EPEI Part 6 – EPEI for Continuous Improvement

This is the last in our series on Every Part Every Interval (EPEI). As we’ve seen, EPEI is an aggregate metric that determines the level of buffer inventory we need to hold in our supermarkets, our production lot sizes, and therefore the lead time of products in our value stream. I have to confess that I’m a bit of a zealot on EPEI. Here’s my final pitch – EPEI is a great metric to use to drive continuous improvement. Your target should be to continuously reduce EPEI. Here’s why…Blog_02.13.19

As we’ve seen EPEI sets both lead time and buffer inventories both of which are almost universally used key performance indicators or metrics of operation performance. It’s important to recognize however that lead time and inventory are not arbitrary but are a consequence of limitations in your process and both are a consequence of EPEI. So if you want to move the lead time and inventory metrics, then you must understand what will move the metric and that’s to be able to achieve a lower EPEI.

That’s all well and good but why EPEI? Why not target improvements in cycle time or changeover or downtime or yield or rework? In the real world, the overall performance of a process is a combination of all of the above. We can observe the overall performance level but from an outsider’s perspective (and everyone is an outsider unless you are working in the process yourself), we don’t know which of these elements is going to be the easiest to change to get to an improved level of performance.

One good strategy involves setting up a kaizen event with an overall target and then letting the kaizen team find the improvements themselves. For example, let’s say that our current EPEI is 9 days. That’s 9 days of buffer inventory and 9 days of lead time. We want to improve it and find that if we are able to achieve a 5 day interval, then we free up a lot of inventory and can reduce lead time to a point where it’s under the customer lead time. Then, we can consider becoming make-to-order. So we give the kaizen team a challenge to get to a 5 day EPEI any way that they can. In all likelihood, to get there will require a combination of improvements in changeover, rework, yield, and downtime. If we targeted just downtime, then the team may ignore other obvious problems that are easy to fix.

So, by creating a kaizen target expressed as EPEI, we encourage improvements in any of the factors that contribute to the EPEI equation. Namely:

  • Cycle Time
  • Changeover Time
  • Downtime
  • Yield
  • Rework
  • Load and Unload Time

Unless we know a lot about the process, it’s better to challenge improvement with a reduction in EPEI than attempt to diagnose the problem more than we are able to. Pick the processes with the highest EPEI and let your teams go after ‘em.

My goal in this series on EPEI has been to explore this key lean metric that’s historically underused and often misunderstood. I hope that it has been helpful.

Coming up will be a new series on scheduling in a lean operation – that’s where the rubber meets the road. Any questions or comments? Contact us today.

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Phil Coy @leaniac
Managing Director of Strategic Services