing network. Lean, however, should not only be applied in production, but across the entire value chain. 

Another issue not to be overlooked is site support costs. Do I need to pay for extension of the rail line, upgrade construction of the local street, extend sewer or water lines, modify electrical source connected to, are but a few to be considered. The only effective method of covering this adequately is to study the plant operations and list all the items it will consume or discharge and mentally walk them back to an adequate connection point. Beware of utilities that must be generated, the cost of supplies to, and the discharges from, the generating operation must be included in the estimate. Only when an in-depth effort is made to uncover hidden scope can it be imcovered in time to be included in the estimate. 

This hidden production with its execution, logistics and quality management is what the paperless operation replaces. Therefore, the hidden factory needs to be exposed—both to set the goals for the paperless operation, which should be based on a streamlined version of the existing hidden factory, and to set the benchmarking goals that are important for evaluating the business case of a paperless operation on both the cost and benefit side. 

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