Operations PPT

Riordan Manufacturing is one of the largest plastics manufacturers in the world. Riordan’s mission statement states that it’s focus is to “Six Sigma, leading edge R&D and exceeding ISO standards” (Riordan Mfg. Internet, home page, 2014). Riordan’s fan manufacturing operation is located in Hangzhou, China. Team D will evaluate the Riordan’s fan manufacturing supply chain design and perform a comprehensive evaluation of the operational effectiveness of the supply chain.

Manufacturing Strategy

Riordan’s Intranet states, that the Hangzhou plant bases its forecasts by “taking the average of sales for the last three years and extrapolating it into the next year” (Riordan, Operations, Hangzhou, China, 2014, p. 1 para 4). Riordan’s use of this approach has lead to a 93 percent on-time delivery rate. Team D believes that the information regarding Riordan’s manufacturing strategy, taken from the firm’s intranet website is an indication that it employs a “Stable Workforce-Variable Work Hours” production planning strategy. This strategy varies the number of hours worked through flexible work schedules or overtime to match the production quantities to orders” (Jacobs & Chase, 2011, pg. 534). It helps assure that the workforce has continuity which helps with employee morale. It is extremely important for employees to feel secure in their work environment. Many workers face everyday pressure on their jobs and in their personal lives. Knowing that they have a secure job to report to and do not fear the cyclical staffing of other production strategies can lead to the feeling that the company cares about their wellbeing. This can lead to more productivity on their current jobs. This is very important in China, where companies are competing for hard working laborers.

Metrics

Team D selected Supply Chain Cycle Time and Fill Rates to be the two metrics that will be evaluated for the performance of the electric fan supply chain. Supply Chain Cycle Time is “the time it would take to fill a customer order if inventory levels were zero” (Spacey 2011). The shorter the cycle time the more efficient the supply chain is. We believe that this metric is important for Riordan to understand how fast it is producing and filling its customer orders. A Fill Rate represents “the percentage of a customer’s order that is filled on the first shipment. This is also an important metric as it measures whether customer needs are being met in the first delivery.

Buyers in Riordan’s manufacturing facility in China purchase eclectic motors and plastic polymers from local Chinese companies (Apollo Group, Inc. 2004). Yin, the Chinese firm that provides the motors has had production shortages when 400 workers went for strike for better wages and reasonable working hours. It is important that Riordan has a close relationship with its suppliers.

There are two metrics that Riordan Manufacturing uses to evaluate performance of the electric fan supply chain. The delivery performance metric entails the determination of the percentage of customer orders shipped when the customer requested them to be shipped. It is meant to determine the measure of manufacturing’s ability to meet customer requirements. This metric help improve their average on-time delivery to better than 93%. Second metric is the quality metric. This is used to measure the reliability of the Riordan’s products. One major use of this metric is that it provides quality information that management can use to minimize cost, improve flow and meet customer quality requirement (Waddell, 2006).

Riordan can enhance the supplier improvement strategies in many ways. They can incorporate appropriate service levels and metrics into agreement, share critical information as early as possible, plan for major contingencies, expect and reward honesty and finally, make relationship meetings meaningful”

By adopting lean production principles, the company can maximize the efficiency and effectiveness of the electric fan supply. For example, through lean production, the company can reduce inventory inherent in a lean supply chain, reduce obsolescence and reduces flow time through the value-added processes (Apollo Group, Inc. 2004). All these can enable the company gain a significant competitive advantage in the global marketplaces.” Lean production principles also enables the company to constantly look for better cost suppliers and products, and use visual inventory management for consistent use of parts (Apollo Group, Inc. 2004). Generally, lean production principle simplifies the work.

Because the company uses make-to-stock operation in which the future demand for fans is forecasted based on taking the average of sales for the last three years and conjecturing it into the next year (Apollo Group, Inc. 2004). The assumption in using time series analysis forecasting method is that history will repeat itself within manageable limits. We had 2 years’ worth of data and used a linear forecasting trend line as follows:

Planning Schedules

Aggregate Production Planning is a critical stage for management when steering the organization to optimal efficiency by maximizing revenue and minimizing costs. The principle objective of an aggregate production plan is to set overall targets of production as there are a finite number of inputs that can produce a corresponding number of outputs. In other words, there must be a sufficient number of resources and raw materials to achieve the desired level of production. A comprehensive aggregate production plan will account for all of the targeted quantities of goods to be manufactured within a certain period such as one quarter. It is management’s job to ensure that the organization achieves the targets quantities within that period of time.

A Master Production Schedule addresses production but also staffing, inventory and other quantities that must be completed within a week period and it demonstrates what quantities will be available in the futures. Some inputs are: forecast demand, sales demand, target stock, resource capacity, and shelf life; these will drive the outputs of: production plans, raw materials/resources requirements, and available stock projections. A product manager should start with aggregate sales and operations plans to see exactly how much of a product is targeted for production and whether operations has the capacity to achieve that production. Output levels are then designed to reach those targets with considering disaggregates. In turn, specific schedules are created for each item that is then evaluated at the end of the week to see of it was achieved.

Materials Requirement Planning is as equally critical as the other planning scheduling. Today, most materials requirement planning is computer-based software since a copious amount of data must be analyzed when creating inventory control systems. Materials requirement planning helps plan manufacturing and purchasing activities by maintaining the lowest amount of inventory needed to meet production targets. At the same time, the material requirements planning schedule must also consider that is a sufficient amount of inputs available production which in turn translates to a plentiful supply of finished product available to customers.

Inventory Requirements

The amount of inventory Riordan should keep in stock will be based on a materials requirements schedule. Riordan should keep just enough inventory in stock so that every customer who wants one of its plastics products (or electric fans here) will be able to purchase one without incurring an increasing marginal cost of production for excessive inventory. In the case of production of the small and low-value electric fan, the two-bin inventory system should be used for the electric fan components and final finished product. In other words, since Riordan can relatively easily produce a massive amount of electric fans, management must be careful not to have an excess amount of components electric fan parts. So by using the two-bin inventory system Riordan keep one bin with enough stock for that once the second bin reach a minimal threshold, the first bin can be reordered and have enough to get through production.

Riordan Manufacturing has a fairly effective supply chain process. However there is always room for improvement. Coordination between various functions and a critical look at the process will benefit operations significantly in the future.

APA Reference

Apollo Group, Inc. (2004). Virtual Organization: Riordan Manufacturing. Retrieved from Apollo Group, Inc., Simulation, MGT498 - Strategic Management website.

Cheeseman, H. R., (2004). Business law (5th Ed.). Upper Saddle River, New Jersey: Pearson

Education, Inc

Jacobs, F. R., & Chase, R. B. (2011). Operations and Supply Chain Management. (13 ed. ed.).

New York, NY: McGraw Hill Irwin.

12 Key Metrics For Supply Chain Management posted by John Spacey, Simplicable, February