Riordan Manufacturing

It is critical for organizations to develop an aggregate sales and operations plan to ensure finance, product development, sales, and operations work together toward the achieving the same goal. Aggregate planning methods can vary across different organizations, depending on the level of detail included, and must remain flexible to adapt to a changing business environment. At Riordan, the aggregate planning process is a focus of the organization and is a formal process. During the past few months several process improvement initiatives have been identified and will be implemented over the next several months.

These improvements must be integrated into the aggregate plan. Therefore, the implementation of these initiatives will be discussed and agreed upon during weekly meetings between the leadership of each department. The goal of the weekly meetings is to continue to build teamwork across each department, ensure that the supply and demand for electric fans is in balance, and the process is completed with the least cost to the organization without sacrificing quality. Total quality management (TQM) is similar to aggregate planning and is critical to Riordan’s success.

TQM is centered on meeting and exceeding customer expectations and teamwork throughout the organization. TQM success is dependent on each department including, marketing, human resources, information technology, managerial departments, and supply chain frequently communicating and working together toward achieving the same objective. Organization’s must oversee and strive toward TQM to remain competitive in its industry. TQM focuses on and analyzes each process within an organization to ensure that acceptable levels of performance are achieved (Chase, Jacobs, & Aquilano, 2006).

For Riordan to achieve TQM, each process within the various departments must be analyzed and process improvements implemented in areas that need improvement. There are two methods: Six Sigma and International Organization for Standardization (ISO) 9000 that Riordan must adopt to measure and standardize processes to achieve TQM and remain competitive within the electric fan industry. Riordan must integrate its new strategies into its aggregate plan and into TQM to measure and analyze the process improvements affect on the organization.

Riordan’s current mission is “Six Sigma, leading edge R&D and exceeding ISO 9000 standards define the attitude and abilities of Riordan Manufacturing” (Apollo Group Inc. , 2012, Mission). The implementation of the new strategies is in alignment with the organization’s mission. The main objective of TQM as stated above is to meet or exceed customer expectations therefore Riordan will revise its safety stock policy to improve its on-time deliveries rate. Riordan will eliminate the safety stock of plastic material but will begin a safety stock of motors.

Possessing a safety stock of motors will increase its current on-time delivery rate of 93% to an acceptable level of 98%, and keep inventory costs flat by not stocking plastic material. Aggregate planning and TQM both rely on an accurate sales forecast. The sales forecast is an integral part of aggregate planning because operations must balance supply and the expected demand. The second improvement initiative at Riordan is to implement a more robust forecasting process to ensure peak demand periods are understood across the organization.

This will ensure the organization has the appropriate amount of materials, equipment, and capacity or inventory to meet the demand and deliver fans on-time to customers. The third improvement for Riordan to implement an automated inventory system to reduce the time it takes between the customer ordering a fan and receiving the fan. Before implementing an automated solution the company conducted a return on investment to prove its value. The solution would significantly reduce time spent on non-value add activities by eliminating manual handoffs and potential errors in data entry.

The automated solution would improve inventory practices and customer on-time deliveries, which allows the organization to focus on future sustainable growth and achieving Six Sigma and ISO9000 standards. Another improvement for Riordan is to shift the production of customized fans to the Michigan plant. This will enable the China plant to focus on improvements to the production of standard fans and achieving Six Sigma and ISO9000 standards. Each of these improvement initiatives is dependent on cohesive leadership and teamwork across the organization.

As Riordan’s implements each of the improvements previously discussed, it is working toward its mission of achieving TQM through an aggregate plan. This achievement will help ensure a successful future for Riordan its China location. Sincerely, Riordan Manufacturing began operations in 1992 at a plant in Pontiac, Michigan. The company immediately expanded into Albany, Georgia, in 1993 and later in 2000 moved into international markets by opening a plant in Hangzhou, China. With the growth from its inception Riordan became a fortune 1000 enterprise with revenues exceeding one billion dollars (Apollo Group Inc. 2012). This growth has inspired leadership to continue Riordan’s success and fulfill its mission through strategic process improvement initiatives focused on its current processes and operations. The first focus area for Riordan is the manufacturing of standard and customized fans at the China plant. This paper will outline how Riordan will coordinate its aggregate operations planning and total quality management, a material requirements plan, a new process design for production, supply chain strategies, production forecast, and an implementation plan for electric fans.

Material Requirements Plan Material requirements planning (MRP) is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these materials, parts, and components should be ordered or produced. Material requirements’ planning is most valuable in industries where a number of products are made in batches using the same productive equipment (Chase, Jacobs, Aquilano, 2006).

Riordan Manufacturing produces standard and customized electric fans in Hangzhou, China. The China plant has experienced a 93% on-time delivery rate of the electric motors but with a new efficient MRP, this would result in a higher on-time delivery rate and help the planning phase of the electric fans produced at the plant. Currently the manufacturing of fans at the China plant has a safety stock of fan blades but no safety stock of motors. Therefore, Riordan should consider a safety stock of motors for this circumstance.

A safety stock of motors will eliminate this bottleneck and allow the plant to manufacture fans on-time. Materials to produce the plastic components and the electric motors for the fans are provided from local suppliers. The new MPR system will determine how much and when to manufacture the electric fans. The system will calculate the time needed to receive the materials used to produce the fans, the time needed to manufacture them, the required date the fans are needed, and will ensure that the deadline will be met without problems or delays.

New Process Design for Production The current process design for the fans at Riordan Manufacturing involves the factory in Hangzhou, China. The buyers in the China facility are responsible for purchasing the parts for the fans and forecasting supplies and sales. The parts include the assembled motors and plastic polymers. The parts are sent into the facility and facility checks the parts in with a purchase order. After matching the parts with the purchase order, they are sent to their respective area to await assembly.

The introduction of lean manufacturing at Riordan Manufacturing’s Hangzhou, China plant will improve the assembly of the fans. The addition of a safety stock of the electric motors will reduce the time necessary for assembly. With an available stock on hand the, a reduction in the time to wait for products will be the result. This will speed production by not relying on an inbound shipment from the suppliers. Purchasing the plastic polymers locally so a safety stock is not necessary will remain part of the process.

An agreement with the supplier of the plastic polymers will be necessary to ensure the supplier has the necessary supplies on hand for Riordan Manufacturing. The new process will require a team to inspect the assembled motors and polymer plastics for defects. The elimination of defects by inspection will reduce the number of defects in the assembled fans that Riordan Manufacturing produces. The addition of the inspection team will increase the quality of the fans and reduce replacement costs for the company.

Riordan Manufacturing will move the production of the customized fans to the Pontiac, Michigan, plant. The production of the standardized fans will remain in the Hangzhou, China plant. This production change allows the Hangzhou, China plant to focus on the standard fan and keep a better production flow. The result of this change is the Hangzhou, China plant will not stop production or change production schedules to assemble specialized fans. Supply Chain Opportunities Production Forecast Forecasting is extremely important for Riordan concerning all of the decisions that are made daily.

It is a way that the organization can effectively predict the quantity of fans to manufacture and which models are going to be in demand by their customers. Riordan utilizes two forecasting techniques including qualitative and quantitative forecasting. Riordan will utilize data mining analysis to better determine what products will be forecasted depending on world regional climates. Market-basket analysis will also better determine consumer buying patterns. Forecasting will provide an effective means for Riordan to capitalize on cost-savings for the production schedule and material costs.

Forecasting also helps Riordan to calculate the production schedule, labor costs, company profits, and facility layout (Chase, Jacobs, and Aquilano, 2006). Through dependent demand and independent demand, Riordan can determine how many fans and fan parts are needed to satisfy customers. Qualitative forecasting is based somewhat on opinions and previous season purchases. Riordan realizes there is no exact way to forecast sales for products, but by using time series analysis Riordan can better determine future fan sales based on past fan sales.

Forecasting uses many factors to determine the production schedule such as grass roots where forecast data is collected from regional sales people who deal with their customers in various regions. This data accounts for much of the production forecast for Riordan. Implementation Plan To ensure successful growth of a new improved MRP, Riordan will implement a new design process with close monitoring. Riordan will strive to meet and exceed expectations of the organizational goals. The process design changes will begin with planning, researching, and implementing. Each phase will last several weeks.

The new MRP system will launch with new safety measures, 3rd party involvement, and shipping relationship building. With weeks of implementing changes and new processes, an analysis will evaluate the success of process design improvements. The following Gantt chart demonstrates the process implementation plan, beginning July 1. Conclusion The desire to improve and increase customer satisfaction at Riordan will drive the success of the improvement initiatives. The initiatives will improve Riordan’s capacity planning, lean production, and supply chain strategies.