OPS/571 Operations Management
A Production Plan For Riordan
Riordan Manufacturing has a reputation for precision and innovation. As a Fortune 1000 enterprise, Riordan cannot afford to have the issues of bottlenecking affecting their production. As a result, a detailed analysis of the bottlenecks, the effects, and appropriate strategic planning were examined. Lean production planning was examined as was new processes. The details of the new processes also outlined the benefits to the company.
Bottleneck Issues: The Effects
A bottleneck in a process is a specific part which falls short of meeting the demand. The capacity, which is necessary for that portion of the process does not have the capability of meeting that demand, has the most lag, or uses the most time or resources. Bottlenecks lessen the output of a process because the flow of the process is halted or slowed (Chase, Jacobs, & Aquilano, 2006).
Strategic Capacity Planning
Strategic capacity planning involves keeping the system balanced so the output of one level is the required input of another level. A bottleneck anywhere in this process would limit the thoroughput time within this system. This is evident in the example of the Riordan manufacturing of the electric fans. The manufacturing process requires specialized piece parts and a specialized labor supply with proper knowledge to create the product.
Supply Chain and Lean Production
Supply chain efficiency is measured by how quickly inventory turns over and weeks of supply. If a bottleneck exists in the supply chain, such as the packaging and shipping of the inventory, the company could not handle the demand of inventory coming in. Thus, the capacity of shipping resources would be less than the demand of inventory and a bottleneck is created (Chase, Jacobs, & Aquilano, 2006). This is true for Riordan. The plant in Hanghzou, China experienced problems with shipping the inventory out of the Shanghai port in a timely and cost-efficient manner. Similarly, in lean production a bottleneck could be a machine, which cannot handle the demand at the proper costs and resources; subsequently, the process flow diminishes.
The ability of an organization to determine its production capacity to meet changes for the demand of its product is a process known as Capacity planning. Capacity, in this context, is defined as the maximum output of work that an organization has completed within a specified time frame. The possibility of inefficiency is inevitable, especially when resources are under- utilized, or when there is a discrepancy between the organization’s capacity versus customers’ demand, or unfulfilled customers. Capacity = (number of machines or workers) × (number of shifts) × (utilization) × (efficiency) (Wikipedia). Because the China plant has already confirmed that there are some individual customers that have schedule products throughout the year for the electric fans, it is necessary to add capacity to meet the increase in demand. This needs to be done to minimize inefficiency. The strategy to achieve this could be lead, lag, or match. Types of Strategies
The Lead strategy is defined as an increase in capacity in anticipation of demand. This ensures customer demands are fully met, to satisfy, and keep them from going to competitors. However, it could result in excess inventory if the demand does not meet the forecast. The Lag strategy is defined as an increase in capacity after the plant is made to run at full capacity or beyond because of an increase in demand. The risk of waste is decreased, but there may be loss of potential customers (North Carolina State University, 2006). The Match strategy is adding capacity in small amounts in response to changing demand in the market. This moderate approach is recommended for implementation of the electric fan production line at...