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Process Design for Riordan Manufacturing Cynthia Jordan OPS/571 March 28, 2011 Dr. Larry Rhodes
Raw materials are then delivered to the plant and verified. The orders are then entered in the system and sent to shipping.Riordan Process Design 2 Materials Requirement Planning Riordan Manufacturing’s China plant is the organizations producer of electric fans. molding. The Chinese nationals are responsible for supplying the labor. Riordan is responsible for the operating capital. and regulatory agencies as well as providing a small sum of operating capital. After verification the information is confirmed. relocating operations to Shanghai should be considered a more appropriate plant location. injection molding. As product demand continues to grow. packaging. competitors have begun using shipping companies that port in Hong Kong and Shanghai. raw materials are taken out of the inventory for use and documented to maintain accurate product levels. and shipping. Analysis Riordan chose the Hangzhou location because of its existing business partner relationships and the proximity to the Qiantang River from the plant. and product expertise. The Hangzhou plant operates six departments within the entire operations. governments. The following describes the China plant’s operations from the receipt of materials to shipping the product to its customers. Riordan customers order the electric fans via phone or fax. as it would better position . The Hangzhou (China) operations are a joint venture between Riordan Manufacturing and local Chinese businesses. As product demand continues to grow. assembly. thus saving even more monies on shipping. communication with other local vendors. receiving. as the river’s access led to the Hangzhou Bay for the shipping needs. The Chinese partner relationships meant reduced waiting times for raw materials and savings on fuel and human capital. machinery. trimming. Initially Hangzhou was the most efficient manufacturing location because of the business network that already existed.
Riordan Process Design 3 Riordan to increase market share throughout Asia and Europe. China plant uses a make-to-order fabrication process selection strategy when manufacturing the electric fans. and based on the product demand throughout Asia and Europe. An assembly model would also encompass customer specific orders in addition to safety stock and current inventory requirements. Safety stock will support a just-in-time (JIT) delivery process to reduce delays that are external to the business such as concerns with work stoppages and working conditions as global plants can experience. The Chinese . Competitive intelligence about the industry suggest that Riordan Manufacturing should move to a more aggressive process design system to meet the anticipated increased demand and to gain more market share. Based on the benchmarked data of our largest competitors. Local vendors allow the China plant to have shorter gaps in product delivery due to the physical proximity of the suppliers. the supplement business relationships in the China plant strengthen the efficiency of the supply chain. The new process design system would include maintaining electric fan capacity reflective of competitor sales performance. Combined with the lower cost of purchasing products locally. The process flow structure would be changed to an assembly line infrastructure to support increased operations and sales. Currently the plant makes fans using a batch shop process flow structure as the fans specify to their customers needs. Supply Chain Riordan strategically chose the Hangzhou location due to its low raw materials costs through their Chinese partners’ relationships with the Chinese nationals. relocation to Shanghai has been incorporated into the five year strategic planning strategy. Process Design The Hangzhou.
Production Forecast The electric fan’s original forecast was influenced by industry data.710 Electric Fan 194. Year Item 1 2 3 4 Electric Fan Original Forecast (in the thousands) Current Forecast 185. so the forecast as of today reflects the next four years. which reduce operational costs and increases profit margins. The original and current forecasts display a growth of 7%15% for the next four years. thus rebounding in the fourth year and anticipating continued upward growth.000 220. Growth was expected to slightly decrease in years two and three. as competitors are expected to manufacture their own version of the Riordan electric fan. and its projected performance with the expectation of increasing market share at the years progressed.Riordan Process Design 4 nationals are also responsible for the relatively low shipping costs.573 .000 200. the product being marketed to the global market. The original forecast was amended based on competitive intelligence researched on other leading fan manufacturers.000 235. Labor costs are also lower in China than they are in Riordan’s United States locations. Riordan’s product standards and value would enable to electric fans to continue to excel in the market.200 Electric Fan 207.400 270. It has been recommended that Riordan relocate its electric fan operations to Shanghai within the next five years.794 Electric Fan 228. although they are slated to change once the company relocates its Hangzhou operations to Shanghai within the next five years.
Riordan Process Design 5 Forecast based on annual growth of 7%-15%. raw materials. The China plant currently manufactures fans when orders are received. . and some unexpected product demands. Sales are expected to increase over a four year period. Implementation Riordan has obtained information that suggests that the electric fans will be a foundational product to market and sell. This strategy will not allow Riordan to grow its electric fan division by capturing a larger and global market. Riordan discovered that moving operations to Shanghai would mean even further savings on shipping costs than what is negotiated in Hangzhou. and its close distance to the river where products were shipped to their destinations. retain an appropriate level of safety stock as brand recognition increases. established vendor relationships with Chinese nationals. This process will effectively meet current demand. and help prevent bottlenecks from disrupting production and sales. with slower growth in the second and third years due to competitors manufacturing their own versions of the electric fan. The Chinese business partners managed the local government and other regulating agency requirements in addition to contributing some of their own capital to support the venture. China was an economically sound decision due to the low cost of labor. The China plant implemented a more aggressive operations process to meet current. future. The China plant will move shift operations to an assembly line structure where fans will be manufactured daily. reduced shipping. Conclusion Riordan’s decision to launch their electric fans line in Hangzhou.
the plants participation in the own strategic planning strategies. The China plant will be involved in all company communications as they relate to production standards. • China plant move to an assembly line operation to support fulltime fan manufacturing • Maintain adequate safety stock based on global company sales to meet product demand • Implement chase staffing plan in anticipation of demand fluctuations • Hybrid staffing strategy to address short-term unexpected increases in production and demand. and logistics throughout the entire organization. 2011 Chief Operations Officer Riordan Manufacturing Corporate Officer San Jose. The facility effectively manages its operational costs and controls overtime. Cynthia Jordan . The Hangzhou plant is continuing to run efficiently is meeting current consumer demands. The Hangzhou location will also begin to be involved in the quality aspect of their products instead of the corporate customer service department managing that function. To avoid overtime and meet product demands or have back order concerns. California 94101 To whom it may concern. • Ensure that the China plant is the most cost effective location to manufacture and ship the electric fans (for the next four years). Please contact me to discuss the upcoming plans for the China plant and the importance in their involvement in growing their region and in how they are critical to Riordan’s global success. The local vendors who provide the raw materials and shipping services are also influential in maintain the operating budget for the China plant. the following aggregate plan has been proposed.Riordan Process Design 6 Appendix March 28. This letter is in reference to the plant operations and manufacturing of the electric fans at the Hangzhou facility. and the establishment of leadership mentors will contribute to the company’s total quality management efforts. Recent competitive intelligence suggests that electric fan demand will increase over the next four years. Customer and management feedback. financing. sales. Sincerely.
R... OPS571 .). (2011). Jacobs N. Aquilano. resource.Operations Management. 2011 from University of Phoenix. (2006).Riordan Process Design 7 References Chase. B. . J. Riordan Manufacturing Virtual Organization. Simulation. N. Boston: McCraw Hill-Irwin University of Phoenix. Operations Management for Competitive Advantage (11th ed. R. Retrieved March 26.
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