Guillermo_Furniture_Store_Analysis

Production Plan for Riordan Manufacturing, Inc Tamara La’ Bordeaux, Mabel Ileogben, Terry Powell, Tyrone Sheffield Operations Management 571 February 10, 2010 Dr. Robert Amason Introduction Production Plan for Riordan Manufacturing, Inc Riordan Manufacturing wholly owned by Riordan Industries with revenues in excess of $1 billion, Riordan Manufacturing is a global plastics producer with projected annual earnings of $46 million. Riordan production is divided among three plants in Albany, Georgia; Pontiac, Michigan; and Hangzhou, Chain with research and development, and corporate headquarters located in San Jose, California. Riordan’s production divisions include plastic beverage containers, custom plastic parts, and plastic fan parts with major customers in the automotive parts, aircraft, and appliance manufacturing industries, and beverage makers and bottlers, and the department of defense one of the company major customers (Apollo Group, Inc, 2006). This document analyzes Riordan’s electric fan production process currently in use at the Chain plant, and proposes a new supply Chain procedure and process design to include strategic capacity planning and lean production. Riordan current process as a decentralized unit manufactures electronic fans for sale to purchasers around the globe. Lean Production According to Chase, Jacobs, and Aquilano, lean production is an integrated set of activities designed to achieve high volume production using minimal inventories of raw materials, work in process, and finished goods (Chase, Jacobs, & Aquilano, 2008). In addition, lean production is based on the logic that nothing will be produced until it is needed. Production need is created by actual demand for the product. Just in time (JIT) is the backbone of the lean production system. JIT purchasing aims in making sure all the required raw materials are in house when they are required. Manufacturing the goods when they are needed is the aim of JIT manufacturing. The need to manufacture is created by the customer demand for the organization, and by the next activity in the manufacturing floor. Production is carried out with no interruptions and with no work in progress. This enables the smooth manufacturing process and flexibility. Monthly Pickup Time Design Riordan Manufacturing’s inventory process has many areas that require improvement, beginning with the receipt of raw materials at the loading lock to logging the inventory of the product shipments. This will implement a cleaner process, which allows little room for error. To save time on the loading docks once the raw materials are received, the receiving area supervisors should be given a hand held computer device to retrieve scheduled orders and communicate directly with the receiving area. Upon receipt of the delivery, receiving area supervisors retrieves all scheduled orders with the vendor name and the expected quantity to be received. If the shipment matches what the receiving area supervisor has on the hand held device, the receiving order is complete and the information is electronically sent to the inventory clerk to add into inventory. The system generates barcode tags to be attached to each shipment for tracking inventory. Product/Bar Codes A bar code is a machine readable representation of data on products. Riordan needs to have barcodes on its product. The receiving supervisor will scan the invoice that is linked to the system that includes shipment details on inventory to be received. The barcode will relate to an order that has been placed and the arrival of the product is logged. The bar code data will transfer to the finance or accounting department to ensure proper payment for materials received. The receiving supervisor can have a visual scan of the shipment to ensure size and quantity is within reason of the information displayed on the hand held device. Duty Classification The Harmonized Tariff Schedule (HTS) classification of goods is a determinant in the amount of customs duties and taxes the company pays for each shipment. Proper customs classification depends on many United States and international trade laws and regulations. The purpose for Riordan to have a classification code is to prevent arbitrary classifications by national and international customs organizations and provide certainty for traders involved in international trade. At the international and national level, Riordan needs to apply six digit codes for its product. In addition, here are suggestions Riordan can adopt to improve classification practices: • Don’t leave product classifications solely to custom brokers. Riordan can be liable for the wrong tariff classification. • Create a classification database. • Manage the customs broker by establishing written policies and procedures with them. • Monitor customs broker performance and entries. • Test the classification process annually. Receiving Department. Forecasted Sales. The Receiving Department brings in the raw materials used to produce the product. The raw materials range from electricity and cardboard to high-density polyethylene (HDPE) plastic pellets and assorted motor fans. All product inputs are handled by the Receiving Department. The Receiving Department uses the sales forecasts to predict market needs or demands, to ensure an adequate amount of inputs to order. Currently, Riordan uses forecasted sales which are based on average sales over the past three years and extrapolating the numbers into the next year. This method of production can in the long-run hurt Riordan accurately to foresee true demand needs in relation to sales. Averaging out the prior three years may not account for spikes or drops in sales over the chosen time-period. The forecasted sales may correlate to a skewed representation of sales figures, which may lead to overproduction or underproduction. A solution to the Riordan sales forecasting method would be to use only the sales of the prior year to forecast future demand numbers for production. Riordan’s current theory, “History will repeat itself” cannot be proven, and therefore must be rationalized to ensure precise sales figures for future production levels (Group, 2008). Molding – Shipping Department Waste. The processes carried out, from the receiving of raw materials, to the packaging and shipping of finished motorized fans, can be run more efficiently. Pollution and hazardous waste byproducts must be handled with a heightened level of importance. Riordan has run the plant for several years without addressing the issue of pollution. To help ensure the betterment of plant operations in each department sector, waste products must be treated with extreme caution and drained into correct sewage as deemed by the Safety Board. To save electricity and heating, all light-bulbs will be switched to fluorescents, to reduce lighting expenses by 20% and decrease waste. In addition, when a department is unoccupied, sensors will turn off light bulbs to likewise save electricity. Strategic Capacity Planning In strategic capacity planning operations managers seek to optimize the use of the organizations resources. This is accomplished through identifying the capacity of the organizations processes. Specifically, these managers will monitor the capacity of aspects like equipment, labor, and facilities. The capacity and appropriate operating level for various processes in the operation need evaluating to assure that the organizations long term mission goals are met. Capacity is a key concept in the notion of strategic planning. Operations managers seek to align the inputs and outputs to maintain profitability within the organization. Capacity Planning is essential in developing profitable strategic plans. Capacity plans are classified in several views. Specifically, capacity planning is viewed in three ranges, long range, intermediate range, and short range. First, long range plans encompass capacity goals and requirements for locations, equipment, and facilities. Next, intermediate range plans assess and develop goals personnel; these include hiring and release of employees. These also include the purchases of equipment and supplies. In addition, the need for any subcontracting is evaluated during this stage. The time range for intermediate range planning is for six months to a year and a half. This time frame may require monthly or quarterly figures and outlooks. Last, there is short range planning. The time range for this type of planning is less than five weeks. The processes that are most related to this planning range are employee hours, personnel assignments and supply chain routes. Capacity Planning also seeks to manage operations at the best operating level. This is the level of operation that maximizes profit by minimizing fixed and variable cost. Strategic plans should also encompass capacity flexibility. This allows the organization to vary the amount of production and change the focus from one product to another. Additionally, capacity cushions are used in some processes to allow for rapid shifts in levels of production (Aquilano, Chase, & Jacobs, 2006 chap, 11). Riordan Logistics After reviewing the Riordan Model, broker handling was identified as a potential bottleneck. Strategic planning would seek to eliminate the possibility materials and prototypes of new fans from may experience delay. Operations managers would seek to greatly reduce broker handling time. This is accomplished by preparing product paperwork to minimize wait time. Next, the organization should develop guidelines to assist employees in processing products through brokers and identifying customs requirements. Specifically, several training programs are required to develop employee knowledge in these areas. It is also recommended that the organization attempt to employ a broker with global locations in China and the U.S. This would greatly facilitate the movement of Riordan products. Conclusion For Riordan Manufacturing to improve on the current production process, the company management will need to review its current operational procedure by measuring and analyzing the best possible outcome for the company and their customers. Reorganizing and implementing a new strategic capacity planning and lean production in any manufacturing organization has the potential of increasing the efficiency of its current work flow process. Currently, Riordan manufacturing standard orders are filled from a make to stock inventory while their custom orders are filled using a different approach entirely. Standardizing their supply orders approach will not only benefit the organization in minimizing waste within the production process but will ultimately increased revenue, customer satisfaction and happy employees. References Chase R.B., Jacobs, F.R., & Aquilano, N.J. (2006). Operations Management for Competitive Advantage (11th ed). New York: McGraw Hill/ Irwin. Group, A. (2008). Operations. Retrieved February 8, 2010, from Riordan Simulation: https://ecampus.phoenix.edu/secure/aapd/cist/vop/business/riordan/Ops/RioOps002.htm Siems, T. F. (2005, January). Supply Chain Management: The Science of Better, Faster, Cheaper . Retrieved February 8, 2010, from Federal Reserve Bank of Dallas: http://www.dallasfed.org/research/indepth/2005/id0501.html Thai-American Business. Volume 5/ 2008. Pg. 34-5.