Ops_571_Week_6

New Process Design The operational focus at Riordan’s China plant is on quantity concerning the production of the fans. The necessary amount of inventory is maintained through the production forecast. Nonetheless, the amount of inventory is not adequately measured because only 93% of deliveries are in a timely manner. Therefore, Riordan should seek substitute manufacturers in addition to its current unit to have an adequate amount of inventory to avoid delays in production. This would help the company schedule and deliver more efficiently. Riordan should also keep more inventories in its units, however; this will increase the company’s inventory cost. Riordan could minimize the cost by reducing the amount of plastic polymer in its inventory because it is easily obtainable. Additionally, Riordan will need to update its MRP system so it will have the capacity to assist in numerous stages within the production cycle. A newer system would ensure that resources are optimally used, which in turn will increase its efficiency, especially concerning production time. Material Requirements Planning System The current supply chain that Riordan has in Hangzhou, China has only a 93% delivery time to its customers. Because Riordan takes pride in, and the company policy is to provide total customer satisfaction in terms of meeting the committed ship dates, the company still has room to improve its delivery time. The local Chinese Company that provides the electric motors is the cause that the delivery time is at this percentage because it sometimes cannot keep adequate stock of the electric motors. As a global manufacturing company Riordan has the ability and access to look into other companies that can provide the supply that Riordan needs in a more cost-efficient way. Riordan can look into a VMI supply chain system that will help lower the cost of inventory, and give a higher delivery time percentage than the local Chinese Company that Riordan currently uses. Acquiring this system, vendors can track the products sent to the company, and know when more products need to be sent because replenishment is done automaticly when needed. This system will help Riordan with both the fan line and the bottle line because the system will allow the organization to have continuous supplies that it needs without waiting for it to come in which will increase the delivery time significantly and reduce the inventory cost for Riordan. With Riordan success as a fortune 1000 enterprise, it needs to have a better Materials Requirement Plan (MRP) in place. The current system has many flaws and is costly to the company. The two plants involved in manufacturing the electric fans currently have a system which is extremely time-consuming and requires a large amount of manpower and paperwork. The MRP that Riordan needs has to be one in each operating entities that will link the United States and China plants altogether. Currently each entity has their own MRP system for various functions that delays and limits accessibility for each entity. The MRP system that Riordan needs will provide flow management, and a production planning system that combines information integration and planning capability that will respond to the build to order and just in time kanban system. The MRP system will determine the number of parts, components, and materials needed for each item, and provide a schedule to restock inventory; the VMI system would benefit Riordan because it can provide these needs of the company. Also other MRP systems that could be useful to Riordan are the MRP systems that integrate more modules that can control accounting and finance, order entry, and inventory control. A few companies that provide a MRP system that Riordan can use are by Oracle, SAP, and i2 Technologies. These companies can tailor the types of applications that Riordan will need and create a MRP system that will provide the applications that Riordan selects. IV. Implementation Plan and Gantt chart of the design process Based on the new process designed by Team E, an electric fans implementation plan was developed to assist management at the Riordan Manufacturing China’s plant with managing and monitor implementation of Riordan new design process. This implementation plans is intended to be scalable and flexible to reflect the degree of urgency, innovation, complexity, and sensitivity of Riordan electric fans process. It level of detail should be sufficient for Riordan China plant effectively to manage the implementation plan with a good degree of success. To keep more units in inventory Riordan process needs to increase China plant forecast capacity and techniques. Riordan China plant business forecasting should study plan historical performance with the purpose of using the knowledge gained to project future electric motors business conditions so that decisions made today enhance achievement of established goals. This forecast should be able to forecast the amount of costs associated with electric motors manufacturing and all its associated supply chain structure, including cost analysis of facilities cost, equipment, and labor. A forecast technique Riordan can use is the Break Even Analysis that helps determines how many units of product or service Chinas’ plant will need to sell to cover the new designed process costs. The forecast Technique will give an estimative of how long it takes for China plant to become profitable using the new process. Riordan will need to better manage its inventories so the plant can cope with electrical motors demand. China plant Inventory Management systems will provide information to manage the plant and effectively coordinate the plant operations because this system function can minimize the plant cost because plastic polymer is easily obtainable. Another innovation will be to update China plant Material Requirement to deal with cost estimates, order entry, inventory control, bill of materials, purchasing, invoicing, among others. Typical MRP system follows a successive planning concept, as depicted in the following figure.  Gantt Chart  ( see attachment for additional chart information) A Gantt chart is a horizontal bar chart developed as a production control tool. It provides a graphical illustration of a schedule that helps to plan, coordinate, and track specific tasks associated with a project. The strength of the Gantt chart is its ability to display the status of a project in a work breakdown structure (WBS). The Gantt chart was used for Riordan China plant to develop an implementation plan for electric motors fans assembly. The implementation plan is divided into nine different main activities to execute during the first six months of 2011. The duration of the activities varied from 10 days to 90 days according to its complexity and required execution time. Because of the specificity of each task some activities occurred in parallel and others will need to wait for another activity to be completed before starting. Identified high-level activities are of identification of electric motors alternatives, generate and development of inventory management systems, break even analysis, implementation of selected inventory system, schedule efficiency improvement, resource optimization, production time efficiency improvement, and continues process miniaturization. Production Forecast The production forecast for Riordan is based on that the unit in China is accountable for both the electric motors and plastic polymers, which are essential components of the electric fans. A projection of production demands was determined according to the average amount of sales during the past three years. The annual production requirements were based on additionally, scheduling, planning costs, production, delivery and was not affectedly forecasted. Riordan must make sure to analyze the appropriate economic markets to determine how the economy’s flow will affect the company. The company should also integrate a lean production process, which launched the products in the proper market, at an adequate price, and that adequate quantities are available to reduce waste and both expected and unexpected changes can be properly addressed timely. Cover Letter December 19, 2010 Dear Supplier, The company has launched a Riordan Manufacturing Process Design initiative for Riordan China plant for the purchase of improving electric fans assembling.  The team leading this project on behalf of Riordan Manufacturing developed a Gantt chart outlining the plant implementation plan and high-level steps associated with this implementation and Total Quality Management (TQM) program associated with the new process design. Attached information gives an overview of the new China plant electric motors process, which designed with the following goals: Improve inventory management system Improve electric motor material delivery schedule Improve electric motor mrp system The new implementation plan is scheduled to start in January 2011. The schedule will continue throughout the first six months of the year. Our expectation is that using the new mrp system, the new process design and also the new supply chain process Riordan Manufacture will have better production forecast. Improve China plant efficiency, and reduce total costs associated with the electric motors fans. Attached Gantt chart and associated document contains complete information regarding the timing and the process for responding to this letter.   Please reply to this letter no later than December 28, 2010.  The team looks forward to hearing from the company.  Sincerely,  OPS 571 Team E ClosingWe appreciate the opportunity to submit our Process Design for Riordan Manufacturing. If accepting this proposal, please sign one copy no later than December 28, 2010. Sincerely, Team E References http://www.inboundlogistics.com/articles/supplychain/sct1001.shtml. Retrieved 12/17/2010. http://oracleapplications.atoztutorial.com/. Retrieved 12/17/2010 Chase, R.B., Jacobs, F.R., & Aquilano, N.J. (2006). Operations Management for competitive advantage (11th ed.) Importance of Financial Forecasting for New Business Start Up http://www.ehow.com/facts_5839032_importance-new-business-start-up.html Making Business Intelligence Work For You http://www.articleshmarticle.com/Art/334252/9/Making-Business-Intelligence-Work-For-You.html Inventory Management Inventory Control http://www.invatol.com/ MRP - Material Requirement Planning http://www.aaxnet.com/topics/mrp.html Is MRP a Planning System' http://www.advanced-planning.eu/advancedplanninge-342.htm Gantt chart. Retrieved on Dec 18, 2010 http://searchsoftwarequality.techtarget.com/definition/Gantt-chart