Introduction
Riordan Manufacturing is a principal global manufacturer dealing with parts, fan parts and plastic containers. It is entirely possessed by Riordan. However, in the year 1992, Riordan manufacturing plant was procured from Michigan. Later in the year 2000, Riordan was moved to China (Chase et al., 2011). The fan parts manufacturing are scheduled based on the forecasted production using the average records obtained from sales conducted in three years. Its strategy is centered on making stocks that benefit customers who urgently need products with most orders filled immediately received from inventory (Soares et al., 2009).
Riordan often analyze its strategies such as; supply chain efficiencies, performance metrics, process flows, and supplier relationships, sales forecasting and principles based on lean production are indispensable. However, Riordan uses plans and reports for production, and material acquisition.
Riordan’s Manufacturing Strategy
The basic strategies employed by Riordan comprises of a stable workforce and maintaining the labour market for the following two reasons; to calculate the totals sales average within three years in order to extrapolate to the following year and to schedule production of fans in order to meet the forecasted sales. The Second reason is to use the turnover report for employees are calculated from 2009 to 2012 in order to get the definite percentage of involuntary separations (Chase et al., 2011). A marginal decrease of 1.4 indicates that Riordan has maintained a steady workforce. The benefits obtained from the set strategy implies that the workforce has a continuity trend with real costs for employee firing and hiring that are associated with employee chase strategy.
Performance Metrics
The two metrics employed to evaluate the supply chain performance include; direct material received promptly and the (CCC) cash conversion cycle (Hanson et al., 2011). The (CCC) cash conversion cycle is used to measure the total amount of time that each net input dollar in the production is tied up and the entire sales process prior to being converted into cash via customer sales. The impact of direct materials that is received promptly for plant plastic polymers is noticed on the Riordan’s product supply to customers.
Figure 1 above shows the Riordan’s well-organized supply chain operation that ascertains potential bottlenecks and logistical steps within the process (Hanson et al., 2011). It is also noted that Riordan uses (PPR) Post Project Review in identifying negative and positive trends in the processes. Data from manufacturing operations are used by Riordan to identify system inadequacies in order to increase effectiveness and implement change.
Supplier Relationship and the Effects on the Supply Chain
There are two main inputs required in manufacturing the Riordan electric fan, they include; (HDPE) high density polyethylene plastic pellets and electric fan motors. Electric motors are wholly assembled in units procured by buyers within China Plant’s procurement department but from a local Chinese firm known as Yin Motor Company that is located in Zhejiang, China. Buyers also procure Plant’s supplies for plastic polymers locally with no information concerning HDPE pellet suppliers found online on Riordan Manufacturing website.
Riordan has acknowledged three potential concerns from suppliers that could easily hinder the supply chain. The first is that a fax that was sent to Mark Neitzel from Robert Lord had indicated that Riordan company has been trying to get a substitute sources ever since, but then their partners have family relationship with Yin or have some business though they say that they are considering for another supplier. Second, there is an article additional to the fax that indicates that about 400 laborers working at the Yin Motor Firm are on a strike. The strike could perhaps affect Yin Motor’s financial stability. Third, even though Yin Motor tries to maintain adequate measures of electric motors in stock in order to meet all its order supplies, its deliveries in time over years have averaged to 93% (Soares et al., 2009).
However, in order to address these apprehensions, Riordan must negotiate with its Chinese associates to acquire rights to enable them directly work with their suppliers. The rights can be acquired by insuring the Chinese associates will maintain the affiliation between Yin Motor Company and the Chinese plant. The strategy of Yin Motor working hand in hand with Riordan can increase their prompt deliveries and improve their labor situation in order to increase Riordan’s supply chain strong point.
Lean Production Principles
In order to make best use of the effectiveness and efficiency at Riordan, a process known as make-to-stock is used (Soares et al., 2009). Satisfying customer orders immediately received from completed goods inventory and upholding a small inventory reduces the gaps in a seasonal instabilities at Riordan. Counterfeiting a strong association with Chinese supply chain as partners will increase volume and quality of the products.
Riordan’s forecasting Technique
Making an allowance for universal demand for Riordan’s electric fans, a more strategic medium term sale forecast is used for the next 12 months. The strategy eases the aggregate production scheduling and planning in anticipation of product positioning and customer demand global supply chain and at decoupling points. Though Riordan uses an average of 3-year sales data to forecasting purpose, only the 2005 sales invoices are available.
A trend decomposition technique with a linear regression was used. It is grounded on the intended time horizon of 12 months of sales data. Figure 3 below plots the 2005 quarterly average electric fan sales (Hanson et al., 2011). The figure 3 below also reveals that both seasonal and linear trends justifies the result that would provide a medium-term forecast, because it allows apprehending seasonal effects that are useful in recognizing major turning points. However, the seasonal factor is calculated for each quarter based on 2005 sales data.
Figure3. The Average Electric Fans Units Sold in 2005 Quarterly
Sales Forecast
Electric fan sales records are determined by the demand of products and sales of the appliances that are also influenced by the market strength. As per Riordan’s economic forecast, the forecasts and data related to mortgage and housing rates and indicating its positive in the near term, the suggestions showing the electric fans demand continues to be strong. Therefore, in 2006, a forecast showing 10% increase in sales was reasonable (Chase et al., 2011). Though, this forecast indicates a slight decrease in sales quarterly for 2006.
Aggregate Production Plan, Master Schedule, and Materials Requirement plans
The Aggregate Production Plan for Riordan is grounded on the company’s workforce, sales forecast, inventory and its production levels (Chase et al., 2011). Since Riordan employs a more stable workforce strategy, it will enjoy an incessant workforce compatible along with its production plan. The ten percent increase forecasted on sales of electric fans cannot affect its current production strategies. About 86,400 fans also represented as 126% of 2006 first quarter projected production levels. With improved supply chain management, constant workforce, prompt suppliers and quick ordering of parts by buyers, Riordan can achieve its projections.
References:
Chase, R. B., Jacobs, F. R. (2011). Operations and Supply Chain Management, 13e. Boston: McGraw-Hill Irwin.
Hanson, K., Martinez, R., Carlson, K., Votaw, N. (2011). Strategic plan Riordan Manufacturing: Strategic plan. Available at: < http://extremelycleandetail.blogspot.com/2011/09/strategic-plan-riordan-manufacturing.html >
Soares, M., Vieira, G. (2009). A new multi-objective optimization method for master production scheduling based on genetic algorithm. International Journal of Advanced Manufacturing Technology, 41(5/6).
