The Riordan manufacturing plant at Hangzhou China specializes in creation of fans for Riordan’s many customers. Based on previous years’ sales and the potential for improvement to meet customers’ demand, Riordan anticipates higher sales in the next one to two years. Team A has developed a proposal to improve sales forecasting at the Hangzhou plant to meet this demand. The proposal includes methods to improve inventory management, employee training and the manufacturing process through implementation of inventory tracking software, aggregate operations planning, and total quality management principles. The proposal focuses on material requirements planning, supply chain optimization, outsourcing and a training timeline to implement the plan.
MRP for the Manufacturing of Riordan’s Fans
Material Requirements Planning or MRP is extremely important for any business, and for Riordan Manufacturing it is the key to improving their production, inventory, and delivery processes. The MRP system is a production planning and inventory control system “that is used to control inventory levels, assign operating priorities for items, and plan capacity to load the production system” (Chase, Jacobs, & Aquilano, 2006). If MRP is properly implemented, it will reduce Riordan’s operating expenses and increase their profitability.
In order for these process improvements to happen Riordan must first implement an Enterprise Resource Planning (ERP) system that can be geared toward enhancing the company’s production, inventory and delivery systems all in one. After much research the team found that Lawson Manufacturing Solutions developed an ERP software system that will fulfill all of Riordan’s needs.
These are the current challenges Riordan is having with its production process:
• As orders increase the plant is not keeping up with production
• In their decision-making process management does not always consider the affects decisions will have on customers and the competition
• The China plant relocation will adversely affect operations; a process must be in place to accomplish the move smoothly
• The costs of hiring more employees to meet production requirements will have an effect on the company bottom line (University of Phoenix, 2008)
By implementing a new ERP software system, such as Lawson, Riordan will be able to:
• “Help reduce operational over-heads and support operational efficiencies in discrete, process, and mixed-mode manufacturing environments” (Lawson, 2012)
• “Help to manage, monitor, and plan complex production process” (Lawson, 2012)
Riordan’s current inventory model is quite generic: they maintain raw materials on hand, do all their own manufacturing and assembly of their goods, and they maintain a warehouse of finished goods that await shipping. This type of inventory management allows Riordan to maintain independence of operations and flexibility to change manufacturing rate to meet demand. Sales are forecasted based on average annual customer demand. Consequently the plant estimates the amount of raw materials that it needs. However, without information from the marketing and sales divisions, the plant does not have the full picture of the materials that it requires and production is not planned on a proper forecast. Incorrect estimates often create a shortage or conversely, a surplus of materials, and likewise the creation of a backlog of orders or a waste of materials due to overstock.
Lawson’s software has many aspects that can help Riordan in improving their inventory process. The main aspect of Lawson’s inventory process is supply chain execution, which includes inventory statistics, warehouse management, and item data interfaces (Lawson, 2012). The software provides tracking for other specific areas of the ERP system...