Production Plan for Riordan Manufacturing

In this paper, Team B discusses strategic capacity planning and lean production for new process design and supply chain processes for the electric fans at Riordan Manufacturing. This discussion is an outpouring of research and brainstorming between team members and begins with a newly designed supply chain to increase value, followed by an evaluation of factors that guide strategic capacity planning and an analysis of current applications of lean production. A concluding section summarizes Team B’s analysis of findings.

NEWLY DESIGNED SUPPLY CHAIN

Riordan Manufacturing is a global plastic manufacturer with a plant in Hangzhou, China, produces plastic fan blades and fan housings. The operation is a joint venture between Riordon Manufacturing and a consortium of Chinese nationals. The electric fans are assembled with an electric motor and sold as a finished product. Riordan will be moving the electric fan production plant to the city of Shanghai, China, to take advantage new markets. The process design for the electric fans will include Material Requirement Planning for the entire process.

NEW PROCESS DESIGN

The new process design for electric parts will be raw material received by the receiving department. The molding department will create the fan’s plastic parts and the trimming department will shave off extra plastic parts before going to the assembly department. The new design will require that the molding department create a precise fan part that requires less trimming. This will shorten trimming time and the assembly of plastic fan parts to the motor will be much faster. This will decrease the amounts of outputs generated by the molding process and trimming process. Destroying waste material cost will decrease as the company becomes more efficient with the new process design; see Gantt chart in exhibit A.

MATERIALS REQUIREMENT PLANNING

Materials requirement planning is the process of a fully integrated computer program that captures the flow of production planning. The system ensures that materials and products are available for production and delivery to customers. The company must maintain the lowest levels of inventory to reduce wasted resources. Coordination between manufacturing activities, delivery schedules, and purchasing activities and the production process is important. For Riordan Manufacturing the materials requirement process starts with the master production schedule, then the materials requirement planning and capacity requirements plan. Maintaining inventory levels and making purchase orders are done after the determination of the capacity. At the same time work orders are taken and passed to the shop floor, manufacturing begins. Exhibit B below has a detailed flowchart of the process.

SUPPLY CHAIN

Riordan Manufacturing will take advantage of the global marketplace and use lower labor costs found in Shanghai, China. The city is in an ideal location for both receiving raw materials and shipping the finished product. Local markets for the electric motor will still be used from the same supplier and continue to be an outsourced item. New opportunities exist for finding suppliers closer to the plant. The city is closer to the main shipping port, the company can take advantage of lower shipping costs and distribute to new markets in Hong Kong and Shanghai.

Supply chain management is the process of managing the sourcing and procurement process plus other logistical issues regarding the movement of materials and supplies (Dossenbach, 2007). Working with suppliers of raw materials and handling inventory efficiently to lower manufacturing costs. Using just-in-time manufacturing involves possessing good relationships with suppliers, material received just in time for production. To help reduce cost and streamline operations it is important to know how much inventory there is on hand and to know the location of the inventory.

STRATEGIC CAPACITY PLANNING

The three centers of Riordan are in Albany, Pontiac, and Hangzhou, which controls the operational activities of manufacturing the fans and order fulfillment of the product to the customer. The manufacturing unit in China and Michigan produces custom parts, which both require different components for different items. The consolidation of these two production plants will reduce the expenditure on equipment and will better meet the demands from the production forecast because the manufacturing process is at one location. The combined system will also improve the delivery schedule of order through better coordination between inventory management, production, shipping, and delivery. The availability of raw materials is added advantage (University of Phoenix, 2010).

Strategic capacity planning is essential in optimal use of resources with minimum wastage of raw materials to achieve the customer demand in timely manner to create the products at lowest cost. The current process of Riordan Manufacturing’s China plant bases their operation off the quantity of fans produced. The local company has the responsibility to provide the required stock of motors based on the production forecast. This kind of operation can only deliver 93% of the products on time. Riordan can take advantage of using an alternative supplier along with the unit that already exists to meet the forecasted production of motors. This will increase the competitiveness among the manufacturing unit and delivery schedule will not have slippages. Other options of keeping the readymade supplies of motors as inventory unit in Riordan inventory itself will increase the inventory cost. Because plastic polymer used in electric fans has plenty of supplies, the lower stock of plastic polymer can balance the cost to reduce the financial burden because of extra stock of motors (University of Phoenix, 2010).

To improve the competitive nature of company in the business of electric fans requires vision of farsighted capacity planning to match the rising number of fans needed in the market. The breakeven analysis of financial statement can provide insight into deciding the course of action to modify the existing process. Lean production using just-in-time system can be very effective in operation processes along with better strategic planning for meeting the demand of customer (University of Phoenix, 2010).

APPLICATIONS OF LEAN PRODUCTION

Riordan Manufacturing strives to run their plants as efficiently as possible. Within the new supply chain design, Riordan’s objective was to identify waste and improve the process to make the supply chain more efficient and cost effective. The decision to have the molding department be more precise was to reduce the amount of waste they were creating by having the extra plastic. Because of the extra plastic, another department has to spend time to cut it off and another department has to dispose of the plastic. The molding department saves the company money because the other departments do not have redo work and because they do not have to dispose of extra plastic.

Riordan’s decision to use just in time manufacturing also decreases the amount of waste the company has in supplies. Just in time, manufacturing decreases the amount of supplies sitting on the shelves, which essentially saves the organization money. This method is risky but Riordan’s working relationship with their vendors will decrease the amount of risk and will ensure the supplies needed are there for production. Even with the supplies, not knowing the location of the supplies will decrease the efficiency of the entire production process. Part of the Lean methodology is to have the supplies available and clearly identified so that employees are not wasting time looking for them but instead is using that time to do value-added work. Part of the new supply chain is to ensure that the supplies are available and clearly identified for use by any employee.

CONCLUSION

In conclusion, Riordan Manufacturing will have an increased competitive edge in their

Manufacturing fans through ingenuity and a strategic planning process. Examining the key operations of company resources and opportunities with implementation of using an alternative supplier will assist meeting goals of streamlining supply and demand of the delivery system. Monitoring inventory on a continual basis will assist in supporting a financial strength advantageous to flexibility when prices of supplies fluctuate. Accurately analyzing the opportunities will provide a vision for lean production, lowering capital expenditure, and provide improvements in market development. Identifying the strengths and the weaknesses of Riordan’s Manufacturing processes will help to develop a competitive edge in the fan market. Various opportunities could develop for Riordan subsequent to resources and company objectives capturing and maintain position in the marketplace with fine-tuning of business knowledge and strategy.

Assessing the ability to provide productive operational efficiency with market trends and customer service will complete the competitive edge of Riordan’s outsourcing and capabilities of meeting customer needs. Providing and gaining a competitive advantage needed to outperform competition will measure and enhance the success of Riordan to be the leading manufacturer and supplier of fans in a global market.

References

Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2005). _Operations management
for competitive advantage, 11e_. New York: The McGraw-Hill Companies.

Dossenbach, T. (2007). SUPPLY CHAIN MANAGEMENT 101: A SHORTCUT TO INCREASED PROFITS! Wood & Wood Products, 112(7), 35-36. Retrieved from Business Source Complete database

University of Phoenix (2010). Riordan manufacturing virtual organization. Retrieved August 17,

2010, from Apollo Group, Inc., Week Four, OPS571- Operations Management