Riordan_Manufacturing_Business_Analysis_Bsa_310

Riordan Manufacturing Business Analysis BSA/310 July 15, 2010 “Riordan Manufacturing, Inc. an industry leader in plastic injection molding and state-of-the-art design capabilities was established in 1991 by Dr. Riordan Plastics, and has earned international acclaim for its innovative plastic designs” (Apollo Group, Inc., 2006). Riordan Manufacturing is a company owned by Riordan Industries, a Fortune 1000 industry with yearly revenues in surplus of $1 billion. “Riordan Manufacturing currently employs 550 people, and has manufacturing plants in Albany, Georgia, Pontiac, Michigan, and Hangzhou, China” (Apollo Group, Inc., 2006) and Corporate Headquarters in San Jose, California. Riordan Manufacturing’s current business focus in Six Sigma, Research and Development, and innovative customer solutions using polymer materials, has left the company with an inadequate information system, supply chain management system, and uncompetitive enterprise resource planning (ERP) solution for large scale businesses. This review analysis will identify in detail existing system and subsystems for Riordan Manufacturing, Inc., and provide recommended system solution software, hardware and applications to improve current business processes and standards. Finance and Accounting Riordan Manufacturing’s finance and accounting department is responsible for numerous aspects of the company’s finances and accounts. They control who receives payment and when, sales information, and the company’s financial reporting, just to name a few. Although customers are unaware of any problems within Riordan’s finance and accounting system, the problem is very apparent to those employed by Riordan. The next few paragraphs will identify and describe the existing information systems being utilized within the finance and accounting department. They will also give brief descriptions of some of the problems Riordan is facing daily and outline a few solutions to ease the increasing strain within the department. Current Finance and Accounting Information Systems Currently, Riordan is operating from three locations within the United States, Georgia, Michigan, and San Jose, California. Michigan and Georgia are both running a system that includes basic components such as: “general ledger, accounts payable, accounts receivable, order entry, procurement, sales and purchasing history, invoicing and shipping, payroll, and financial reporting” (Apollo Group, 2006). San Jose, also known as Corporate Headquarters, is running a system with EDI, which stands for Electronic Data Interchange, Bar Code Reading and and Executive Decision Support System (EDSS), in addition to the already listed basic components. Although the systems seem to be operating with the same set of components, they are anything but the same. Each location is using a different software application as well as using them on different operating systems and different workstations. As one would expect, this is causing compatibility issues within the company. According to their intranet site, San Jose is running a Windows based ERP (Enterprise Resource Planning) distribution, manufacturing and financial management software application. This software specifically designed for assembly manufacturers and plastics processors. “They have a license for its use, although the license does not include application source code” (Apollo Group, 2006). The Pontiac, Michigan site is running a software application that was purchased from an outside vendor who is no longer in business. It runs on DEC (Digital Equipment Corporation) Alpha servers and uses a VMS (Virtual Memory System) operating system, VAX400 workstations and is programmed in C. Although different from Michigan’s, Georgia also purchased their software from an outside vendor. Their system runs on AS400 servers using a UNIX operating system which is programmed in RPG400, and personal computers running Windows in individual workstations. Current Finance and Accounting Information Systems Analysis It is without question that the finance and accounting systems are out of sync and out of date. With three different operating systems being used as well as three different types of servers and workstations, it is no wonder that the company “has been unable to achieve anything remotely resembling seamless compatibility” (Apollo Group, 2006). Data consolidation seems to be one of the greatest problems Riordan is encountering. Data is being sent to corporate in digital form as well as paper form and not always win a format that is compatible with corporate system. Employees are finding that data is being reentered and often times converted to proper codes before it can be applied to the system. Of course this creates a lag in the time it takes to complete tasks. Currently, the Income Statement and Balance Sheet is completed 15-20 days after month end. This and other weaknesses have been deemed unacceptable to Riordan Enterprises. Our Recommendations for System Improvements There are two very apparent options to fix the compatibility issues with the finance and accounting departments. One is to do a complete upgrade of the systems being operated at the Michigan and Georgia locations. This would include purchasing new servers and workstations, as well as purchasing additional licenses for the fully integrated Windows ERP system that is currently being run at the corporate headquarters in San Jose. Although this could be a more costly approach, it may be the best in the long run. The second option would be to hire a group of software programmers. Since both the applications being run at the Michigan and Georgia locations were purchased with the attendant source code, a software engineer or programmer could easily modify the code to better suit the needs of the company and perhaps resolve some of the compatibility issues. This may be a less costly approach, but also not necessarily a long term fix. Because there are so many problems with the data consolidation, this may only fix a few of those and eventually a system upgrade would be inevitable. Current Human Resource Information Systems Policies and Procedures The human resources information system (HRIS) is a critical business system for Riordan Manufacturing. “The human resources information system is designed to collect, process, and disseminate information that has been deemed valuable for the organization” (Flynn, 2008). Riordan Manufacturing’s current human resources information system was part of a financial systems package, and currently tracks the following employee information: personal information, hire dates, pay rates, seniority dates, and personal exemptions for tax purposes, organizational information, and accrued vacation hours for non-exempt employees. All other human resources information not listed is currently kept by individuals managers, recruiters, employee relation specialists, and outside vendors in Excel spreadsheets and not in a HRIS centralized database. Riordan Manufacturing’s current human resources information system allows sensitive information about employees to be kept with many managers, in different states, and different areas of the company. Riordan does not have in place a centralized policy or procedural guideline for collecting, processing, or disseminating employee information for the company. Riordan’s current human resources process is not efficient, and lacks the data management scalability requirements needed for a large manufacturing company. Current policies like having individual managers keep, track, and manage Federal Medical Leave Act accommodations may allow for interpretations of the law by managers, and potential biased decision practices, which could lead to litigation by employees, and substantial monetary awards paid-out by Riordan Manufacturing. The lack of centralization of human resources processes, employee files, payroll records, human resources policies and records creates an unorganized dissemination of all human resource information to officers and employees of the company. With the current HRIS in place if the Chief Operating Officer wanted to view payroll, FMLA employee leaves, employee complaints, salary surveys, and training records, then he would have to make request to individual sales managers, development specialists, employee relations specialists, and the compensation manager in different states for those records. It could take days to weeks to gather all of this information and assimilate the information into comprehensive reports. This lack of sophisticated and intuitive HRIS report management processes does not allow the officers of the company the ability to react swiftly to new federal and state policies, financial reporting, and employee policies, which could lead to a breakdown in communication to both officers and employees of Riordan Manufacturing. HRIS Recommendations Riordan Manufacturing is in need of a human resource data management software system for large businesses. PeopleSoft® from Oracle is a comprehensive and scalable HRIS solution for Riordan Manufacturing. PeopleSoft® is capable of fully integrating all of Riordan’s human resources data from all states into customized data reporting based on Riordan’s needs and business specifications. The centralization of all HRIS data including compensation, FMLA, employee information, employee relations, training and development would allow for standardized and customized human resources policies and procedures for Riordan Manufacturing based on state and federal regulatory laws. It would also allow for comprehensive financial report analysis and statistics, which could result in increased profitability, and the ability to react promptly to markets variations, and implement new policies or practices based on these reports. This system would centralize FMLA practices, and allow centralized corporate human resources representative to input, track, and manage eligible employees, and take the burden off individual managers in each state. Also the Chief Financial Officer of Riordan could track payroll for each state, and for the entire company using the all-inclusive centralized payroll data analysis and reporting systems. This would allow him to see payroll compensation trends, and could save Riordan from paying large compensation overages, or see compensation shortages because of turnover or understaffing. A comprehensive centralized HRIS makes financial sense for a large manufacturing company like Riordan. Although this is a large initial investment for Riordan, it could save substantial costs in the future based on the ability to see accurate and real-time report analysis of payroll and other financial report analysis. Sales and Marketing The sales and marketing department at Riordan Manufacturing is responsible for managing a host of tasks, information, and records which are pivotal to the company’s growth and success. According to their marketing plan, Riordan will be increasing their business development efforts over the course of the upcoming year. During this period, Riordan’s sales team will be attending trade shows in force, collecting useful market data while spreading the word about the company. In order to ensure the needs of their existing customers remain met while simultaneously attempting to acquire new customers will require the implementation of an efficient system for collecting, storing, and retrieving customer data. The next few paragraphs will identify and describe the existing information systems currently being employed by Riordan’s sales and marketing team. The systems identified will then be analyzed for strengths and weaknesses. Finally, recommendations will be made to help the team develop a streamlined, useful system that will be capable of managing all of their data efficiently for years to come. Current Sales and Marketing Information Systems Currently, the sales and marketing team maintain a number of different databases that house important historical sales records. The use of these databases are an improvement over years past when team members would typically use pen and paper to record sales information. Most of this data, which includes order information, product sales volumes, and sales by customer information, has been digitized and new records are now being entered electronically. In addition to historical sales records, each member of the sales team manages their own set of customer records. Because there is no standardized system for entering and maintaining customer information, some salespeople simply use pen and paper, while others may be using sales management software such as Act to manage their records. The sales and marketing team also maintains an archive of past marketing budgets, market research data, marketing plans, and design awards. The bulk of these records is available in hardcopy only and is conveniently located in a filing cabinet just down the hall. Current Sales and Marketing Information Systems Analysis It is apparent that the sales and marketing team at Riordan Manufacturing are in desperate need of help, technologically speaking. The most sophisticated system that the team currently has in place is the system for managing historical sales data. Several years ago, the team began digitizing historical records and storing the data in a variety of different databases. Despite their best efforts, there is still plenty of room for improvement here. The separate databases are each hosted separately, maintained separately, accessed separately, and they all maintain different portions of the data. Creating a comprehensive historical sales report while using this system for data retrieval would be like cutting and pasting a novel together using only individual words from newspaper clippings. Unfortunately, historical records are the only records currently maintained in any sort of reliable system. Individual members of the sales team are each responsible for maintaining their own customer records. There is no standard piece of software and no standard system currently being used by team members. The lack of standardization has resulted in a worst case scenario; multiple types of sales management software and, in some cases, no software used at all, pen and paper hardcopies only. If a sales person were to leave, the person taking his/her place would be left with a huge mess to sort out. They would have to uncover that person’s individual system for maintaining customer information. Ensuring customer satisfaction under even the best of circumstances with a system this unorganized would be verging on chaos at best. Finally, using a filing cabinet to archive records can certainly be organized when managed by the right person, and it is sure to minimize the impact of light and other damaging elements on important paperwork. However, compiling reports based on research using paperwork and data that is housed in this method is both inefficient and burdensome. So, what should we do' Our Recommendations for Systems Improvements Fortunately for the sales and marketing team, they have already begun the difficult process of converting over to a more efficient system. By digitizing all of their historical data, they have cut the workload significantly. What is missing, however, is a firm database and CRM software foundation to build the rest of their information systems on top of. To begin with, a consolidated database must be built. The database will maintain all of the customer data, historical data, and other relevant information in an organized manner. It will eliminate duplicate entries and provide an easily accessed archive of information from which comprehensive sales reports, marketing reports, and customer records may be generated on a moments notice. Once the database is built and in place, a CRM system will need to be built and integrated. The system will allow for a standardized method of entry for all of the information that is currently being maintained. Users will initially need to be trained to use the system, but once fully adopted, new users will be able to quickly step in and pick up where another person had previously left off. Following the development of the database and CRM systems, all of the old records and hand written records will need to be digitized. This will require employing temporary workers performing data entry and scanning paperwork until all of the old records and data have been converted and entered into the system. Upon completion of development, training, and initial data entry, the new, consolidated CRM system will streamline the marketing and sales team by speeding order entry, and by giving them instant access to information that previously may have taken minutes, hours, or even days to put together. Manufacturing Operations Albany, Georgia Riordan has a manufacturing plant in Albany, Georgia where plastic bottles are produced. This facility utilizes 20 client computers that run Windows 98 and MS office and connect to corporate headquarters using a fractional T1. This plant uses the time consuming, inefficient single employee, paper shipping and receiving process. The shipping and receiving process at this site varies because of customer’s contractual release of orders in small quantities. Consequently this site must keep a safety stock of the most popular bottles but are limited to the amount they can store due to the minimal space available at this facility. In keeping with company policy to provide total customer satisfaction the Albany plant has shipped customer orders inconsistently by using various means of delivery. Pontiac, Michigan The Pontiac plant produces stocks and supplies the raw materials necessary for the Riordan’s custom plastic fabrication. The areas of customization comprise of the part design and the colors selected for the finished part. The injection molding process and dies are both unique to each custom job depending on the customer’s specifications. This facility uses 45 client computers with Windows 98 and MS Office and also connects to corporate headquarters using a fractional T1. This plant also uses the inefficient single employee, paper shipping and receiving process. San Jose, California The San Jose, California facility is home to Riordan’s research and development personnel and is also Riordan’s Corporate Headquarters. There are five product development specialists on site here who are assigned to “research and develop the next generation of heart valves, medical stents, and complementary medical devices” (University of Phoenix, 2008). This facility also uses fractional T1 to connect with the Albany, and Pontiac sites, and houses the satellite base station needed to connect with the Hangzhou, China facility. This facility also uses the inefficient single employee, paper shipping and receiving process but is not majorly impacted since no materials are stocked in high volumes here. Hang Zhou, China The Riordan China Facility stocks pre-assembled parts used to manufacture fully assembled fans that are also stored at this location. A predetermined amount of pre-assembled parts are kept in stock based on the average demand from customers in the previous three years. Although the Hang Zhou, China facility is entirely capable of sustaining itself, the means in which it does so only allows this plant to deliver on time an average of 93%. This facility also uses the inventory clerk and paper shipping and receiving process that is very inefficient. Current Manufacturing Process The current process of receiving and shipping Riordan manufacturing uses a single inventory clerk to manually enter the receipt information gathered by a single receiving area clerk at the end of the each day. The inventory clerk is also responsible for manually entering the raw material use for the assembly of Riordan products. The data entered includes the quantities of materials received from each vendor and used during the manufacturing processes. Another responsibility of the inventory clerk is to enter and update the inventory system based on shipping order documents. In addition, a hard copy of materials received is then forwarded to several different departments for accountability. This process of one person entering in all this information is time consuming and allows for the possibility of too many data entry errors. In addition the status of what is in inventory, inventory is not up-to-date until the inventory clerk finishes their data entry tasks. Recommended Operations Improvements The current process of inventory management at Riordan Manufacturing is out of date, time consuming, and inefficient. The recommended system upgrades suggested will include inventory scanning which will replace the need for the manpower used to perform tasks related to data entry. Implementing the suggested upgrades will allow Riordan to save a great amount of money. Savings will be realized by cutting time and the workforce that the new scanning system will replace, along with the savings accrued from not having to rush order materials necessary for production and rush delivery to customer costs. Executing the proposed information system changes will enhance the existing processes by allowing receiving, assembly and shipping data to be updated as soon as material is pulled for usage. Inventory management will be enhanced by the almost instantaneous updates of materials received and used. Finance will be able to bill vendors and post financials the same day as receipt. The scanning system will replace the need for an inventory clerk, and eliminate the possibility of data entry errors. Riordan must also consider switching to a VMI supply chain system which would be this facilities best option. VMI stands for Vendor Managed Inventory. A VMI system will allow all Riordan plants to “improve product availability and inventory performance through timely information exchange and effective replenishment planning strategies” (Pan-Pro LLC., 2004). In turn this will reduce costs through automation and allow for “improved visibility of supply chain inventories and actual consumption rates to help ensure production more closely matches demand” (Pan-Pro LLC., 2004) In order for Riordan Manufacturing to remain a Fortune 1000 enterprise and continue to maintain revenues as they have seen in previous years, the preceding recommended upgrades to their outdated business systems, applications, technology, business processes and standards must be considered. It is very important that each business system and subsystems within Riordan’s business structure be as efficient and effective as possible to ensure. Riordan Manufacturing must also consider creating a long term strategy that will allow them to evolve and keep up with current market demands and the most successful business processes. References Apollo Group, Inc. (2006). Riordan Manufacturing. Retrieved from Apollo Group, Inc., BSA310 - Business Systems website. Apollo Group. (2006). Finance and Accounting. Retrieved from https://ecampus.phoenix.edu/ secure/aapd/cist/vop/Business/Riordan/Finance/RioFandA001.htm Flynn, S. (2008), Human Resource Information Systems, (p.1). Great Neck Publishing, Retrieved from Research Starter – Business database Pan-Pro LLC. (2004). VMI Information and Downloads. Retrieved from http://www.pan-pro.com/info/frameset.html'vmi_faq.html~main University of Phoenix. (2008). Riordan Operations R&D. Retrieved from University of Phoenix, BSA310 website. .