Supply Chain Design
Riordan Manufacturing is a global plastics manufacturer and is a subsidiary of Riordan Industries. Riordan Manufacturing has three main production facilities located in Georgia, Michigan and Hangzhou, China. This paper will focus on the manufacturing business and supply chain activities of the electric fan production in Hangzhou China with information on manufacturing strategy, production performance, supplier relationships, forecasting and inventory. Manufacturing Strategy
Riordan Manufacturing China uses a level manufacturing strategy to produce electric fans. The advantages of using a level manufacturing strategy as defined by Jacobs and Chase (2011) are, “Maintain a stable workforce working at a constant output rate. Shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and lost sales. Employees benefit from stable work hours”. The choice of level manufacturing is used by Riordan because Riordan produces fans based on an average of three years combined sales forecast. It does keep a small inventory to account for demand fluctuations. A combination approach could be used in the future to reduce labor costs and more efficiently match demand for make to stock and make to order options.
Supply Chain Flow Chart
. Metrics and Supplier Relations
Riordan is able to keep the cost of production minimal while preserving the value of the final product by purchasing the electric fan motors from a third party and assembling the rest of the product in house with adequately trained Chinese workers. Placing the manufacturing plant in China rather than the United States is also a good cost effective tool as they are able to produce and assemble the fans quickly and at a low cost with cheaper labor.
To maximize their profits Riordan Manufacturing might consider the following in becoming more efficient, the electric motors used in the fans are completely assembled units purchased from a local Chinese company, while Riordan Manufacturing attempts to maintain adequate quantities of electric motors in stock to meet all its order requirements, its on-time deliveries have averaged only 93%. The first measurable metric is on-time delivery time. This could be improved if Riordan could use two suppliers to maximize its motor inventory. Riordan could then be better positioned to meet supply and demand requirements. The second measurable metric is forecast accuracy. Riordan could use a better forecasting technique when deciding how much of each product to produce using customer demand and preference of model rather than past sales. This might allow Riordan to cut down on over production of certain models and be more efficient in meeting the demand of customers. Lean Production
According to Jacobs and Chase (2011), lean production techniques, “consider the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination.” Considering this, Riordan needs better control of its supplier relations to improve on its 93% delivery rate. It also needs to consider a more efficient manufacturing strategy than level. Using the above suggestions; multiple motor suppliers and a combination manufacturing strategy will help Riordan become “leaner”. Forecasting Technique
A plan does not always go as planned sometimes. The use of formulas, complex systems and countless hours of calculations still have limitations when trying to provide an accurate product forecast. Because Riordan does have past sales data for many years, this information can be used within a quantitative forecasting method. This allows, based on history, an accurate measure of sales trends and can also help determine the natural sales demand for products over time. For example, if a 10% sales growth is expected the forecast for materials can be increased accordingly Since it is recommended that Riordan use a combination...
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