Manufacturing is in need of a new process for its manufacturing of electric fans. With potential bottlenecks from the current process, both time management and expenses have been suffering. Many factors have been taken into consideration with the new innovative process. With the utilization of the new process it is not only going to be time saving but also will illustrate overall revenue growth.
The proposal will include many implementation ideas that are going to contribute to the future success of Riordan Manufacturing: A cover letter detailing aggregate operations planning and TQM for Riordan Manufacturing • A new process design for the production of Riordan electric fans • A supply chain for the electric fans, taking advantage of any global opportunities available to Riordan Manufacturing such as lower labor costs • A production forecast for the Riordan electric fans • An implementation plan, including a Gantt chart • The MRP for the Manufacturing of the Riordan electric fans New Process Design Riordan’s new process design will consist of three process improvements.The first will improve the efficiency between Riordan and their parts vendor in China. The second improvement will be to implement a just-in-time manufacturing system. The final improvement will be to pursue opportunities to recycle and minimize waste to adhere to industry corporate social responsibility standards. Riordan’s local vendor’s on time rate is currently 93% which is below industry standards.
To improve the vendor’s on time rate Riordan will require that the vendor invest equally in an ordering system upgrade that will benefit both organizations by increasing he order and delivery systems efficiency. The new ordering system will link both organizations in order to communicate demand for plastic polymers instantaneously when an order is inputted into the system. This ordering system upgrade is the first of many process improvements that will be identified during the implementation of the just-in-time inventory system. Riordan will analyze industry best practices to determine the best approach and process improvements necessary to successfully transition to a just-in-time inventory system.The just-in-time inventory system will improve Riordan’s production rate, reduce inventory and storage space needs Finally, Riordan will create a task force that will pursue recycling opportunities.
The task force will research recycling methods that are consistent with industry standards. They will look at opportunities to market the organization as a green facility, pursue government tax benefits and reach out to the community as a socially responsible partner. Supply Chain/Global OpportunitiesHangzhou, China is the location of the production plan for the electric fans that Riordan Manufacturing produces. Due to the low cost of production that it requires by having the plant in China versus locally in the United States, Riordan is already on the right track for operating at maximum profit by minimizing all costs possible.
By outsourcing the polymer production and fan engine production, Riordan is able to reduce costs and raise profit of their Hangzhou plant.Their next step after receiving the polymers and engines from local companies through their just in time order programs on the computer, they use their production capabilities to produce the fans and then when completed, they ship out using FedEx or the Chinese international shipping company, whichever is able to offer the lowest price and fastest service for the order. This all depends on the polymer and engine producer being involved in the network of receiving an order demand to Riordan and instantly getting the request for the correct amount of product.This would change from their current out of the loop setup. Riordan would gain valuable time by involving them in the intranet, so that when an order is placed, it starts the production of engines/polymers instantly.
This is the most cost efficient method of producing these fans involving global opportunities and labor options. Production Forecast The management at Riordan Manufacturing must make production forecasts for future periods in order to ensure that the company is using its resources effectively and efficiently.Riordan also needs to deliver their electric fans to customers when promised and the production forecast can help with this process as well (Chase, 2006). For this proposal, Riordan Manufacturing is making the production forecast for the 2006 fiscal year. In order to generate this forecast, management will use historical data. Management has taken the historical sales figures in dollars for fiscal years 2002, 2003, 2004, and 2005 in order to make a forecast for 2006.
The following table is the actual sales amounts as reported on the Profit ; Loss Statements. 2002 |$39,481,276 | |2003 |$43,418,370 | |2004 |$46,044,288 | |2005 |$50,823,685 |In order to determine the 2006 forecast, it is first imperative to determine the difference between each year’s sales. |2002 – 2003 |$3,937,094 |110% | |2003 – 2004 |$2,625,918 |106% | |2004 – 2005 |$4,779,397 |110% | The average of these differences is $3,780,803 or a 9% average increase in sales over the periods.
Therefore, management at Riordan Manufacturing can make the production forecast for 2006 based on the average difference (Chase, 2006). Management has thus determined the forecast for 2006 should be $54,604,488. This forecast was calculated by adding the 2005 actual sales to the average difference of the periods. F2006 = $50,823,685 + $3,780,803 = $54,604,488 This forecast will enable management to effectively make decisions on the production schedule, labor, materials, and other resources necessary to the production of the electric fans (Chase, 2006). Gantt Chart Riordan Manufacturing New Design Process-Gantt Chart | | | | |Tasks |Start Date |Duration (Days) |End Date | |Finished Proposal |10/18/2010 |3 |10/21/2010 | |Decision on Proposal |10/20/2010 |4 |10/24/2010 | |Link outsourced production to Riordan Manufacturing |10/21/2010 |30 |11/20/2010 | |Link polymer manufacturer with Riordan |10/30/2010 |25 |11/24/2010 | |Implement just in time manufacturing |11/7/2010 |55 |1/1/2011 | |Develop ways to recycle and reuse waste |11/14/2010 |7 |11/21/2010 | |Market themselves as a “green” facility |11/17/2010 |90 |2/15/2011 | |Develop a method to reuse plastics and oils |11/28/2010 |62 |1/29/2011 | |Compare results of new design process to solve an potential bottlenecks |12/15/2010 |4 |12/19/2010 | |Implement new design process with all future locations |12/20/2010 |360 |12/15/2011 | [pic] Implementation The Gantt chart is a guideline of all the tasks that need to be completed along with due dates. It also shows which tasks are overlapping and helps depict a schedule that will convey organization and timeliness.With the tasks prepared as illustrated in the chart, management will then analyze any potential bottlenecks that may arise and a plan will be administered that will help complete the project.
Once the implementation plan is determined, incentives such as reward programs can be evaluated to help motivate staff and thus team work will be administered. The operations planning of the new process proposal will include following all policies and regulations that are set. As noted in the following one important aspect when it comes to an implementation plan is time management, “Each task should be paired with an appropriate time frame for completion.You should be aggressive but reasonable with your time allocation in order to ensure not just completion but competent work” (Richards, 2010). With the Gantt chart this can be possible because due dates are already established. Management needs to be sure they are able to stay within the perimeters of the dates that are set. MRP Material Requirement Planning takes the end product requirements from the MPS and breaks them down into their component parts and subassemblies to create a materials plan.
This plan specifies when production and purchase orders must be placed for each part and subassembly to complete the products on schedule. Most MRP systems also allocate production capacity to each order. Chase, 2006, pg 562) Material Requirement Planning is needed to meet a time phased requirement for fan production operations. The molded unit acts creates an input for the trimming department which can be used for creating additional parts. The trimmed remains are assembled at the assembly department to create components. These components are then handled at packaging department. The shipping department supplies the products for the distribution department.
The scrap material created by the different departments is causing concern for Riordan, because it is creating a large waste. Minimizing the wastes from each unit can help reduce the cost of fan production.In a time where waste reduction and going green is vitally important for the environment as well as company culture and awareness, finding ways to use the least amount of material, and then recycling or finding a use for the wasted material, will further our ability to show our commitment to company responsibility for the environment.References Chase, R. B (2006). Operations Management for Competitive Advantage.
Retrieved October 17, 2010 from University of Phoenix Course Materials. Richards, Daniel (2010). Writing a Business Plan-Implementation Plan. Retrieved October 18, 2010.
com/od/businessplan/a/implementation. htm University of Phoenix. Riordan Manufacturing Virtual Organization. Retrieved October 17, 2010 from University of Phoenix Course Materials OPS/571[pic]