Production Advisory Team
One Riordan Plaza, San Jose, California, 95112
August 6, 2012
Riordan Manufacturing China
Aggregate planning provides an organization with labor and output goals over the near future (three to 18 months). According to Chase, Jacobs, and Aquilano (2006), “The objective of aggregate planning is to minimize the cost of resources required to meet demand over that period” (p. 560). It is critical for organizations to develop an aggregate sales and operations plan to ensure finance, product development, sales, and operations work together toward the achieving the same goal. Aggregate planning methods can vary across different organizations, depending on the level of detail included, and must remain flexible to adapt to a changing business environment. At Riordan, the aggregate planning process is a focus of the organization and is a formal process. During the past few months several process improvement initiatives have been identified and will be implemented over the next several months. These improvements must be integrated into the aggregate plan. Therefore, the implementation of these initiatives will be discussed and agreed upon during weekly meetings between the leadership of each department. The goal of the weekly meetings is to continue to build teamwork across each department, ensure that the supply and demand for electric fans is in balance, and the process is completed with the least cost to the organization without sacrificing quality. Total quality management (TQM) is similar to aggregate planning and is critical to Riordan’s success. TQM is centered on meeting and exceeding customer expectations and teamwork throughout the organization. TQM success is dependent on each department including, marketing, human resources, information technology, managerial departments, and supply chain frequently communicating and working together toward achieving the same objective. Organization’s must oversee and strive toward TQM to remain competitive in its industry. TQM focuses on and analyzes each process within an organization to ensure that acceptable levels of performance are achieved (Chase, Jacobs, & Aquilano, 2006). For Riordan to achieve TQM, each process within the various departments must be analyzed and process improvements implemented in areas that need improvement. There are two methods: Six Sigma and International Organization for Standardization (ISO) 9000 that Riordan must adopt to measure and standardize processes to achieve TQM and remain competitive within the electric fan industry. Riordan must integrate its new strategies into its aggregate plan and into TQM to measure and analyze the process improvements affect on the organization. Riordan’s current mission is “Six Sigma, leading edge R&D and exceeding ISO 9000 standards define the attitude and abilities of Riordan Manufacturing” (Apollo Group Inc., 2012, Mission). The implementation of the new strategies is in alignment with the organization’s mission. The main objective of TQM as stated above is to meet or exceed customer expectations therefore Riordan will revise its safety stock policy to improve its on-time deliveries rate. Riordan will eliminate the safety stock of plastic material but will begin a safety stock of motors. Possessing a safety stock of motors will increase its current on-time delivery rate of 93% to an acceptable level of 98%, and keep inventory costs flat by not stocking plastic material. Aggregate planning and TQM both rely on an accurate sales forecast. The sales forecast is an integral part of aggregate planning because operations must balance supply and the expected demand. The second improvement initiative at Riordan is to implement a more robust forecasting process to ensure peak demand periods are understood across the organization. This will ensure the organization has the appropriate amount of materials, equipment,...