Riordan Supply Chain Design

Forecasts are also needed for how a firm 484pg ALL TEAM

In considering what forecasting approach to use it is important to consider the purpose of the forecast. Some forecasts are for very high-level demand analysis. What do we expec tthe demand to be for a group of products over the next year, for example? Some forecasts

are used to help set the strategy of how, in an aggregate sense, we will meet demand. We

will call these strategic forecasts . Relative to the material in the book, strategic forecasts

are most appropriate when making decisions related to overall strategy (Chapter 2), capacity

(Chapter 4), production process design (Chapter 6), service process design (Chapter 7), sourcing

(Chapter 11), location and distribution design (Chapter 12), and in sales and operations

planning (Chapter 16). These all involve relatively long-term decisions that relate to how

demand will be met strategically.

Riordan's Manufacturing Strategy

Determine Riordan's manufacturing strategy (chase, level, or combination) and explain its benefits

P ro d u c t i o n P l a n n i n g S t rat e g i e s 534pg CH 16

There are essentially three production planning strategies. These strategies involve trade-offs among the workforce size, work hours, inventory,

and backlogs.

Heston I think its combination “stable and level” base off what I read 534

Diagram 1. Process Flow for Electric Fan Supply

Create a process flow diagram for the electric fan supply chain

Performance Evaluation

Select two metrics to evaluate performance of the electric fan supply chain

M E A S U R I N G P RO C E SS PERFORMANCE 116p

There is much variation in the way performance metrics are calculated in practice. This section

defines metrics in a manner consistent with the most common use in practice. It

keep in mind fans are make to stock review CH 5 “This part of the plant's business is a 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 extrapolating it into the next year. The assumption in using this forecasting method is that history will repeat itself within manageable limits”

Supplier Relationship and Supply Chain

· Describe the supplier relationship and the effects on the supply chain.  As part of this consider the following:

· Type of relationship

· Supplier location, size of company, and financial stability

· Metrics used to measure supplier performance (on-time delivery, defects, etc)

· Supplier improvement strategies 

· ST R AT E G I C SOURC I N G CH 11 376-383

Strategic sourcing is the development and management of global supplier relationships to

acquire goods and services in a way that aids in achieving the immediate needs of the business

Review Supply Chain - Hangzhou, China on last page

Principles of Lean Production

· Describe how lean production principles may be used to maximize the efficiency and effectiveness of the electric fan supply chain process

L E A N S U P P LY C H A I N S 433pg CH 13

Building a lean supply chain involves taking a systems approach to integrating the partners.

Supply must be coordinated with the need of the production facilities and production must be tied directly to the demand of the customers for products

Forecasting Technique and Process (DEGREETHATSME)

Select a business forecasting technique (qualitative or quantitative) for the electric fans and describe the forecasting process to be used at Riordan

PAGE 486 “IM Struggling or thinking to much “

Forecasting can be classified into four basic types: qualitative, time series analysis, causal

relationships, and simulation.

Qualitative techniques are subjective or judgmental and are based on estimates and opinions.

Time series analysis , the primary focus of this chapter, is based on the idea that data

relating to past demand can be used to predict future demand. Past data may include several

components, such as trend, seasonal, or cyclical influences, and are described in the following

section. Causal forecasting, which we discuss using the linear regression technique, assumes

that demand is related to some underlying factor or factors in the environment. Simulation

models allow the forecaster to run through a range of assumptions about the condition of the

forecast.

.

Crystal I think need focus on qualitative and time series techniques since these are

most often used in supply chain planning and control

Forecast of Sales(DEGREETHATSME)

Create a sales forecast for electric fans using selected techniques

L I N E A R R E G R E S S I O N A N A LY S I S 489 khalilah DO NOT WHAT excel to do? I assume Y= Extensions/sales of fans 2005 and X=Quantity Gross Fan units 2005? Please review excel sheet attach? helpppppp

Regression can be defined as a functional relationship between two or more correlated variables.

It is used to predict one variable given the other. The relationship is usually developed

from observed data. The data should be plotted first to see if they appear linear or if at least

parts of the data are linear. Linear regression refers to the special class of regression where

the relationship between variables forms a straight line.

The linear regression line is of the form Y _ a _ bX , where Y is the value of the dependent

variable that we are solving for, a is the Y intercept, b is the slope, and X is the independent

variable. (In time series analysis, X is units of time.)

Linear regression is useful for long-term forecasting of major occurrences and aggregate

planning. For example, linear regression would be very useful to forecast demands for product

families. Even though demand for individual products within a family may vary widely

during a time period, demand for the total product family is surprisingly smooth.

The major restriction in using linear regression forecasting is, as the name implies, that past

data and future projections are assumed to fall about a straight line.

Graph or Table 1. Sales Forecast(DEGREETHATSME)

Aggregate Production Plan Cannot go here all numbers base off sales forecast . need some feedback please(DEGREETHATSME)

Develop Aggregate Production Plan, Master Schedule, and Materials Requirement Plans for electric fans based off the sales forecast. Be sure to include the following: 

· The determination of inventory requirements of the electric fans component parts and finished goods

· The selection of an appropriate inventory system (fixed order quantity, two bin method, etc.) to meet inventory requirements

Master Schedule Cannot go here all numbers base off sales forecast . need some feedback please(DEGREETHATSME)

Materials Requirement Plan Cannot go here all numbers base off sales forecast . need some feedback please(DEGREETHATSME)

Conclusion

Supply Chain - Hangzhou, China Information from web

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.

The electric motors used in the fans are completely assembled units. They are purchased by buyers in the China Plant's purchasing department from a local Chinese company. While this company attempts to maintain adequate quantities of electric motors in stock to meet all its order requirements, its on-time deliveries over the past year have averaged only 93%.

The buyers also purchase the Plant's requirements for plastic polymers locally. The polymers, after being received, are melted at precisely controlled temperatures and injected into individual molds to create individual plastic parts required by the fans. This is accomplished by means of injection molding machines located in the production area. These capital expensive machines control the molding processes to the specifications of the plastic parts being produced, such as the fan blades and fan housings. The plastic fan blades, plastic fan housings, electric motors and other miscellaneous parts are then assembled to create finished models of electric fans. The assembled fans are individually packaged together with instructions on how to use the product and stored in a finished goods stockroom awaiting sale.

This part of the plant's business is a 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 extrapolating it into the next year. The assumption in using this forecasting method is that history will repeat itself within manageable limits.

Orders for electric fans can be picked up at the China plant by the customers themselves or else they can be shipped to the customers anywhere in China. The China Plant uses a Chinese shipping company that offers services comparable to FedEx, but is less expensive. Orders are also shipped internationally by either FedEx or a Chinese shipping company that competes with FedEx. Two shipping companies are used by the China Plant for international shipments to assure that timely delivery services will always be available. The services both shippers offer are very similar and their shipping charges are competitive.

The China plant also designs and develops customized electric fan products for customers world-wide under individual customer contracts. After the design and development of a new electric fan is completed for a particular customer, a small production lot of the fans is usually scheduled, but under a separate contract. A separate contract from the development contract is used since the final cost of the fan can only be determined after its development is completed. This final cost is used in estimating the cost of the production quantity. A small production quantity is produced to statistically validate both the design of the fan and the production process used to build and assemble the fan, if the fan's design represents a significant departure from the way typical fans had been designed and assembled. This initial production can be described as a production pilot run.

Estimates of follow-on orders for these new custom fans are not forecasted but are based on the customers indicating what their estimated yearly requirements will be. Since the fans are being produced to a particular customer's unique requirements, they are not available for sale to other customers; consequently no additional forecasts are required. The customer's indication of what its yearly requirements will be helps the China Plant to estimate what their yearly resources requirements will be in terms of production capacity, material requirements, and labor to satisfy the customer's requirements. Customers normally negotiate their yearly requirements for fans in order to obtain the lowest price. They then provide periodic release orders for smaller quantities against the yearly total throughout the year.

Periodic orders for quantities of fans against the contract's yearly total however are received from customers randomly throughout the year. This makes it difficult for the China Plant to estimate exact material requirements in the very short term since the orders are received randomly and are for varying quantities. To assure that it will be able to meet any delivery schedule its customers request, the China plant maintains a safety stock of polymer material even though the material is obtained locally and does not present an availability or a delivery problem, at least for the foreseeable future. It does not stock electric motors other than a small quantity of the more popular types for warranty repairs, but depends on the electric motor supplier to maintain motors in their stockroom. The China Plant, following good supply chain management practices, periodically 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.

Logistics requirements for the China plant to ship products internationally are similar to the requirements for shipping items from the United States to China. A logistics scenario for a shipment of items from the Riordan R & D facility, for example, to the China Plant would be as follows:

1. Riordan's R & D Department contacts FedEx, the shipping company they plan to use, on a shipment going to the China Plant.

2. FedEx picks up the shipment at the R & D facility.

3. The R & D Facility provides FedEx with information on the items being shipped including export license if required, item descriptions, item model or part numbers, quantities, total cargo weight, Product Duty Classification Codes, and destination name and address. The United States Bureau of Export Administration (BXA) under the U. S. Commerce Department oversees export control and licensing in the United States. It is mandatory that companies follow their requirements when shipping items internationally. Originals of all documentation are maintained by Riordan's R & D's shipping department. Copies of all the shipping documents are also faxed to the China Plant.

1. To determine the Product Duty Classification Code, the R & D Facility compares the technical description of the items being shipped against a set of technical descriptions known as both Schedule B and as the Harmonized Tariff Schedule (HTS) codes. The HTS is maintained by the U.S. Government. Coding items with duty classifications can be tricky business, but it is essential to international supply chains to make sure that only the correct amount of duty is imposed.

2. The code for a fractional horsepower AC motor for example is 8501.20.2000. The code for polycarbonate plastic material is 3920.61.0000. The first six digits in each code is the code classification. The last four digits is a country specific code.

4. FedEx delivers the cargo and documentation to a customs broker at a United States sea port and then faxes the details of the shipment, including shipment arrival time in China, to FedEx in China so they will be prepared to receive the cargo upon arrival.

5. The Broker takes possession of the cargo and the documentation from FedEx and presents the documentation to U.S. Customs for clearance. Dock fees or any other fees such as channel dredging fees, if imposed, are identified and paid by the broker. The broker collects for all such payments from the R & D Facility when his responsibilities have been fulfilled and he submits his bill.

6. The Broker also arranges transportation with a ship company and has the cargo moved to the dock area along side the ship. Note that this same procedure would be used to ship by air. The shipping documentation travels with the cargo although copies are usually faxed to the customs office at the destination port ahead of time by the broker to help expedite receipt and clearance of the cargo when it arrives. Shipping charges by the ship company are billed directly to the R & D Facility.

7. The ship reaches its destination.

8. Chinese Customs examines, or re-examines the paperwork if previous copies were received, accepts it if there are no problems and releases the cargo, which has been or is in the process of being unloaded, to a designated local Broker. This Broker might be a member of the same Broker Company hired originally in the United States or it might be a different company. The stateside broker determines which one to use. The Broker accepts the paperwork and cargo and submits everything to the local FedEx carrier after making copies of all the documents for its files. If any additional fees such as dock fees are imposed, the Broker pays these and submits a complete bill for his services, including any fees he pays, to the China Plant.

9. Fed Ex accepts the cargo and paperwork from the Broker, signs off on receiving the cargo, and delivers the cargo to the China Plant. FedEx makes copies of all documentation for its records.

10. Upon receiving the delivery, the China Plant verifies the contents of the shipment while checking for damage, then accepts the shipment and provides FedEx with a signed receipt.