Riordan Manufacturing is a company that uses plastic injection molding to manufacture plastic bottles, fans of all sizes, heart valves, medical stents, and custom plastic parts. It has state-of-the art design capabilities to produce plastic product that have earned the company international status and made Riordan an industry leader. The company founded in 1991 by Dr Riordan, a professor in chemistry, and currently employs 550 people with projected annual earnings of $46 million.
Riordan has a plant in Albany Georgia that produces plastic beverage containers, one in Pontiac Michigan that manufacturers custom plastic parts, and a plant in Hangzhou China that produces plastic fan parts. Riordan is planning on moving the China location from Hangzhou to Shanghai that will result in significant cost savings resulting from shipping expense. In Shanghai the product can be loaded directly to shipping containers and bypassing the current shipping expense from Hangzhou to Shanghai thereby improving the supply chain process for electric fans.One Riordan’s major areas of focus are six sigma and emphasizing lean production. The company is planning on a new process design and supply chain process to improve on strategic capacity planning for the electric fans. Strategic Capacity Planning “The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources—facilities, equipment, and overall labor force size—that best supports the company’s long-range competitive strategy.
” (Chase, Jacobs, & Aquilano, 2006, p. 31) In business terms, capacity equals the maximum level of output, or in the case of Riordan, the highest number of fans that can be produced in a single shift. In order to determine how close the organization is to their best operating level, the capacity utilization rate is a common measure used. Capacity used is the rate of output achieved and the best operating level is the capacity for which the process was designed. In other words capacity utilization equals the capacity used divided by the best operating level.For example if the best operating level is 150 fans per week and Riordan is manufacturing 85 (capacity used) then the utilization rate is approximately 57%.
(Chase, Jacobs, & Aquilano, 2006) Several important considerations have to be taking into account if, as it would seem above, capacity needs to be added. System balance maintenance is required at each stage in the process, i. e. the required number of both inputs and outputs deemed appropriate throughout manufacture has to be monitored. Lean Production for the new process designThe basis of a lean system is to allow maximum efficiency and concentration on the goal at hand: providing the customer with a superior product (Badurdeen, 2008). Any act that does not assist in this goal will not be considered and productivity will need to be measured more precisely. It is important to meet the needs of the customer and it is equally important to maintain a manageable level of inventory at any given time. Forecasting will be of the utmost importance for Riordan in regards to its fan division in China.
Basing seasonal variances on previous year’s activity and allowing for an increase in business for the present year will allow Riordan to cover all bases for its customers and keep production to a minimum. One problem in the past is that customers have an annual contract but ordering can be sporadic. Due to the contract, Riordan has a time frame in which they must deliver the finished goods. Any materials that may be difficult to receive or have an increased lead time will be ordered far in advance to accommodate for any customer orders that may come in.In the upcoming year, in the contract Riordan will identify that the customer must give a two week lead time in order to assure all parts are available for manufacturing. Seasonal variances will be closely watched to ensure larger quantities are on hand when sales are higher.
Supply Chain Process Supply chain processes are constructed of the flow of materials, information, services and products. The development of raw materials, production processes, inventory control and management, warehousing and transportation, and distribution and sales are all important processes in the supply chain process.Supply Chains must consider strategic planning, resources, manufacturing, delivery of products, and return of defective products. Riordan Manufacturing’s supply chain focuses on the manufacturing of plastic bottles, heart valves and various fan products (Wailgum, 2010). Riordan Manufacturing’s China operations produce its electric fans. The motors used in the fans are completely assembled and purchased from a local Chinese manufacturer. Plastics needed for the fan parts are derived from melted plastic polymers and injected into molding machines to produce fan blades and housings.All parts are then assembled to create completed models of electric fans.
Riordan’s fad division works on a make-to-stock process by forecasting needs based on average sales for the last three years. Orders are shipped through the use of a Chinese shipping company, similar to FedEx used in the United States. International orders are shipped through FedEx and a Chinese shipping company, whichever can get the order to the customer’s location quickest. This ensures orders are received in a timely manner. Productions of new customized fan designs are based on customer contracts.Once the new custom fan is complete, a small production lot of fans are completed based on the customer’s projected annual requirements.
By obtaining the customer’s yearly needs, Riordan can plan material needs, manpower needed, production capacity, and offer its customers discounts. To ensure production of short term orders, Riordan maintains a safety stock of materials. Riordan also provides is China fan manufacturing company a periodical list of motors needed throughout the year to meet its customer orders (University of Phoenix, 2010).ReferencesBadurdeen, A. (2008.
Lean Manufacturing. Retrieved January 9, 2011 from www. leanmanufacturing.
com Chase, R. , Jacobs, R. , & Aquilano, N. (2005). Operations Management for Competitive Advantage (11th ed. ).
New York, NY: McGraw Hill/Irwin. Wailgum, T (2010), Supply Chain Management Definition and Solutions, retrieved January 9, 2011 from www. cio. com University of Phoenix Material, (2006). Virtual Organizations: Riordan Manufacturing. Copyright 2004, 2005, 2006 by Apollo Group, Inc.