EPE – Every Part Every Day
“A chain is no stronger than its weakest link” is a familiar cliché that still contains meaning when you’re looking for sustainable improvement in logistics and supply chain management. Your customers are expecting that they can pull any part any day. In Lean-speak that means that manufacturers must strive for EPE.
In many scenario’s this is impossible, but the principle remains the same. The amount of inventory that needs to be on hand is a mathematical equation. Inventory amount = demand * lead time or K = D*L.
When demand for a specific product is high – then the inventory needs to be high. When the demand for a product is low then we can keep smaller amounts of inventory on hand. The real key is the L. Theoretically if our lead time is 0 then our inventory requirements for our ware houses are …. 0. It’s math.
Moving back from theory to practice, reducing lead times from 4 weeks to 2 weeks (well, you guessed it) reduce inventories by 50%. Warehouse and logistics is a vital part of the order to cash equation and understanding the dynamics is critical so that we can move away from mass production thinking.
Additional challenges include:
– today’s ever expanding global economy
– increasing demands for supply chain transparency
– longer lead times and increased demand for fast delivery
Combine these issues with the number of “links in your chain” – from the customer to retailers to distributors to wholesalers to manufacturers to vendors and suppliers – you need a systems approach to continuous improvement to remain competitive.
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