For this week’s assignment, Learning Team A was assigned the task of reviewing Riordan Manufacturing, Inc., a virtual organization wholly owned by Riordan Industries. This company produces plastics for customers all over the world. Our team will cover the manufacturing strategy, performance methods, supplier relationship, and lean production. Lastly, our team has developed a future sales forecasting plan for Riordan as well as an aggregate production, master schedule, and materials requirement plan. After thoroughly researching the manufacturing company Riordan, we have determined the company uses a combined strategy of both chase and level. The chase strategy is best described as production meeting demand and capacity from one period of time to the next (Jacobs & Chase, 2011). By keeping inventory low, the chase strategy allows the company to use money that is freed up to purchase items such as raw materials, if needed. Whereas the level strategy, the amount of goods produced are equal to the demand.
An example of this is Riordan wants to produce 30,000 plastic beverage containers over the next 60 days. On average, to meet the demand, Riordan would have to produce 500 containers a day to meet the level strategy of demand. Ideally, when there is no inventory and demand is unpredictable, the chase strategy would be used best (Cohen & Roussel, 2013). For Ridoran, this can sometimes be the case, but not often which is why the level strategy is also used in conjunction. The overall benefit of this mix empowers enhancement of objectives and lower expenses more so than freely. Organizations and companies inside the administration business that utilize this method are in a sense demand matching which implies that the workforce must match the demand (Chopra & Meindl, 2013). Riordan Manufacturing will execute another process for their supply chain in the future, that will keep a deficiency or excess of generated materials, diminish material waste, reduce back orders, and increase sales. Right now with the current system, the worker is measuring the measure of crude materials utilized day by day.
At that point, the representative gives the data to the stock agent. The new supply chain process will not only increase sales, but will dispatch a modernized framework that will compute the utilization of materials. This will diminish human lapse and give input all the more rapidly. The satisfaction of requests is proficient in diverse stages. The new system will deliver precise aggregates of crude materials and stock for the company. Attachment 1 provides the projected sales forecast for Riordan Manufacturing. Metrics are an important aspect of monitoring the supply chain so that it is efficient and delivers high quality and value to customers (Jacobs & Chase, 2011, p. 39). One metric used to evaluate the performance of the electric fan supply chain managed at Riordan’s China location are its on time deliveries over the past year, which average about 93% (Riordan). This metric reflects an aspect that slow down the supply chain which results from the purchase of parts required for assembly from a third party.
Another metric that Riordan’s uses to evaluate its performance is the final cost of production quantity of the fans which is determine after its development is created (Riordan). This metric is also dependent upon purchasing supplies from a third party. Riordan has a very dependent structure of relationships with its suppliers. These relationships have a direct impact on its supply chain. The supplier relationship supply parts such as electric motors and plastic polymers used in the creation of its electric fan and bottle products. They have to keep in continuous communication with suppliers to ensure the appropriate levels of components are being purchased and shipped to Riordan. Communication is essential as Riordan uses local suppliers as well as suppliers located in China. This process operating effectively creates a satisfactory quantity of fans to the buyer in line with the number predicted for unexpected orders. Undoubtedly, among the bigger challenges the business faces would be the logistical problems related to foreign trade.
Riordan is a large scale maker of the electrical fans, in addition, the company has been historically financially stable because of their repeat clients and capability to create custom fans for newer clients upon request. A lot of these successes and failures may be quantified by their on-time delivery speed along with the logistical hurdles they have been driven to beat often. They do encounter some difficulties with their on time delivery price due to the design and transportation products worldwide. Along these lines, importing and exporting items demands more funds and time, along with several other sources, to get the item to the customer. One process the company can implement as an improvement strategy is to stockpile a large number of the substances utilized to create the fans. In addition, they may streamline their delivery processes by bringing the shipping operation in house since to increase delivery objectives of 93% in the China factory. Lean production has been the most significant approach in operations and supply management.
In the context of supply chains, lean production refers to and focuses on eliminating as much waste as possible. Waste in a supply chain, can be but is not limited to overproduction, transportation, waiting time and excess inventory. Within a supply chain, moves that are not essential, processing steps that are unnecessary and excess inventory in the supply chain are all targets for improvement. “Lean manufacturing systems produce what customers want, in the quantity they want, when they want it, and with minimum resources. Applying lean concepts in manufacturing typically presents the greatest opportunities for cost reduction and quality improvement (Jacobs & Chase, 2011, p. 423).” Riordan Manufacturing can remain a leading competitor in the market by may use the lean production principles: elimination of waste and respect for people to maximize the efficiency and effectiveness of the electric fan supply chain process.
Since Riordan Manufacturing manages its forecast of electric fans, by applying the “lean production principles the company can reduce inventory inherent in a lean supply chain, reduce obsolescence and reduces flow time through the value-added processes (Jacobs & Chase, 2011, p. 423).” The combination of improved customer service and reduced cost Riordan Manufacturing is destined to achieve a momentous competitive lead in the entire global enterprise. Other techniques Riordan Manufacturing could implement to maximize the efficiency and effectiveness of the electric fan supply chain process is to design a lean layout that ensures a balanced workflow with a minimum of work-in-process inventory. Also by developing JIT (just-in-time) process for components required for the custom plastic fabrication.
Lastly, the involvement of visual inventory management for consistent use of parts (Kanban) all techniques will maximize the efficiency and effectiveness of the supply chain process. Riordan Manufacturing is known for its conception and preciseness; therefore, it is imperative for Riordan to cultivate a forecasting process that minimizes excess inventory and streamlines production. “Forecasts are vital to every business organization and for every significant management decision (Jacobs & Chase, 2011, p. 484).” Operation and production personnel use forecasts techniques to determine the supplier selection, facility layout, capacity planning, and process selection, along with recurrent decisions concerning inventory, purchasing, scheduling, and production planning (Jacobs & Chase, 2011, p. 484). The technique in which Riordan Manufacturing uses to forecast is make-to-stock operation in which the forthcoming demand for fans is based on the average of sales from the prior three years and inferring it into the subsequent year.
Riordan should use a number of forecasting methods to analyze their data and inventory. A qualitative technique of time series analysis forecasting is based on the notion that data pertaining to previous demand can be used to forecast future demand. The assumption in using time series analysis forecasting method is that history will repeat itself within manageable limits. Riordan should also use causal relationship forecasting in which the company will assume that the demand for their products are based off of underlying environmental factors. A Seasonal factor and or Environmental factor affect the demand for Riordan’s product. “A seasonal factor is the amount of correction needed in a time series to adjust for the season of the year (Jacobs & Chase, 2011, p.493).” It is a reasonable assumption to believe that demand for fans will increase seasonally from region to region.
Warmer temperatures will cause the demand for fans to increase and vice versa for cooler temperatures. Riordan employing the correct forecast technique will allow the company to become more productive and operate more effectively and efficiently. Since most to Riordan’s customer agree to one year contracts, an Aggregate Production Plan can be used to determine production across product lines. Riordan currently produces 4 types of fan in different models. There are four personal fan models, six cooling fan models, a desk fan, and a window fan. When producing each of the various fan models, different molds and equipment are required. In order to optimize efficiency, a master schedule should be followed to complete production requirements. This master schedule should allow for similar models to be produced at similar times, which will create efficiency in the supply chain by allowing similar fan production to be focused during the times when the same models and equipment is being used. Using a fixed-time inventory model parts for production should be order ahead of schedule production. If the company forecasts 50,000 units being sold during the next year based on contracts, the company should maintain a stock that would allow them to create an additional 10,000 units.
This safety stock would vary supply dependent upon ordering demands. Including models in inventory from the previous year, Riordan should being ordering to being production on a month to month basis by fan type for a yearly total of 60,000 units, which is approximately 5,000 units per month based on the master schedule. In conclusion, Riordan Manufacturing, Inc., a virtual organization wholly owned by Riordan Industries produces plastics for customers all over the world using the chase and level manufacturing strategies. This international organization uses various performance methods and has a dependent supplier relationship which directly affects its supply chain and proven by recorded metrics. In order to meet the customers demand for the next year, our team has developed a future sales forecasting plan for Riordan as well as an aggregate production, master schedule, and materials requirement plan to ensure an efficient operation during the next year, while able to supply product for unforeseen orders.
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Boston, MA: McGraw-Hill Irwin.
Riordan Intranet Page. University of Phoenix.