##### March 1, 2006

###### By Darren Dolcemascolo

What was the primary reason that Shigeo Shingo invented the SMED System of quick changeover? There are many people that think that the primary reason he did this was to add capacity to his equipment. This is a slight misconception; Shingo invented SMED so that Toyota could meet the low volume requirements that they had at the time. Unlike the big American automotive manufacturers 50 years ago, Toyota did not have a big market nor did Toyota have the money to invest in lots of capital equipment. As a result they needed their equipment to be more flexible- they needed to make shorter runs.

The primary reason for implementing quick changeover is to be able to reduce the lot size or EPEI. EPEI stands for Every Part Every Interval. EPEI is the lot size expressed in time. For example, if your company were to run five different products and it ran product A on Monday, product B on Tuesday, ..., and product E on Friday, EPEI for each of those products would be one week. That is, each time the product is made, one week's worth is produced. If, instead, you were to run each of the products every day (by increasing your # of changeovers), you would have an EPEI of 1 day.

The goal is to have a lower EPEI- why would we want this? If we have a smaller EPEI, we can have less inventory and shorter lead times. If your EPEI is one week, you will need to have about 5 times more inventory (and lead time) than if you had an EPEI of 1 day. Reducing inventory by 80% results in a major financial gain. If, for example, you have about $5M in WIP inventory with an EPEI of 1 week, and you are able to reduce that inventory by $4M; that results in an increase in cash by about $4M that can be used for investment in things that can grow the business like acquisitions, R&D, etc.

How do we decrease our EPEI using quick changeover? Let's assume we have five products to run, and our interval is currently one week; we would like our interval to be one day.

1. For each process, sum the run time to produce one days worth of each part that goes through the process based on average customer demand. Let's assume each product takes about one minute to produce and our demand is 60 units per day. To produce one day's worth of product would take 60 minutes (1 minute/unit X 60 units/day). To produce all 5 in one day, would take 300 minutes.

2. Next, determine how much time per day is left over for changeovers. Let's say the equipment that these five products runs on has about 450 minutes/day available. After running the parts 300 minutes, there would be about 150 minutes left over for changeover.

3. Let's assume that current changeover time is 70 minutes. The changeover time would need to be 30 minutes or less to have an interval of 1 day instead of 1 week. Thus, we can hold a kaizen event aimed at reducing changeover on this piece of equipment.

I encourage you to look at the current interval / lot sizes you are running (for your regular running products). Many factories still have EPEI's of 1 month for many of their products. If you were to reduce your interval from 1 month to 1 week, you could dramatically reduce inventory and lead time.

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