Proposal package for Riordan Manufacturing production plan

Riordan Manufacturing employs 550 people worldwide with projected annual earnings of $46 million and operates as a global plastics manufacturer. Riordan Manufacturing, Inc. is one of the industry leaders in the field of plastic injection molding in terms of both total volume and quality. By utilizing the company's state-of -- the art design competencies, Riordan Manufacturing can create innovative plastic designs that are well respected in their applications. Riordan holds its headquarters in San Jose, California, and domestic offices in Albany, Georgia and Pontiac, Michigan. Riordan also has a plastic fan parts facility in Hangzhou, China. The company's production competencies include items such as attention to detail, extreme precision and enthusiastic quality control. Riordan Manufacturing is wholly owned by Riordan Industries, a Fortune 1000 enterprise.

Riordan Manufacturing is in the process of implementing a lean production model in order to eliminate waste, minimize inventory levels and enable suppliers and internal procurement real-time access to ordering, transit, and inventory data. The new procurement process design stands the potential to help streamline the entire organization while reducing overhead and inventory expenses. This strategy will increase the effectiveness of the supply chain. Purchasing and procurement will be able to identify and support the optimal efficiencies for materials required by the production elements of the electric fans for Riordan Manufacturing.

When the company entered the Chinese market, the company decided to locate their China operations in Hangzhou. This location was deemed as ideal because it is closely proximate to corporate partners and the Qiantang River. This location provides quick access to the river which provides an important transportation avenue. Although the plant has operated production processes relatively well using the domestic assets, Riordan has determined that the Hangzhou plant could significantly benefit from an improvement in the supply chain process for its electric fan operations. After much consulting and planning, Riordan has decided to integrate lean production and planning into its new process to further streamline operations and make the factory as effective as feasibly possible.

Material Resource Planning

To support the lean strategy, Riordan will have to implement a material resource planning platform (MRP) to support the lean strategy. A MRP system can automate much of the procurement process and even make suppliers aware of orders so that anyone in the supply chain. In some systems everyone in the supply chain, even external partners, can access the system and check on the status of any of the material movements in the supply chain. This system can serve as the cornerstone of the strategy to effectively implement a functional lean production system at the factory. A lean system reduces inventory levels by ordering materials and supplies as they are needed and MRP can automate this process.

How MRP Works

The MRP system will identify the materials needed for a new production run, identify the inventory that is currently being held in stock, then determine what material will be required to fulfilled to produce the order beyond the current inventory being held can support. The inventory levels can be adjusted in the system and usually a safety stock level of key materials is held as a buffer (Watson, 2012). In a lean production system the safety stock levels will be kept as low as possible to keep inventory levels down.

One a production manager enters the production order into the MRP system, the system will generate a bill of material, master schedule, and lead times as all part of what is referred to as a BOM explosion routine (SAP, N.d.). The system can automatically output purchase orders and work orders as well as all production schedules once the BOM is approved. The system is also equipped with several reporting features that allow a production manager to research trends and try to identify opportunities to further refine production systems. Such reporting functionality is essential in a lean production system as well; such reports can include scrapping allowances, lead times, customer purchasing trends, and forecasting sales. These reports assist in identifying areas for cost savings in the inventory process.

Figure 1 - BOM Explosion (SAP, N.d.)

The advantages of the MRP system are simplicity, control, and lowering transaction costs related to its production functions (Wells, N.d.). There are four basic components to most MRP systems; Purchasing Planning, Production Planning, Work Scheduling, and Customer Service. Most of the MRP systems are fairly user friendly and require minimal training for users to get acquainted with the system. This is also a critical factor for implementation of new software because there will be little production downtime. The cost of implementing MRP module is also far less expensive than implementing a more comprehensive full ERP system. Although a MRP function is included in most ERP software, there are many other modules that are also included and as a result it is more complex to implement.

MRP - Recommendation