Team D has been tasked with creating a new process design for Riordan Manufacturing’s production of electric fans. Currently the fans are made in Hangzhou, China.
The process begins with raw materials delivered to Riordan’s shipping area supervisor who compares the shipping documents to a scheduled orders receiving report. Once these reports are matched, materials are moved further into the factory for use.This is the first problem with the old process for the plant, there is no one inspecting the raw materials for defects, thus allowing problematic materials to dilute the process.
Team D is prepared to create a new process design. Process design is the design of processes for desired physical and chemical transformation of materials parts, and subassemblies as they move through the plant. The new process begins with each shipment being inspected for quality to ensure that only top grade materials are being used in the product.
Because Riordan is concerned with the amount of fans produced, Team D suggests a Plant-within-a-plant (PWP) concept be instituted. This allows Riordan to use a portion of their plant to manufacture its own electric fan motors, which are currently provided by a local Chinese company with a 93% on-time delivery rate. Producing its own fan motors will solve the delivery problem and reduce dependency on outside sources and over time allow Riordan to sell fan motors to outsiders, thus creating a new revenue stream.According to the tabulations from the learning curve for in-house production of fan motors, Team D expects Riordan will increase motor production from 75% the first year to 99. 9% of all its motors in year five. Additionally, by switching from a make-to-stock format to a make-to-order plant, Riordan would be able to increase efficiency and reduce inventory because customers can deliver their projected number of fans needed giving Riordan plenty of time to produce the product while keeping inventory, work-in-process and finished fans at a minimum.
Once the orders are received, production can begin. The implementation of a relatively few new steps will help Riordan move toward a lean production model. Inspection of the raw materials, developing a PWP for electric fan motors, and moving from a make-to-stock to a make-to-order model are crucial for lean production organizations.
Knowing that the materials for the product will be delivered just-in-time permits better use of resources.