Process_Design

Process Design for Riordan Manufacturing Kenneth Ross UOP Operations Management OPS/571 Dr Tug Gokaydin August 18, 2010 Abstract This paper proposes a new process design for Riordan Manufacturing electric fan operation. The focus is on improving the materials requirement planning (MRP) and supply chain management for global customers; with emphasis on reducing labor and production costs. There is an analysis of the current process and production plan for electric fans. The new process focus is effective use of MRP and supply chain to produce a quality product for the customer. I included a production forecast, implementation plan, and a Gantt chart of the new process. Also provided a cover letter addressing aggregate operations plan, and continuous improvement methodology for Riordan electric fans. Process Design for Riordan Manufacturing Materials Requirement Planning for Manufacturing Operations The Riordan manufacturing facility located in Hangzhou, China is a decentralized plant that produces electric fans for numerous appliance manufacturers worldwide. There production requirements are based on sales forecast from the previous year. If there was an anomaly or economic crisis in the previous years that could skew the computation and accuracy of the projected data, and cause the company to overstock or under stock the inventory. The electrics motors and plastic polymers for the fans are procured locally and they produce and stock an adequate amount of plastic fan parts for assembly in this make-to-stock operation of electric fans. They store the finished product in the warehouse for future orders. The on-time delivery of the electric motors to the plant is only 93 percent; and this impacts the productivity of the operation. There is definitely an opportunity to improve this process and increase the on-time delivery from the local manufacturers to 99 percent. The plant also makes custom fans; however they do not forecast for these items because they are sporadically ordered throughout the year on separate contracts from their customers. The customized fan process produces a lot of waste and scrap that is not used again due to contractual obligations. Since there are no forecasts it is very difficult to have accurate materials planning under the current process. The MRP process would have to be revised or modified to reduce the amount waste and lower the cost of producing the customized fans. New Process Design The primary goal and focus of the Hangzhou facility is to produce electric fans in mass. The inventory levels are derived from forecasts and they produce the required fan parts to meet the needs of the customers. After analyzing the MRP process we identified improvement opportunities for the on time delivery of electric motors from the local manufacture and the management of inventory to reduce waste and lower production costs. We will develop a team and train them on the LEAN and Six Sigma process and let the team develop a solution for improving the current on time delivery rate of 93 percent. They will also be tasked with improving inventory and material management to increase productivity. Some of the possible solutions the team could explore are alternate sourcing of the electric motors. The local manufacturers should have contractual obligation with on-time delivery rates as one of their metrics. If they can’t meet the needs of the company then find another source that is dedicated to satisfying the customer. The inventory could possibly be stocked for just in time manufacturing or they can reduce the stock levels of the polymers to reduce waste and lower production costs. The team could decide to implement the latest MRP II software to effectively manage the resources in the production cycle process. These are some solution using the new methodology. Supply Chain