Riordan Manufacturing

Riordan Manufacturing is a global manufacturer or plastics. The organization was established in 1991 by Dr. Riordan. Its headquarters is in San Jose, California. Additional manufacturing plants are located in Michigan, Georgia and China. The company makes plastic products that include custom plastic parts, beverage containers and plastic fan components. It leads in plastic injection molding. Its major customers include aircraft companies, beverage makers, automotive industries and appliances manufacturers. The company has revenue of about $1 billion.

Riordan’s Manufacturing uses the level strategy in production planning and scheduling. The company continuously manufactures goods that are equal to the average demand for the goods. The benefits of this type of strategy are that: a) it maintains a stable workforce that works at a constant output rate. Surpluses and shortages are absorbed by lost sales, order backlogs and fluctuating inventory levels. Throughout the production cycle, final products are assembled at the same rate. During periods when there’s low demand, surplus accumulates to allow the company or retailers to keep an excess of the product. Surplus is useful in times when there is high demand because the company does not have to increase or fasten production to sustain customer demand. b) Employees gain from stable work hour. They know what their working hours will be and they also know what they should expect. Moreover, scheduling becomes easier to compute and it does not need using a lot of overtime or bringing in temps. Employees also learn their specific work with standardized practice and a degree of expertise making it easy to predict what they can produce at any given time. This result in standardization of production roles which speed up production output when all employees become adept enough at their tasks. c) Level strategy used by Riordan Manufacturing produces products based on an average combined sales forecast of three years. Thus, it keeps a small inventory to account for the demand fluctuation. There is no drain on material or financial resources. It makes it possible to plan in advance the quantity of money needed at any given time during the production process. Planning helps to avoid problems linked with attempting to meet production efforts. The constant resource drain is capable of being foretold and will not change in a manner that can put undue stress on production efforts. d) Consistent scheduling arranges the same amount of goods for production based on total demand for the products. Hence, it leads to predictability. Employees will not vary from the required output level by maintaining the current production level. Managers are responsible to ensure predictability occurs to allow the company and customers to know exactly the amount of products and when the production will be finished (AceMyHW.com, 2009).

Customer
Customer

The supply chain diagram for Riordan Manufacturing is shown below:

Supplier
Supplier

 

 

 

 

 

Forecasted Demand
Order Acknowledgementent
Order

Processing

Production

 

 

Freight
Quality Check and packaging
Order Shipment
Order Received

 

The purpose of supply chain is to add value to the product by transporting it from one location to another as the good is changed through processing. The growth and success of Riordan relies on the continuous development of new ideas and improvement of existing processes.

The metrics for evaluating performance that Riordan Manufacturing can use may be classified into two: 1) Qualitative measures. They are: product quality and customer satisfaction. 2) Quantitative measures. They are: supply chain response time, resource utilization, order-to-delivery lead time, delivery performance, productivity, fill rate measures, perfect order measure, transportation and cost.

Riordan Manufacturing uses partnership supplier relationship. The company majorly manufacturers fan. Therefore, it has partnered with companies that require plastic fans such as the automotive industries. The company is owned and managed by Riordan Industries. It has yearly earnings of $46 million and employs about 550 workers. Riordan has three locations. Research and development is conducted in San Jose, California. Production of custom plastic parts is done in the plant established in Pontiac, Michigan. Beverage plastic containers are produced in Albany, Georgia. Manufacture of plastic fan parts is done in Hangzhou, China.

Riordan employs several metrics to assess supplier performance. Majority of these metrics focus on tangible performance such as: supplier scorecard, on-time delivery performance, quality performance and defect. a) On-time delivery performance is the comparison between actual delivery and delivery appointments and planned delivery. It is the measure of the company to fulfill customer demands. b) Defect is measured using Defective Rate PPM. PPM means one defect in a million or 1/1000000. A good supplier must have a defect rate of 1000 PPM which is the same as 0.0025%. This means that any shipment containing 1000 pieces should not have more than 25 defective pieces. c) Supplier scorecard engages stakeholders and customers across to complete surveys and questionnaires relating to the supply performance of the company. They help to benchmark and improve supplier performance by implementing best practices through informed sourcing decisions. Scorecard categories include quality, delivery, responsiveness, cost, innovation, customer complaints, CSR and risk (Hugos, 2010).

Supplier improvement strategies are: 1) Improving the distribution network. Distribution affects business from delivery tracking to sales strategies. The distribution network can be improved through a holistic approach. Different segments of distribution can be reviewed to ensure they are in sync. Supply chain should be aligned with business goals by connecting operations planning and sales with corporate business planning. 2) Adopting a demand-driven plan based on demand and real-time demand insights. The company can adjust promotion strategies and pricing to shape demand and to move additional products. 3) Building an adaptive chain with integrated execution and rapid planning. Executives must adapt the company’s supply chain to changing events and market opportunities. 4) Optimizing product design for manufacturing, supply and sustainability to accelerate profitable innovation. Through innovation, the company will be ahead of rivals. Competitive advantage will increase and improve the supply chain in turn. 5) Embedding sustainability into the supply chain operation. 6) Establishing information conduits. These are channels that the business can use to share important data such as tracking information with key partners (Fredendall & Hill, 2000).

The ultimate goal for using lean production principles is to improve efficiency and reduce waste in labor, space, time, materials and overproduction. Waste in manufacturing process can be about 90%, but lean principles can reduce it to 25-35%. Lean Manufacturing process can be implemented in: 1) Material handling. This will involve fewer moves of products, simple picking routes and shorter travel distance in the warehouse. 2) Inventory. By using small lots, outbound and inbound queues will be smaller. It will reduce the inventory needed to be in the queue and the overall inventory level. Goods are received just as they are required, eliminating the need to sustain large levels of stock. 3) Quality. Small lots ensure that quality issues which arise can be handled effectively. Manufacturing processes with large. 4) Customer satisfaction. Improvement in inventory, quality and material handling leads to a successful manufacturing operation. When products are produced and delivered on time, customer satisfaction increases. This will result in high quality standards and reduce defects and complaint in turn maximizing the efficiency and effectiveness of the fan supply chain process (Black, 2008).

Riordan Manufacturing can use quantitative business forecasting technique. 1) Time series forecasting. This method will measure data from the company over time to identify trends. Data can be taken over weekly, monthly or yearly intervals. Cyclical, trend, irregular and seasonal components make up time series. Trend component is the gradual shifting of data over time. It is shown as a downward or upward sloping line. Cyclical components lie below or above the trend line. The business cycle provides a cyclical component. Irregular components occur randomly and cannot be estimated. Seasonal components are repetitive and similar to cyclical components, but they occur annually.

Decomposition technique of sale forecasting can be used by Riordan Manufacturing. In this case, it is assumed that sales for the company are affected by four factors: general economic cycles, irregular occurrences, seasonality and general economic cycles. The forecast is created by considering each component separately then combining them together (Ord & Fildes, 2012).

Sales (t) = Trend (t) * Cyclical (t)

To develop an aggregate production plan the following steps are followed. 1) Determining demand for each period covered in the plan. 2) Determining available capacities for each period. 3) Identifying external constraints and corporate policies. 4) Determining product cost based on material costs, direct labor as well as fixed or indirect manufacturing expenses. 5) Creating contingency plans to account for downturns and surges in the market 6) Selecting the plan that meets corporate objectives at testing it.

MRP is a computer-based inventory system. It helps production managers to schedule and place orders for goods of dependent demand. Dependent demand goods are components parts, subassemblies and raw materials. It works backward from the production plan for final products to develop requirements for raw material and components. In this case, Riordan Manufacturing makes plastics.  Therefore, dependent demand inventory goods will include ethylene, polyvinyl chloride and titanium dioxide.

The appropriate inventory system is the two bin method to meet its requirement.  The company will have a main bin for ordinary operations and another bin for backup use. The primary bin will be used to fill customer’s orders. Once it becomes empty, the backup bin is used while waiting for other orders for the primary supply to be replenished. This system is appropriate because plastics are not perishable and there is no risk of spoilage (Toomey, 2000).

 

 

References

Black, J. R. (2008). Lean Production: Implementing a World-class System. Boston: Industrial Press Inc.

Fredendall, L. D., & Hill, E. (2000). Basics of Supply Chain Management. New York: CRC Press.

Hugos, M. (2010). Essentials of Supply Chain Management. Hoboken: John Wiley & Sons, Inc.

Mahadevan, B. (2009). Operation Management: Theory and Practice. Mumbai: Pearson Education.

Ord, K., & Fildes, R. (2012). Principles of Business Forecasting. Boston: Cengage Learning.

Toomey, J. (2000). Cengage Learning. Chicago: Springer US.