Running head: PROPOSAL PACKAGE FOR RIORDAN MANUFACTURING 1

Proposal Package for Riordan Manufacturing

Jerry Thornhill, Paula Wade

OPS/571

February 4, 2013

Ray E. Mowery

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Process Design for Riordan Manufacturing

Riordan Manufacturing is a global plastics manufacturer employing 550 people with

projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a

Fortune 1000 enterprise with revenues in excess of $1 billion. Riordan Manufacturing's China

plant operates as a decentralized unit of Riordan Manufacturing. It prepares its own forecast of

electric fan sales throughout the world, which includes the United States. It schedules production

of these fans to meet the forecasted sales (University of Phoenix, 2013). Riordan Manufacturing

will streamline the supply chain management system for strategic capacity planning and lean

production by initiating a new process design.

Material Requirements Planning System

 One of the first software based integrated information systems designed to improve

productivity for businesses. A materials requirement planning (MRP) information system is a

sales forecast-based system used to schedule raw material deliveries and quantities, given

assumptions of machine and labor units required to fulfill a sales forecast (Investopedia, 2013).

The MRP is a logical, understandable approach to determining the amount of parts and materials

needed to produce a set number of products. Riordan does need this system for the mass

produced fans as well as the customized ordering system. This system will cover “the entire

system from order entry through scheduling, inventory control, finance, accounting, accounts

payable, and so on” (Chase, Jacobs, & Aquilano, 2006, pp. 508). Riordan currently uses a

database system to track orders; however, it is not online and therefore not traceable by the

customers.

Riordan must incorporate the MRP into the manufacturing process. The system will

incorporate the ordering system to the supply chain. Riordan will implement an online ordering

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and tracking system to allow customers to see the different models of fans as well as track their

orders. This online tool will feed the orders into the MRP allowing more accurate materials

levels. With this database of orders, the correct amount of fan parts and motors can procure.

Another benefit is the parts manufacturing division of Riordan will have an up-to-date

production demand. With the advent of such systems, production efficiency could be greatly

improved. As the analysis of data and the technology to capture it became more sophisticated,

more comprehensive systems were developed to integrate MRP with other aspects of the

manufacturing process (Investopedia, 2013). This system will streamline the supply chain

allowing faster order acceptance, smoother supply of the required parts and resources, and allow

the system to produce a report of real-time information for management.

Process Design

The activity of determining the workflow, equipment needs, and implementation

requirements for a particular process typically uses a number of tools, including flowcharting,

process simulation software, and scale models (Business Dictionary, 2013). Riordan’s current

process focuses on producing a high quantity of fans, according to the production forecast model.

However, the amount of their current inventory that reaches the customers on time is

approximately 93% (University of Phoenix, 2013). Improving this process will raise the on time

delivery numbers as close to 100% as possible.

The bottleneck appears to be the number of fan blades, preassembled motors, and plastic

parts deliveries. If these numbers are low, this would account for the lower on time deliveries.

Therefore, Riordan must change the process for these parts, and increase the amounts of

unassembled parts. This increase in the parts inventories can be offset by a slight decrease in the

amount of plastic polymers kept on hand because of the availability in the local area. Changing

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the polymer deliveries to a Just-In-Time delivery schedule will reduce cost savings for the higher

inventory costs of keeping more parts available.

The process included in the new MRP system will show how many parts, and motors will

need to be on hand for the forecasted production schedules. The MRP system will advise the

operations management team what levels of production for the fan parts by week, month, or

quarter. With these levels automatically produced, management should be able to predict the

labor force size needed to produce the parts and to complete the fans.

Supply Chain

“A supply chain consists of all parties involved, directly or indirectly, fulfilling the

customer’s request. The supply chain not only includes the manufacturer and suppliers, but

transporters, warehouses, retailers, and customers themselves” (Chopra, Sunil, & Meindl, 2004,

p. 1). This supply chain starts with the customers demand for a fan or number of fans, and ends

when the product is successfully delivered to the customer.

Riordan’s supply chain starts with a customer’s order, and extends through the suppliers

of the raw materials, such as plastic polymers and assembled motors. This chain moves to the

manufacturing facilities within Riordan and onto the delivery system for the product. Riordan

keeps a safety stock of the polymer material on hand along with a stock of the assembled motors.

The material is obtained locally and does not present availability or a delivery problem, at least

for the foreseeable future (University of Phoenix, 2013). Periodically, Riordan provides the

electric motor company with a list of the motors it forecasts it will need throughout the year to

help the company plan, which motors and how many it should carry in its stock (University of

Phoenix, 2013).

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With the implementation of the new MRP system, these forecasting schedules will

increase in accuracy. With this increase in accuracy, the forecasted amounts of raw materials will

allow greater planning and control over the production and delivery of fans. This system will

track an order from the start to delivery. Production management can generate accurate reports to

allow for greater scheduling control. With this greater control, logistics will increase the on time

delivery percentages. The Riordan management team can follow material and production parts

throughout the system which will reveal any bottlenecks or work stoppages in the supply chain.

This new supply chain system incorporating the new MRP system will lower labor costs as the

electronic systems will generate necessary reporting freeing up multiple clerks from producing

reports manually. Manual input of initial data will take place; however, the system will update

levels of inventory and raw materials automatically.

Production Forecast

Riordan’s production process is high demand and flexible to the current customer needs

but lacks the lean production techniques leaving the company with waste driving up costs.

Riordan’s production processes is make to order operation, forecasting the future demand of

sales taking average of sales for the last three years and projected into the next year forecast

(University of Phoenix, 2013).

Forecasting is necessary to ensure information on future production trends, whether

internal or external forecast accurate calculations for the company. Production forecasting

allows the decision makers of the company to identify how much production required to meet the

budget and scheduling decisions (Martin, 2007, p, 523). Key elements to defining the production

forecast is an effective supply chain management outlining the foundation, and infrastructure

within the organization improving the quality, and flow of the high-demands for the electric fans.

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Adopting the time series forecasting, and using lean production techniques will help Riordan

predict the future business based on past data to respond to the high-demand needs of the

customers (Aquilano, Jacob, & Chase, 2006, pp. 518).

Implementation Plan of the Design Process

Identified Bottlenecks

Remove Bottlenecks

Research MRP Systems

Review Results Management

Initial Planning

Research and Development

Location Selection

Requirements for new process design

Implementation of process design

Final Stage of process design

1-Feb 8-Feb 15-Feb 22-Feb 1-Mar 8-Mar 15-Mar22-Mar29-Mar 5-Apr

Start DateDuration (days)

The design process plans for manufacturing processes require some degree

of planning: raw materials, capacity, labor, shipping (Vollman, Berry,

Whybark, Jacobs, 2004, pp. 346). Riordan approach to remove waste

requires effort from areas of the business. Implementing the Lean production

processes will identify the principle aspects of quality and maintenance.

Integrating process design systems as the MRP system will assist the

company in translating customer orders, sales forecast, and strategic

capacity requirements. Accurate data will support the business

infrastructure, supports the day-to-day operations needed to ensure a

smooth process.

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Cover Letter

February 4, 2013

To: Riordan Manufacturing Board of Directors:

Team B understands the underlying challenges of identifying and implementing solutions to

align with the missions of the company’s path forward. Implementing Lean production

processes, TQM, and aggregate planning will take the company’s manufacturing planning

process to the next level. Following these recommendations will ensure maximum profitability

and sustain a competitive edge in the industry.

The Lean production technique will remove the bottlenecks among the three plants beginning

with the supply chain for internal/external operations and manufacturing processes. Lean

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production process will attack two of the underlying planning factors Riordan is currently

experiencing: lead times and quick changeover. As customer demand and market changes

improve the technique will provide quality, continual improvement, process standards, supplier

integration, visual control, and customer satisfaction (Martin, 2007).

Total Quality Management (TQM) will improve processes, products, services, along with

aggregate planning strategies to influence the demands for Riordan in the following ways:

Strategic and systematic approach.

Fact-based decision.

Customer-focused.

Communications.

Pricing strategies.

Managing future delivery schedules.

Product mix diversification.

Implementing the processes outline in this proposal will set the core values and principles

Riordan Manufacturing to operate a profitable business. Team B is ready to implement this

proposal and welcome any feedback.

Sincerely,

Team B

Conclusion

In conclusion, Riordan Manufacturing will place system balances unifying the operating

and manufacturing processes. The proposal will maintain a production process supporting the

company values of implementing a strong manufacturing plan. Following this proposal will

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sustain growth, reduce costs, and continue to meet the high demands of the customers. Riordan

knows lean production will support the company values by increasing efficiency in the

production process, which is the path forward for remaining a competitive advantage in the

industry.

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References

Business Dictionary. (2013). Aggregate Planning. Retrieved from

http://www.businessdictionary.com/definition/aggregate-planning.html

Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2006). Operations Management for Competitive

Advantage (11th ed.). Retrieved from the University of Phoenix eBook Collection database.

Chopra, Sunil, and Meindl. (2004).What is a Supply Chain? (2nd ED.), Pearson Prentice Hall.

Retrieved from http://www.sbaer.uca.edu/publications/supply_chain_management/pdf/01.pdf

Investopedia. (2013). Definition of ‘Materials Requirements Planning – MRP’. Retrieved from

http://www.investopedia.com/terms/m/mrp.asp#axzz2JEUvOuJ2

Martin, J.W. (2007). Operational Excellence: Using Lean Six Sigma to Translate Customer

Value through Global Supply Chains. Boca Raton, FL: Taylor & Francis Group.

Project Management Tools from MindTools.com. (2013). Retrieved from

http://www.mindtools.com/pages/article/newPPM_03.htm

Reference for Business. (2013). Production Planning and Scheduling. Retrieved from

http://www.referenceforbusiness.com/management/Or-Pr/Production-Planning-and-

Scheduling.html

University of Phoenix. (2013). Riordan Manufacturing Virtual Organization [Multimedia].

Retrieved from University of Phoenix, OPS571-Operations Management website.

Vollman, T., Berry, W., & Whybark, D.C., Jacobs, F. R., (2004). Manufacturing Planning And

Control Systems For Supply Chain (5th ed.). New York, NY: McGraw-Hill.

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