Riordan Plant in Hangzhou China

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Riordan Plant in Hangzhou China
Saad Benchekroun, Sami Berrahou, Kachong Duniya,
Jennifer Watkins, Angus Newton, Anthony Lampkin
OPS/571

April 26th, 2011

Dr. Roberto Coto

Riordan Plant in Hangzhou China
Riordan Manufacturing is a global plastics manufacturer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a fortune 1000 enterprise with revenues in excess of $1 billion. The company produces plastic containers, custom plastic parts, and plastic fan parts in Albany, Georgia, Pontiac, Michigan and Hangzhou, China (Apollo Group 2005 – 2008). In the following sections, team C will discuss the strategic capacity planning, the lean production for a new process design, and the supply chain process for the electric fans at the China Plant. Strategic Capacity Planning

Production Forecast
Riordan manufacturing forecasts the future demand for fans based on taking the average of sales for the last three years (Apollo Group 2005 – 2008). The company relies on historical data to schedule the future capacity of its China plant. Relying only on historical data jeopardizes production and sales of the plant because other orders from several small random customers cannot be accommodated due to the lack of capacity in production. Therefore Riordan manufacturing in China needs to develop a strategic capacity plan to overcome this major issue. The company’s forecast must reflect the company’s growth rate of its market share and its predicted sales in order to successfully respond to its growing demand. The China plant would be able to improve its capacity planning through accurate analysis of customers’ forecasts, through detailed monthly, quarterly, and annual sales projections, and through identifying the measures of labor and machine requirements for production.

Inventory Control
Moreover, the China plant maintains a safety stock of polymer material even though the material can easily be obtained locally and does not present any availability or delivery problems (Apollo Group 2005 – 2008). To resolve the stocking of unnecessary inventory that ties the company’s cash flow and lowers the company’s capacity inside the plant, Riordan must adopt a new strategy that emphasizes just-in-time delivery of these polymers as needed for production since they are easily obtainable. On the other hand, the China plant needs to focus more on stocking the electric motors to avoid shortages of supplies. The China plant must contract with several electric motor suppliers to ensure adequate stock needed to produce its main products and not be under the mercy of a single dominate supplier. Not having enough supply of electric motors could create a bottleneck in the production process. According to Goldratt’s theory of constraints and the synchronous manufacturing approach, one of the ways of dealing with imbalance is through the use of buffer inventories in front of the bottleneck stage to ensure that it always has something to work on (Chase, Jacobs, & Aquilano, 2006). In Riordan scenario, the recommendation of stocking the electric motors within the China plant would eliminate the inability of producing enough electric fans to answer the demand. Riordan Trucks

The Hangzhou location in China has been sufficient to handle the production volume during the past years. Nevertheless, as the production volume increased made it difficult to handle the shipping needs and answer the demand of both Chinese and European markets. Traditionally the China plant shipped either through containers which was a lengthy and inefficient process, or contracted with trucking companies who raised their shipping prices knowing that they were used as alternatives. Therefore, Riordan should invest in company owned trucks that would efficiently handle the shipping process to Shanghai port where products would be loaded into containers and then directly loaded onto the ships that will be...
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