Summary: Riordan Manufacturing
OPS/571
February 13, 2012
Riordan Manufacturing
Learning Team C has completed the analysis of Riordan Manufacturing’s electric fan design process and has developed a proposal outlining the changes that need to be implemented. The team is proposing to focus on total quality management (TQM); this will allow Riordan to remain focused and efficient in areas of opportunity, and to excel in all aspects of the electric fans that are important to customers. The team’s recommendation is to use quality at the source that will address the following scenarios: proper training for employees, holding employees accountable, and incentives to help motivate employees. TQM will also be implemented within the supply chain including suppliers and transportation; this will decrease costs and improve on-time delivery to customers, which will increase sales.
With the new process transitioning to the just-in-time (JIT) method, the technology portion of the organization will need to be upgraded to a system that monitors from the point of order to the point of delivery. …show more content…
The company will transition from a basic material requirements plan (MRP) to an MRPII system that will allow Riordan to excel in efficiency, lean production, and cost effectiveness.
Applying lean production principles will aid in removing waste, reducing inventory, maximizing process flow, and meeting customer expectations. Communication is key for the organization; this will allow management to empower the employees with a company-wide initiative of continuous improvement. The recommendation is to use make-to-order for standard and custom orders to excel in the customer service arena that will not only retain current customers but also attain new customers.
The supply chain recommendations will allow Riordan to realize a 25% increase in on-time delivery, which will increase the bottom line. Taking advantage of global opportunities and outsourcing internal organization functions to outside providers can reduce operating costs. It is also recommended that Riordan find a clean/green supplier that provides a 99% on-time guarantee for parts. This will be made possible by using an incentive for on-time deliveries and a penalty for late deliveries.
We have included a variety of charts that reinforce Learning Team C’s recommendations: flow chart of the new process (pg. 1), forecast example (pg. 4), master production schedule (MPS) example (pg. 7), sample inventory chart (pg. 8), and Gantt chart (pg. 9).
Please find enclosed our complete proposal detailing recommended changes to Riordan’s process design for electric fan production. This aggregate operations plan coordinates all aspects of production to improve process quality and efficiency.
Sincerely,
Learning Team C, University of Phoenix
| |
References
Chase, R.B., Jacobs, F.R., & Aquilano, N.J. (2006). Operations management for competitive advantage (11th ed.). New York, NY: McGraw Hill/Irwin.
Kaizen & GembaKaizen. (2012). Kaizen Institute. Retrieved from http://us.kaizen.com
Microsoft Excel (2007) [Computer Software]. Retrieved from http://www.microsoft.com
University of Phoenix. (2012). Riordan Manufacturing Virtual Organization. Retrieved from University of Phoenix, OPS571 - Operations Management website.
|Content and Development |Points Earned |
|11 Points |8 out of 8 |
| |Additional Comments: |
|All key elements of the assignment are covered in a substantive way. |See my comments in the body of the text. |
|The proposal includes the following: | |
|An MRP for the manufacturing of the Riordan electric fans | |
|A new process design for the production of the Riordan electric fans | |
|A supply chain for the Riordan electric fans | |
|A production forecast for the Riordan electric fans | |
|An implementation plan, including a Gantt chart of the design process, | |
|for the Riordan electric fans | |
|A cover letter detailing how the student will coordinate aggregate | |
|operations planning and TQM for the Riordan electric fans | |
|The proposal is no more than 1,050 words in length. | |
|The content is comprehensive, accurate, and persuasive. | |
|The paper develops a central theme or idea directed toward the | |
|appropriate audience. | |
|The paper links theory to relevant examples and uses the vocabulary of | |
|the theory correctly. | |
|Major points are stated clearly, are organized logically, and are | |
|supported by specific details, examples, or analysis. | |
|The introduction provides sufficient background on the topic and | |
|previews major points. | |
|The conclusion is logical, flows from the body of the paper, and | |
|reviews the major points. | |
|Readability and Style |Points Earned |
|2 Points |1.5 out of 1.5 |
| |Additional Comments: |
|Paragraph transitions are present, logical, and maintain the flow |See my comments in the body of the text. |
|throughout the paper. | |
|The tone is appropriate to the content and assignment. | |
|Sentences are complete, clear, and concise. | |
|Sentences are well constructed, strong, and varied.Sentence transitions| |
|are present and maintain the flow of thought. | |
|Mechanics |Points Earned |
|1.5 Points |1.5 out of 1.5 |
| |Additional Comments: |
|The paper—including the title page, reference page, tables, and |See my additional comments in the body of the text. |
|appendixes—follows APA formatting guidelines, and the requirements | |
|noted in the Instructor Policies document. | |
|The citation/reference requirements noted in the Instructor Policies | |
|document are met and those citations/references of original works | |
|within the body of the paper follow APA guidelines. | |
|The paper is laid out with effective use of headings, font styles, and | |
|white space. | |
|The paper was submitted in a single MS Word document. | |
|A copy of the Turnitin report was submitted with the assignment. | |
|Rules of grammar, usage, and punctuation are followed. | |
|Spelling is correct. | |
|Total |Points Earned |
|11 Points |11 out of 11 |
Overall Comments:
Team,
Outstanding! You did a superb job with this assignment, both with content and presentation. This shows how it should be done. Wow!
-----------------------
PRESENTED BY LEARNING TEAM C, UNIVERSITY OF PHOENIX
[pic]
[pic]
PROCESS DESIGN
A PROPOSAL TO: RIORDAN MANUFACTURING
FEBRUARY 13, 2012
NEW PROCESS DESIGN RECOMMENDATIONS
NEW PROCESS DESIGN
Multiple Stages: Riordan should divide electric fan production into five stages—purchasing motors, fabrication of plastic fan parts, assembly of all parts, packaging of finished fans, and customer pick-up or shipping (flow chart pictured below). Dividing fan production into multiple stages allows closer examination of each part of the process, making it easier to identify constraints.
[pic]
Make-to-Order: To promote lean production Riordan should primarily use a make-to-order process (Chase, Jacobs, & Aquilano, 2006). Following this method, Riordan will produce most fans, standard or customized, only in response to orders placed. However, Riordan should maintain flexibility in case of an unforeseen boom in sales. For this reason, they should maintain a small safety stock of fan parts (see supply chain section for specific recommendations). Riordan will notify clients of the new make-to-order process, encouraging them to place orders well in advance to ensure resources are available to service their needs.
Pacing: Riordan’s standardized fan orders should be filled using a paced process, setting time limits for each production stage (Chase et al., 2006). This will ensure the fans move through production in a timely manner, providing on-time delivery to customers. Nonpaced production is best for the customized fan initial pilot runs; the experimental nature of these pilots does not allow for pacing. However, once the pilot is complete, operators will have a clearer idea of timing and can implement pacing in the production of the complete custom order.
LEAN MANUFACTURING
RIORDAN MANUFACTURING, P 1
RIORDAN MANUFACTURING, P. 2
FEBRUARY 13, 2012
FEBRUARY 13, 2012 supply chain recommendations
THE PROCESS OF RIORDAN’S SUPPLY CHAIN IS ESSENTIAL FOR SUCCESS. "THIS PROCESS ESSENTIALLY INVOLVES THE TRANSFORMATION OF RAW MATERIALS OR THE FLOW OF SEMI-FINISHED PRODUCTS FROM SUPPLIERS AND DISTRIBUTE TO CUSTOMERS," (CHASE ET AL., 2006). IN TODAY 'S MARKET, COMPANIES SUCH AS RIORDAN WILL BE COMPETITIVE IF THEY FIND NEW AND INNOVATIVE WAYS TO TRANSFORM THEIR SUPPLY CHAIN TO IMPROVE EFFICIENCY, MAKING IT A COMPETITIVE ADVANTAGE OR STRATEGY.
ELECTRIC MOTOR CHANGES: A PRIMARY GOAL OF THE MANAGEMENT TEAM IS TO HAVE AN EFFICIENT SUPPLY CHAIN THAT USES OPTIMIZED TECHNIQUES TO GET THE BEST CAPACITY UTILIZATION IN PRODUCTION AND DISTRIBUTION (CHASE ET AL., 2006). TO ACCOMPLISH THIS, THE COMPANY MUST OBTAIN A NEW SUPPLIER FOR THEIR ELECTRIC FANS. PRESENTLY, THE PLANT IS USING YIN MOTOR COMPANY, WHICH HAS ONLY A 93% ON-TIME RATE FOR DELIVERY. ALSO THE COMPANY IS SUSPECTED TO BE THE CAUSE OF THE TOWN’S WATER POLLUTION, WHICH IS CAUSING MANY PEOPLE, INCLUDING CHILDREN, TO BE HOSPITALIZED (UNIVERSITY OF PHOENIX, 2012). RIORDAN MUST FIND A CLEAN/GREEN SUPPLIER WITH A 99% ON-TIME GUARANTEE FOR PARTS. THE PLANT IS CURRENTLY NEGOTIATING WITH A NEW SUPPLIER THAT WILL GUARANTEE THE ON-TIME RATE AND IN EXCHANGE, RIORDAN IS WILLING TO RE-NEGOTIATE THEIR PAYMENT CYCLE. AT THE MOMENT, THE COMPANY HAS NET-45 DAYS WITH ALL SUPPLIERS. TO GUARANTEE ON-TIME DELIVERY, RIORDAN IS WILLING TO PAY NET-10 DAYS IF THE SHIPMENT IS RECEIVED AHEAD OF SCHEDULE. SHOULD THE SUPPLIER BE DELAYED, THEY WILL INCUR A PENALTY OF 1% FOR EACH DAY THE PRODUCT IS NOT DELIVERED ON-TIME.
SAFETY STOCK: RIORDAN SHOULD MAINTAIN A SMALL SAFETY STOCK OF FAN PARTS TO MAINTAIN FLEXIBILITY IN CASE OF UNFORESEEN BOOMS IN DEMAND. HOWEVER, THIS NEED FOR SAFETY STOCK MUST BE CAREFULLY BALANCED WITH THE NEED TO MAINTAIN LEAN PRODUCTION AND LOW INVENTORY COSTS. CONSIDER THE SAFETY STOCK OF POLYMER FOR EXAMPLE. AT THIS TIME, THE SAFETY STOCK IS KEPT AT A FOUR-WEEK SUPPLY, WHICH SEEMS EXCESSIVE BECAUSE THE POLYMER IS RECEIVED LOCALLY WITHOUT ANY PROBLEMS AND WITHIN ONLY A FEW DAYS. THE PLANT WILL KEEP A TWO-WEEK SUPPLY OF THE POLYMER ON HAND REDUCING SAFETY STOCK AND THE INVENTORY COSTS BY 50%.
RIORDAN MANUFACTURING, P. 3
RIORDAN MANUFACTURING, P. 5
FEBRUARY 13, 2012
NEW PROCESS DESIGN RECOMMENDATIONS CONT…
Quality at the Source: This concept requires management to hold employees accountable for productivity in their own work center and calls for employees within a work center to hold each other accountable as well. We recommend you first train employees on how to minimize reworks and plan for fast changes. To motivate employees to embrace such accountability, Riordan will need to implement incentives that reward employees for quality and efficiency improvements. For example, awarding bonus money, gift cards, paid time off, etc. to employees and work teams with the fewest product defects or the least waste.
Kanban Pull System: Riordan should use a kanban pull system. In this system, the signal to produce additional parts comes from a downstream system; this ensures that parts are produced only when needed, eliminating unnecessary inventory. There should be a container at the plastic parts fabrication work center in which finished parts will be placed. The assembly center removes these parts from the container as needed. The fabrication center should only produce more plastic parts when their container is empty. A container at the assembly center will hold finished fans. The shipping center will remove fans from their container as needed, and the assembly center should only assemble more fans when this container is empty. A container at the shipping center will hold packaged fans that will be shipped or that customers will pick up. No more fans should be packaged until this container is empty.
NEW PROCESS DESIGN RECOMMENDATIONS CONT…
Assembly Line Flow and Job Shop: Riordan should use an assembly line flow to produce standard fans. Such a flow entails the production of discrete parts moving from one station to another in a controlled time and sequence (Chase et al., 2006). A paced assembly line flow through each of the five stages is the best fit for Riordan’s mass production of standardized fans because it will allow the most efficient production of large quantities of fans.
To produce customized fans, Riordan should use the job shop flow. This is the most efficient method for producing small batches of a large number of differentiated products requiring different processing steps (Chase et al., 2006). The job shop allows Riordan to design and test the customized fans during the pilot run, and determine necessary production steps for the larger order. Once the pilot is complete, the paced assembly line flow will allow the most efficient assembly of the complete custom fan order.
LEAN PRODUCTION
Applying lean production principles will help Riordan achieve optimum output by removing waste, reducing inventory, maximizing process flow, meeting customer expectations, empowering employees to design, pulling production from customer demand, minimizing reworks, planning for fast changes, negotiating a partnership with suppliers, and having a continuous improvement philosophy (Kaizen & GembaKaizen, 2012). Riordan should implement three specific lean production concepts: quality at the source, group technology, and a kanban pull system (Chase et al., 2006).
Group Technology: By grouping dissimilar machinery and other resources into work centers to work on products that have similar processing requirements, the group technology method allows these resources to work together to move product more efficiently and reduce production time. Riordan should develop three work centers. All machines and resources necessary to fabricate plastic fan parts should be grouped together to make up the first center; resources necessary to assemble all parts should be grouped into the second center; and all packaging materials and resources should be grouped into the third center.
Forecast Recommendations
AN ACCURATE SALES FORECAST IS ESSENTIAL TO THE SUCCESS OF RIORDAN’S NEW LEAN JIT PRODUCTION SYSTEM. IT IS ESPECIALLY IMPORTANT WHEN SETTING EXPECTATIONS FOR SUPPLIERS, SUCH AS THE ELECTRIC MOTOR VENDOR. BECAUSE DEMAND FOR FANS IS SEASONAL, RIORDAN SHOULD FORECAST MONTHLY ELECTRIC FAN DEMAND BASED ON DATA FROM THE SAME MONTH IN THE PREVIOUS YEAR. THE FORECAST WILL REVEAL HOW MANY FANS RIORDAN CAN EXPECT TO PRODUCE IN THE COMING YEAR. THE DEMAND FOR ELECTRIC MOTORS IS DEPENDENT UPON THE DEMAND FOR FANS—THIS MEANS THAT THE NUMBER OF FANS RIORDAN FORECASTS TO SELL WILL DETERMINE HOW MANY MOTORS THEY WILL NEED (CHASE ET AL., 2006).
TIME SERIES ANALYSIS: RIORDAN SHOULD USE A TIME SERIES ANALYSIS TO FORECAST DEMAND. SUCH ANALYSIS IS BASED ON THE IDEA THAT ONE CAN USE PAST DEMAND TO PREDICT FUTURE DEMAND (CHASE ET AL., 2006). BECAUSE DEMAND FOR FANS IS SEASONAL (HIGHER IN WARMER MONTHS; LOWER IN COOLER MONTHS), RIORDAN SHOULD FORECAST DEMAND MONTHLY BASED ON LONG-TERM DATA FROM THE SAME MONTH IN PREVIOUS YEARS. FOR EXAMPLE, WE FORECAST DEMAND FOR THIS MARCH BASED ON DEMAND FOR MARCH OVER THE PAST THREE YEARS.
LINEAR REGRESSION FORECAST: LINEAR REGRESSION IS APPLICABLE TO LONG-TERM FORECASTS FOR PRODUCT FAMILIES (I.E., ELECTRIC FANS), WHICH IS USUALLY A SMOOTH DEMAND (CHASE ET AL., 2006). IF DEMAND IS LINEAR, RIORDAN CAN USE THIS METHOD TO PREDICT THE DEMAND FOR FANS THIS COMING MARCH. RIORDAN’S INTRANET ONLY REPORTS DATA FOR ONE YEAR, SO WE USE THAT YEAR’S MARCH DATA (BASED ON 2005 SALES INVOICE) AND FILL IN ESTIMATES FOR THE MISSING DATA TO CALCULATE AN EXAMPLE FORECAST (UNIVERSITY OF PHOENIX, 2012). WE FORECAST DEMAND USING THE “FORECAST” FUNCTION IN MICROSOFT EXCEL (2007) AS SHOWN BELOW. RIORDAN MUST USE ACTUAL SALES DATA TO RUN A MORE ACCURATE FORECAST; THIS FORECAST SIMPLY GIVES MANAGEMENT AN EXAMPLE:
[pic]
THUS, RIORDAN CAN EXPECT TO PRODUCE 669 FANS THIS MARCH. BECAUSE MOTOR DEMAND DEPENDS ON FAN DEMAND, RIORDAN CAN ALSO INFORM THE SUPPLIER THAT THEY WILL NEED 669 MOTORS AND DETERMINE WHETHER THE SUPPLIER CAN MEET THIS DEMAND. supply chain recommendations cont…
TRANSPORTING FINISHED GOODS: ANOTHER ISSUE TO ADDRESS IS THE TRANSPORTATION OF FINISHED GOODS FROM HANGZHOU TO SHANGHAI.
CURRENTLY, THE PRODUCT IS PACKED ONTO A TRUCK AND DRIVEN TO THE PORT ON THE QIANTANG RIVER WHERE IT IS LOADED INTO SHIPPING CONTAINERS, WHICH ARE LOADED ONTO BARGES. THESE BARGES THEN GO TO THE PORT IN SHANGHAI WHERE THE CONTAINERS ARE OFFLOADED AND TRUCKED TO ANOTHER AREA OF THE PORT WHERE THEY ARE AGAIN LOADED ONTO SHIPS TO THEIR DESTINATION. BY CHANGING THE LOGISTICS OF HOW THE PRODUCTS ARE DELIVERED, DELIVERY TIME CAN INCREASE BY 25%. THE SHORT-TERM SOLUTION WOULD BE TO TRANSPORT THE PRODUCTS BY TRUCK TO SHANGHAI WHERE THEY ARE LOADED INTO THE CONTAINERS AND PUT DIRECTLY ONTO THE SHIP TO THE FINAL DESTINATION. ALTHOUGH COSTS MAY REMAIN COMPARABLE, THE TIME FACTOR WILL IMPROVE. A LONG-TERM GOAL INCLUDES MOVING THE ENTIRE PLANT TO SHANGHAI WHERE THE PRODUCT COULD BE PUT DIRECTLY ONTO THE
SHIPS.
OUTSOURCING AND OFF-SHORING: RIORDAN SHOULD CONSIDER OUTSOURCING (MOVING INTERNAL ORGANIZATION FUNCTIONS TO OUTSIDE PROVIDERS) CERTAIN SUPPLY CHAIN FUNCTIONS TO OFFSHORE PROVIDERS IN AN EFFORT TO SAVE COSTS BY TAKING ADVANTAGE OF GLOBAL OPPORTUNITIES (CHASE ET AL., 2006). OUTSOURCING IS A GREAT WAY TO DISTRIBUTE WORK AROUND THE WORLD THAT COULD BENEFIT FROM REGIONAL MARKETS, REDUCING OPERATING COSTS. RIORDAN SHOULD CONSIDER INTEGRATING THE DELIVERY PROCESS THAT HELPS IN THIS REGARD. ONE AVENUE RIORDAN SHOULD UTILIZE IS OUTSOURCING THE SUPPLY CHAIN TO A GLOBAL MARKET. OUTSOURCING CAN POTENTIALLY SAVE RIORDAN A GREAT DEAL OF MONEY. IT WOULD HELP RIORDAN CENTER ON ADDITIONAL BUSINESS ACTIVITIES AND NOT HAVE TO FOCUS ON THE OUTSOURCED JOBS SINCE IT IS BEING PROVIDED BY EXTERNAL EXPERTS; THIS, IN TURN, WOULD ELIMINATE SEVERAL FACETS OF THE SUPPLY-CHAIN. OUTSOURCING WOULD BE A GREAT WAY (MONETARILY) TO DISTRIBUTE WORK GLOBALLY, IN WHICH THE COMPANY WOULD TAKE ADVANTAGE OF REGIONAL MARKETS WHILE REDUCING OPERATIONAL COSTS.
WHILE TAKING ADVANTAGE OF ANY GLOBAL OPPORTUNITIES, RIORDAN MUST CAREFULLY RESEARCH POTENTIAL LOCATIONS, TRADERS, AND CONSUMERS. THE COMPANY SHOULD REVIEW THE DIFFERENT MARKET CONDITIONS, LAWS, ETC., AND CAREFULLY WEIGH THE RISKS AND BENEFITS OF EACH OPTION.
RIORDAN MANUFACTURING, P. 4
RIORDAN MANUFACTURING, P. 6
RIORDAN MANUFACTURING, P. 7
MRP RECOMMENDATIONS
Riordan currently uses the material requirements planning (MRP) system to inventory materials needed for production. MRP also has a scheduling module (master production schedule or MPS) that identifies what materials are needed and when they are needed. As Riordan transitions to a new process using the just-in-time (JIT) method, they will need to upgrade technology to connect resources of the organization into one system that monitors each step of the order, from the order to point of delivery. This can be achieved using an MRPII system. This system is valuable to Riordan because of the high volume of fans assembled, and it works effectively with the JIT systems (Chase et al., 2006). Putting aside the system’s ability to minimize inventory on hand, automate the master schedule, prepare material purchases, and produce financial figures, it also has a built-in engineering system that has a product-data and lot number control system. Product-data control provides information of product, which includes producing the Bill of Material (BOM). The MRPII system enhances the new process design for Riordan. In the new multiple stage process, Riordan divides each process stage that is viewed separately in the new MRP system. Each step in the process has its own job and work order control, inventory management, purchasing/receiving and quality control system available in real time. The MRPII system is the ultimate investment for Riordan to excel in efficiency, lean production, and cost effectiveness.
MPS: As Riordan moves to a JIT process, the MPS is the most applicable component of the MRP. The MPS schedules the current orders due, and schedules in what week to produce ordered fans based on available resources and capacity. The following sample MPS shows how many fans Riordan should produce in the weeks leading up to March to meet forecasted demand of 669 fans:
|Week |4 |5 |
|Cooling Fans |30 |5 |
|Desk Fans |20 |5 |
|Window Fans |10 |2 |
|Custom Fans |0 |0 |
IMPLEMENTATION
Project Team: Putting these recommendations for a new process design into effect will be a highly involved task. Riordan should assemble a team of people charged with coordinating, implementing, and monitoring the changes as well as ensuring all Riordan workers comply. This implementation task force should consist of representatives from each affected department (parts ordering and supplier relations, assembly, shipping, etc.) to ensure constant communication between management and all impacted Riordan employees. They should meet weekly to ensure that the project stays on task. These team members will meet with other leaders and peers within Riordan to gain feedback from them to incorporate into their team meetings. The team will outline the needed tasks to implement these changes and designate implementation timelines for each department.
Process Design Adherence: Riordan must adhere to the aforementioned MRP recommendations to ensure operations run as streamlined as possible. The following Gantt chart more clearly illustrates the design process by showing the time involved in fan production and the sequence of activities (Chase et al., 2006):
[pic]
IMPLEMENTATION CONT…
Other Implementation Considerations: Production must measure their capacity utilization rate for their strategic capacity planning. The economies of scale concept should be used to allow Riordan to track cost per fan while increasing output levels by using the experience curve. Riordan’s greatest production processes will be evident from this because it increases experience. This will be an ongoing project managed through the MRP until Riordan has minimized costs while meeting fan demand. This analysis will enable Riordan to match resource capabilities and keep work-in-process and finished goods inventory to a minimum. It will allow Riordan to make future investment decisions to meet long-term demand requirements (Chase et al., 2006).
CONCLUSION
Riordan’s goal is to move to a lean process design for its electric fans in order to reduce costs and increase efficiency. By following these recommendations, Riordan will be well on its way to achieving this goal. The new process design will allow Riordan to meet customer demand for fans while reducing inventory costs. The new process will also please customers by ensuring on-time delivery and improving fan quality. More satisfied customers will lead to an increase in fan sales; Riordan will meet this increased demand with a more efficient and streamlined process. As a result, costs will decrease and profits will increase.
RIORDAN MANUFACTURING, P. 9
FEBRUARY 13, 2012
FEBRUARY 13, 2012
RIORDAN MANUFACTURING, P. 10
February 13, 2012
Riordan Manufacturing
Learning Team C has completed the analysis of Riordan Manufacturing’s electric fan design process and has developed a proposal outlining the changes that need to be implemented. The team is proposing to focus on total quality management (TQM); this will allow Riordan to remain focused and efficient in areas of opportunity, and to excel in all aspects of the electric fans that are important to customers. The team’s recommendation is to use quality at the source that will address the following scenarios: proper training for employees, holding employees accountable, and incentives to help motivate employees. TQM will also be implemented within the supply chain including suppliers and transportation; this will decrease costs and improve on-time delivery to customers, which will increase sales.
With the new process transitioning to the just-in-time (JIT) method, the technology portion of the organization will need to be upgraded to a system that monitors from the point of order to the point of delivery. …show more content…
The company will transition from a basic material requirements plan (MRP) to an MRPII system that will allow Riordan to excel in efficiency, lean production, and cost effectiveness.
Applying lean production principles will aid in removing waste, reducing inventory, maximizing process flow, and meeting customer expectations. Communication is key for the organization; this will allow management to empower the employees with a company-wide initiative of continuous improvement. The recommendation is to use make-to-order for standard and custom orders to excel in the customer service arena that will not only retain current customers but also attain new customers.
The supply chain recommendations will allow Riordan to realize a 25% increase in on-time delivery, which will increase the bottom line. Taking advantage of global opportunities and outsourcing internal organization functions to outside providers can reduce operating costs. It is also recommended that Riordan find a clean/green supplier that provides a 99% on-time guarantee for parts. This will be made possible by using an incentive for on-time deliveries and a penalty for late deliveries.
We have included a variety of charts that reinforce Learning Team C’s recommendations: flow chart of the new process (pg. 1), forecast example (pg. 4), master production schedule (MPS) example (pg. 7), sample inventory chart (pg. 8), and Gantt chart (pg. 9).
Please find enclosed our complete proposal detailing recommended changes to Riordan’s process design for electric fan production. This aggregate operations plan coordinates all aspects of production to improve process quality and efficiency.
Sincerely,
Learning Team C, University of Phoenix
| |
References
Chase, R.B., Jacobs, F.R., & Aquilano, N.J. (2006). Operations management for competitive advantage (11th ed.). New York, NY: McGraw Hill/Irwin.
Kaizen & GembaKaizen. (2012). Kaizen Institute. Retrieved from http://us.kaizen.com
Microsoft Excel (2007) [Computer Software]. Retrieved from http://www.microsoft.com
University of Phoenix. (2012). Riordan Manufacturing Virtual Organization. Retrieved from University of Phoenix, OPS571 - Operations Management website.
|Content and Development |Points Earned |
|11 Points |8 out of 8 |
| |Additional Comments: |
|All key elements of the assignment are covered in a substantive way. |See my comments in the body of the text. |
|The proposal includes the following: | |
|An MRP for the manufacturing of the Riordan electric fans | |
|A new process design for the production of the Riordan electric fans | |
|A supply chain for the Riordan electric fans | |
|A production forecast for the Riordan electric fans | |
|An implementation plan, including a Gantt chart of the design process, | |
|for the Riordan electric fans | |
|A cover letter detailing how the student will coordinate aggregate | |
|operations planning and TQM for the Riordan electric fans | |
|The proposal is no more than 1,050 words in length. | |
|The content is comprehensive, accurate, and persuasive. | |
|The paper develops a central theme or idea directed toward the | |
|appropriate audience. | |
|The paper links theory to relevant examples and uses the vocabulary of | |
|the theory correctly. | |
|Major points are stated clearly, are organized logically, and are | |
|supported by specific details, examples, or analysis. | |
|The introduction provides sufficient background on the topic and | |
|previews major points. | |
|The conclusion is logical, flows from the body of the paper, and | |
|reviews the major points. | |
|Readability and Style |Points Earned |
|2 Points |1.5 out of 1.5 |
| |Additional Comments: |
|Paragraph transitions are present, logical, and maintain the flow |See my comments in the body of the text. |
|throughout the paper. | |
|The tone is appropriate to the content and assignment. | |
|Sentences are complete, clear, and concise. | |
|Sentences are well constructed, strong, and varied.Sentence transitions| |
|are present and maintain the flow of thought. | |
|Mechanics |Points Earned |
|1.5 Points |1.5 out of 1.5 |
| |Additional Comments: |
|The paper—including the title page, reference page, tables, and |See my additional comments in the body of the text. |
|appendixes—follows APA formatting guidelines, and the requirements | |
|noted in the Instructor Policies document. | |
|The citation/reference requirements noted in the Instructor Policies | |
|document are met and those citations/references of original works | |
|within the body of the paper follow APA guidelines. | |
|The paper is laid out with effective use of headings, font styles, and | |
|white space. | |
|The paper was submitted in a single MS Word document. | |
|A copy of the Turnitin report was submitted with the assignment. | |
|Rules of grammar, usage, and punctuation are followed. | |
|Spelling is correct. | |
|Total |Points Earned |
|11 Points |11 out of 11 |
Overall Comments:
Team,
Outstanding! You did a superb job with this assignment, both with content and presentation. This shows how it should be done. Wow!
-----------------------
PRESENTED BY LEARNING TEAM C, UNIVERSITY OF PHOENIX
[pic]
[pic]
PROCESS DESIGN
A PROPOSAL TO: RIORDAN MANUFACTURING
FEBRUARY 13, 2012
NEW PROCESS DESIGN RECOMMENDATIONS
NEW PROCESS DESIGN
Multiple Stages: Riordan should divide electric fan production into five stages—purchasing motors, fabrication of plastic fan parts, assembly of all parts, packaging of finished fans, and customer pick-up or shipping (flow chart pictured below). Dividing fan production into multiple stages allows closer examination of each part of the process, making it easier to identify constraints.
[pic]
Make-to-Order: To promote lean production Riordan should primarily use a make-to-order process (Chase, Jacobs, & Aquilano, 2006). Following this method, Riordan will produce most fans, standard or customized, only in response to orders placed. However, Riordan should maintain flexibility in case of an unforeseen boom in sales. For this reason, they should maintain a small safety stock of fan parts (see supply chain section for specific recommendations). Riordan will notify clients of the new make-to-order process, encouraging them to place orders well in advance to ensure resources are available to service their needs.
Pacing: Riordan’s standardized fan orders should be filled using a paced process, setting time limits for each production stage (Chase et al., 2006). This will ensure the fans move through production in a timely manner, providing on-time delivery to customers. Nonpaced production is best for the customized fan initial pilot runs; the experimental nature of these pilots does not allow for pacing. However, once the pilot is complete, operators will have a clearer idea of timing and can implement pacing in the production of the complete custom order.
LEAN MANUFACTURING
RIORDAN MANUFACTURING, P 1
RIORDAN MANUFACTURING, P. 2
FEBRUARY 13, 2012
FEBRUARY 13, 2012 supply chain recommendations
THE PROCESS OF RIORDAN’S SUPPLY CHAIN IS ESSENTIAL FOR SUCCESS. "THIS PROCESS ESSENTIALLY INVOLVES THE TRANSFORMATION OF RAW MATERIALS OR THE FLOW OF SEMI-FINISHED PRODUCTS FROM SUPPLIERS AND DISTRIBUTE TO CUSTOMERS," (CHASE ET AL., 2006). IN TODAY 'S MARKET, COMPANIES SUCH AS RIORDAN WILL BE COMPETITIVE IF THEY FIND NEW AND INNOVATIVE WAYS TO TRANSFORM THEIR SUPPLY CHAIN TO IMPROVE EFFICIENCY, MAKING IT A COMPETITIVE ADVANTAGE OR STRATEGY.
ELECTRIC MOTOR CHANGES: A PRIMARY GOAL OF THE MANAGEMENT TEAM IS TO HAVE AN EFFICIENT SUPPLY CHAIN THAT USES OPTIMIZED TECHNIQUES TO GET THE BEST CAPACITY UTILIZATION IN PRODUCTION AND DISTRIBUTION (CHASE ET AL., 2006). TO ACCOMPLISH THIS, THE COMPANY MUST OBTAIN A NEW SUPPLIER FOR THEIR ELECTRIC FANS. PRESENTLY, THE PLANT IS USING YIN MOTOR COMPANY, WHICH HAS ONLY A 93% ON-TIME RATE FOR DELIVERY. ALSO THE COMPANY IS SUSPECTED TO BE THE CAUSE OF THE TOWN’S WATER POLLUTION, WHICH IS CAUSING MANY PEOPLE, INCLUDING CHILDREN, TO BE HOSPITALIZED (UNIVERSITY OF PHOENIX, 2012). RIORDAN MUST FIND A CLEAN/GREEN SUPPLIER WITH A 99% ON-TIME GUARANTEE FOR PARTS. THE PLANT IS CURRENTLY NEGOTIATING WITH A NEW SUPPLIER THAT WILL GUARANTEE THE ON-TIME RATE AND IN EXCHANGE, RIORDAN IS WILLING TO RE-NEGOTIATE THEIR PAYMENT CYCLE. AT THE MOMENT, THE COMPANY HAS NET-45 DAYS WITH ALL SUPPLIERS. TO GUARANTEE ON-TIME DELIVERY, RIORDAN IS WILLING TO PAY NET-10 DAYS IF THE SHIPMENT IS RECEIVED AHEAD OF SCHEDULE. SHOULD THE SUPPLIER BE DELAYED, THEY WILL INCUR A PENALTY OF 1% FOR EACH DAY THE PRODUCT IS NOT DELIVERED ON-TIME.
SAFETY STOCK: RIORDAN SHOULD MAINTAIN A SMALL SAFETY STOCK OF FAN PARTS TO MAINTAIN FLEXIBILITY IN CASE OF UNFORESEEN BOOMS IN DEMAND. HOWEVER, THIS NEED FOR SAFETY STOCK MUST BE CAREFULLY BALANCED WITH THE NEED TO MAINTAIN LEAN PRODUCTION AND LOW INVENTORY COSTS. CONSIDER THE SAFETY STOCK OF POLYMER FOR EXAMPLE. AT THIS TIME, THE SAFETY STOCK IS KEPT AT A FOUR-WEEK SUPPLY, WHICH SEEMS EXCESSIVE BECAUSE THE POLYMER IS RECEIVED LOCALLY WITHOUT ANY PROBLEMS AND WITHIN ONLY A FEW DAYS. THE PLANT WILL KEEP A TWO-WEEK SUPPLY OF THE POLYMER ON HAND REDUCING SAFETY STOCK AND THE INVENTORY COSTS BY 50%.
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NEW PROCESS DESIGN RECOMMENDATIONS CONT…
Quality at the Source: This concept requires management to hold employees accountable for productivity in their own work center and calls for employees within a work center to hold each other accountable as well. We recommend you first train employees on how to minimize reworks and plan for fast changes. To motivate employees to embrace such accountability, Riordan will need to implement incentives that reward employees for quality and efficiency improvements. For example, awarding bonus money, gift cards, paid time off, etc. to employees and work teams with the fewest product defects or the least waste.
Kanban Pull System: Riordan should use a kanban pull system. In this system, the signal to produce additional parts comes from a downstream system; this ensures that parts are produced only when needed, eliminating unnecessary inventory. There should be a container at the plastic parts fabrication work center in which finished parts will be placed. The assembly center removes these parts from the container as needed. The fabrication center should only produce more plastic parts when their container is empty. A container at the assembly center will hold finished fans. The shipping center will remove fans from their container as needed, and the assembly center should only assemble more fans when this container is empty. A container at the shipping center will hold packaged fans that will be shipped or that customers will pick up. No more fans should be packaged until this container is empty.
NEW PROCESS DESIGN RECOMMENDATIONS CONT…
Assembly Line Flow and Job Shop: Riordan should use an assembly line flow to produce standard fans. Such a flow entails the production of discrete parts moving from one station to another in a controlled time and sequence (Chase et al., 2006). A paced assembly line flow through each of the five stages is the best fit for Riordan’s mass production of standardized fans because it will allow the most efficient production of large quantities of fans.
To produce customized fans, Riordan should use the job shop flow. This is the most efficient method for producing small batches of a large number of differentiated products requiring different processing steps (Chase et al., 2006). The job shop allows Riordan to design and test the customized fans during the pilot run, and determine necessary production steps for the larger order. Once the pilot is complete, the paced assembly line flow will allow the most efficient assembly of the complete custom fan order.
LEAN PRODUCTION
Applying lean production principles will help Riordan achieve optimum output by removing waste, reducing inventory, maximizing process flow, meeting customer expectations, empowering employees to design, pulling production from customer demand, minimizing reworks, planning for fast changes, negotiating a partnership with suppliers, and having a continuous improvement philosophy (Kaizen & GembaKaizen, 2012). Riordan should implement three specific lean production concepts: quality at the source, group technology, and a kanban pull system (Chase et al., 2006).
Group Technology: By grouping dissimilar machinery and other resources into work centers to work on products that have similar processing requirements, the group technology method allows these resources to work together to move product more efficiently and reduce production time. Riordan should develop three work centers. All machines and resources necessary to fabricate plastic fan parts should be grouped together to make up the first center; resources necessary to assemble all parts should be grouped into the second center; and all packaging materials and resources should be grouped into the third center.
Forecast Recommendations
AN ACCURATE SALES FORECAST IS ESSENTIAL TO THE SUCCESS OF RIORDAN’S NEW LEAN JIT PRODUCTION SYSTEM. IT IS ESPECIALLY IMPORTANT WHEN SETTING EXPECTATIONS FOR SUPPLIERS, SUCH AS THE ELECTRIC MOTOR VENDOR. BECAUSE DEMAND FOR FANS IS SEASONAL, RIORDAN SHOULD FORECAST MONTHLY ELECTRIC FAN DEMAND BASED ON DATA FROM THE SAME MONTH IN THE PREVIOUS YEAR. THE FORECAST WILL REVEAL HOW MANY FANS RIORDAN CAN EXPECT TO PRODUCE IN THE COMING YEAR. THE DEMAND FOR ELECTRIC MOTORS IS DEPENDENT UPON THE DEMAND FOR FANS—THIS MEANS THAT THE NUMBER OF FANS RIORDAN FORECASTS TO SELL WILL DETERMINE HOW MANY MOTORS THEY WILL NEED (CHASE ET AL., 2006).
TIME SERIES ANALYSIS: RIORDAN SHOULD USE A TIME SERIES ANALYSIS TO FORECAST DEMAND. SUCH ANALYSIS IS BASED ON THE IDEA THAT ONE CAN USE PAST DEMAND TO PREDICT FUTURE DEMAND (CHASE ET AL., 2006). BECAUSE DEMAND FOR FANS IS SEASONAL (HIGHER IN WARMER MONTHS; LOWER IN COOLER MONTHS), RIORDAN SHOULD FORECAST DEMAND MONTHLY BASED ON LONG-TERM DATA FROM THE SAME MONTH IN PREVIOUS YEARS. FOR EXAMPLE, WE FORECAST DEMAND FOR THIS MARCH BASED ON DEMAND FOR MARCH OVER THE PAST THREE YEARS.
LINEAR REGRESSION FORECAST: LINEAR REGRESSION IS APPLICABLE TO LONG-TERM FORECASTS FOR PRODUCT FAMILIES (I.E., ELECTRIC FANS), WHICH IS USUALLY A SMOOTH DEMAND (CHASE ET AL., 2006). IF DEMAND IS LINEAR, RIORDAN CAN USE THIS METHOD TO PREDICT THE DEMAND FOR FANS THIS COMING MARCH. RIORDAN’S INTRANET ONLY REPORTS DATA FOR ONE YEAR, SO WE USE THAT YEAR’S MARCH DATA (BASED ON 2005 SALES INVOICE) AND FILL IN ESTIMATES FOR THE MISSING DATA TO CALCULATE AN EXAMPLE FORECAST (UNIVERSITY OF PHOENIX, 2012). WE FORECAST DEMAND USING THE “FORECAST” FUNCTION IN MICROSOFT EXCEL (2007) AS SHOWN BELOW. RIORDAN MUST USE ACTUAL SALES DATA TO RUN A MORE ACCURATE FORECAST; THIS FORECAST SIMPLY GIVES MANAGEMENT AN EXAMPLE:
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THUS, RIORDAN CAN EXPECT TO PRODUCE 669 FANS THIS MARCH. BECAUSE MOTOR DEMAND DEPENDS ON FAN DEMAND, RIORDAN CAN ALSO INFORM THE SUPPLIER THAT THEY WILL NEED 669 MOTORS AND DETERMINE WHETHER THE SUPPLIER CAN MEET THIS DEMAND. supply chain recommendations cont…
TRANSPORTING FINISHED GOODS: ANOTHER ISSUE TO ADDRESS IS THE TRANSPORTATION OF FINISHED GOODS FROM HANGZHOU TO SHANGHAI.
CURRENTLY, THE PRODUCT IS PACKED ONTO A TRUCK AND DRIVEN TO THE PORT ON THE QIANTANG RIVER WHERE IT IS LOADED INTO SHIPPING CONTAINERS, WHICH ARE LOADED ONTO BARGES. THESE BARGES THEN GO TO THE PORT IN SHANGHAI WHERE THE CONTAINERS ARE OFFLOADED AND TRUCKED TO ANOTHER AREA OF THE PORT WHERE THEY ARE AGAIN LOADED ONTO SHIPS TO THEIR DESTINATION. BY CHANGING THE LOGISTICS OF HOW THE PRODUCTS ARE DELIVERED, DELIVERY TIME CAN INCREASE BY 25%. THE SHORT-TERM SOLUTION WOULD BE TO TRANSPORT THE PRODUCTS BY TRUCK TO SHANGHAI WHERE THEY ARE LOADED INTO THE CONTAINERS AND PUT DIRECTLY ONTO THE SHIP TO THE FINAL DESTINATION. ALTHOUGH COSTS MAY REMAIN COMPARABLE, THE TIME FACTOR WILL IMPROVE. A LONG-TERM GOAL INCLUDES MOVING THE ENTIRE PLANT TO SHANGHAI WHERE THE PRODUCT COULD BE PUT DIRECTLY ONTO THE
SHIPS.
OUTSOURCING AND OFF-SHORING: RIORDAN SHOULD CONSIDER OUTSOURCING (MOVING INTERNAL ORGANIZATION FUNCTIONS TO OUTSIDE PROVIDERS) CERTAIN SUPPLY CHAIN FUNCTIONS TO OFFSHORE PROVIDERS IN AN EFFORT TO SAVE COSTS BY TAKING ADVANTAGE OF GLOBAL OPPORTUNITIES (CHASE ET AL., 2006). OUTSOURCING IS A GREAT WAY TO DISTRIBUTE WORK AROUND THE WORLD THAT COULD BENEFIT FROM REGIONAL MARKETS, REDUCING OPERATING COSTS. RIORDAN SHOULD CONSIDER INTEGRATING THE DELIVERY PROCESS THAT HELPS IN THIS REGARD. ONE AVENUE RIORDAN SHOULD UTILIZE IS OUTSOURCING THE SUPPLY CHAIN TO A GLOBAL MARKET. OUTSOURCING CAN POTENTIALLY SAVE RIORDAN A GREAT DEAL OF MONEY. IT WOULD HELP RIORDAN CENTER ON ADDITIONAL BUSINESS ACTIVITIES AND NOT HAVE TO FOCUS ON THE OUTSOURCED JOBS SINCE IT IS BEING PROVIDED BY EXTERNAL EXPERTS; THIS, IN TURN, WOULD ELIMINATE SEVERAL FACETS OF THE SUPPLY-CHAIN. OUTSOURCING WOULD BE A GREAT WAY (MONETARILY) TO DISTRIBUTE WORK GLOBALLY, IN WHICH THE COMPANY WOULD TAKE ADVANTAGE OF REGIONAL MARKETS WHILE REDUCING OPERATIONAL COSTS.
WHILE TAKING ADVANTAGE OF ANY GLOBAL OPPORTUNITIES, RIORDAN MUST CAREFULLY RESEARCH POTENTIAL LOCATIONS, TRADERS, AND CONSUMERS. THE COMPANY SHOULD REVIEW THE DIFFERENT MARKET CONDITIONS, LAWS, ETC., AND CAREFULLY WEIGH THE RISKS AND BENEFITS OF EACH OPTION.
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MRP RECOMMENDATIONS
Riordan currently uses the material requirements planning (MRP) system to inventory materials needed for production. MRP also has a scheduling module (master production schedule or MPS) that identifies what materials are needed and when they are needed. As Riordan transitions to a new process using the just-in-time (JIT) method, they will need to upgrade technology to connect resources of the organization into one system that monitors each step of the order, from the order to point of delivery. This can be achieved using an MRPII system. This system is valuable to Riordan because of the high volume of fans assembled, and it works effectively with the JIT systems (Chase et al., 2006). Putting aside the system’s ability to minimize inventory on hand, automate the master schedule, prepare material purchases, and produce financial figures, it also has a built-in engineering system that has a product-data and lot number control system. Product-data control provides information of product, which includes producing the Bill of Material (BOM). The MRPII system enhances the new process design for Riordan. In the new multiple stage process, Riordan divides each process stage that is viewed separately in the new MRP system. Each step in the process has its own job and work order control, inventory management, purchasing/receiving and quality control system available in real time. The MRPII system is the ultimate investment for Riordan to excel in efficiency, lean production, and cost effectiveness.
MPS: As Riordan moves to a JIT process, the MPS is the most applicable component of the MRP. The MPS schedules the current orders due, and schedules in what week to produce ordered fans based on available resources and capacity. The following sample MPS shows how many fans Riordan should produce in the weeks leading up to March to meet forecasted demand of 669 fans:
|Week |4 |5 |
|Cooling Fans |30 |5 |
|Desk Fans |20 |5 |
|Window Fans |10 |2 |
|Custom Fans |0 |0 |
IMPLEMENTATION
Project Team: Putting these recommendations for a new process design into effect will be a highly involved task. Riordan should assemble a team of people charged with coordinating, implementing, and monitoring the changes as well as ensuring all Riordan workers comply. This implementation task force should consist of representatives from each affected department (parts ordering and supplier relations, assembly, shipping, etc.) to ensure constant communication between management and all impacted Riordan employees. They should meet weekly to ensure that the project stays on task. These team members will meet with other leaders and peers within Riordan to gain feedback from them to incorporate into their team meetings. The team will outline the needed tasks to implement these changes and designate implementation timelines for each department.
Process Design Adherence: Riordan must adhere to the aforementioned MRP recommendations to ensure operations run as streamlined as possible. The following Gantt chart more clearly illustrates the design process by showing the time involved in fan production and the sequence of activities (Chase et al., 2006):
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IMPLEMENTATION CONT…
Other Implementation Considerations: Production must measure their capacity utilization rate for their strategic capacity planning. The economies of scale concept should be used to allow Riordan to track cost per fan while increasing output levels by using the experience curve. Riordan’s greatest production processes will be evident from this because it increases experience. This will be an ongoing project managed through the MRP until Riordan has minimized costs while meeting fan demand. This analysis will enable Riordan to match resource capabilities and keep work-in-process and finished goods inventory to a minimum. It will allow Riordan to make future investment decisions to meet long-term demand requirements (Chase et al., 2006).
CONCLUSION
Riordan’s goal is to move to a lean process design for its electric fans in order to reduce costs and increase efficiency. By following these recommendations, Riordan will be well on its way to achieving this goal. The new process design will allow Riordan to meet customer demand for fans while reducing inventory costs. The new process will also please customers by ensuring on-time delivery and improving fan quality. More satisfied customers will lead to an increase in fan sales; Riordan will meet this increased demand with a more efficient and streamlined process. As a result, costs will decrease and profits will increase.
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