MRP System for Riordan Manufacturing's Lean Strategy
This paper examines Riordan Manufacturing's plan to adopt a Material Resource Planning (MRP) system in support of a lean production strategy at its Hangzhou, China electric fan facility. The paper outlines how MRP automates procurement, generates bills of materials, and coordinates purchase and work orders to minimize inventory levels. It covers the system's four core components, its cost and implementation timeline, and the projected return on investment. The analysis concludes that MRP software represents the most practical and cost-effective path toward achieving Riordan's goals of reducing production costs by 10% and cycle time by 15%.
- Company Overview: Riordan Manufacturing profile and lean initiative
- Material Resource Planning: MRP role in supporting lean production
- How MRP Works: BOM explosion, components, and reporting features
- MRP Recommendation: Cost estimates, ROI, and strategic justification
- Implementation Timeline: Five-phase rollout schedule with durations
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What makes this paper effective
- Grounds the technology recommendation in the specific operational context of Riordan Manufacturing, making the analysis concrete rather than generic.
- Moves logically from problem identification (supply chain inefficiency) through solution explanation (how MRP works) to justification (cost savings and ROI), giving the argument a clear through-line.
- Includes a practical implementation timeline with task durations and predecessors, demonstrating that the recommendation is actionable and not merely theoretical.
Key academic technique demonstrated
The paper applies a solution-justification structure common in applied business writing: it establishes organizational needs, explains the proposed technology in sufficient technical detail, and then quantifies the expected benefits. Citing specific cost figures ($1 million implementation budget, $2 million five-year savings) and percentage targets (10% cost reduction, 15% cycle time reduction) strengthens the credibility of the recommendation by making it measurable.
Structure breakdown
The paper opens with a company profile that establishes context, then introduces the lean production initiative as the driving business need. Two body sections explain MRP conceptually and technically, including the BOM explosion process and the system's four components. A dedicated recommendation section addresses cost, timeline, and ROI. The paper closes with a Gantt-style project schedule that translates the proposal into a concrete rollout plan spanning roughly 16 months.
Company Overview
Riordan Manufacturing employs 550 people worldwide with projected annual earnings of $46 million and operates as a global plastics manufacturer. The company is one of the industry leaders in the field of plastic injection molding in terms of both total volume and quality. By utilizing state-of-the-art design competencies, Riordan Manufacturing creates innovative plastic designs that are well respected across their applications. Riordan holds its headquarters in San Jose, California, with domestic offices in Albany, Georgia, and Pontiac, Michigan. The company also operates a plastic fan parts facility in Hangzhou, China. Its production competencies include attention to detail, extreme precision, and rigorous 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 staff real-time access to ordering, transit, and inventory data. The new procurement process design has the potential to 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 in the production of electric fans at Riordan Manufacturing.
When the company entered the Chinese market, it chose to locate its China operations in Hangzhou. This location was deemed ideal because of its proximity to corporate partners and the Qiantang River, which provides an important transportation avenue. Although the plant has operated production processes relatively well using domestic assets, Riordan has determined that the Hangzhou facility could significantly benefit from an improvement in its supply chain process for electric fan operations. After extensive 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 need to implement a Material Resource Planning (MRP) platform. An MRP system can automate much of the procurement process and make suppliers aware of orders so that everyone in the supply chain is informed. In some systems, all supply chain participants — including external partners — can access the system and check on the status of material movements at any point. 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 only as they are needed, and MRP can automate this process.
How MRP Works
The MRP system identifies the materials needed for a new production run, determines the inventory currently held in stock, and then calculates what additional materials must be ordered to fulfill production requirements beyond what current inventory can support. Inventory levels can be adjusted within the system, and a safety stock level of key materials is typically maintained as a buffer (Watson, 2012). In a lean production system, safety stock levels are kept as low as possible in order to minimize inventory carrying costs.
Once a production manager enters a production order into the MRP system, the system generates a bill of materials, a master schedule, and lead times — all as part of what is referred to as a BOM explosion routine (SAP, n.d.). The system can automatically output purchase orders, work orders, and production schedules once the bill of materials is approved. The system also includes several reporting features that allow a production manager to analyze trends and identify opportunities to further refine production systems. Such reporting functionality is essential in a lean production environment; relevant reports can include scrap allowances, lead times, customer purchasing trends, and sales forecasting. These reports assist in identifying areas for cost savings throughout the inventory process.
The advantages of an MRP system include simplicity, control, and lower transaction costs related to production functions (Wells, n.d.). There are four basic components to most MRP systems: Purchasing Planning, Production Planning, Work Scheduling, and Customer Service. Most MRP systems are fairly user-friendly and require minimal training for users to become proficient. This is a critical factor in any new software implementation, as it reduces production downtime during the transition. The cost of implementing an MRP module is also considerably less than implementing a comprehensive, full-scale ERP system. Although MRP functionality is included in most ERP software packages, ERP systems include many additional modules that significantly increase implementation complexity and cost.
Works Cited
SAP. (n.d.). Controlling the BOM explosion. Retrieved from SAP Help:
Watson, M. (2012, February 16). Safety stock helps buffer against variability in the supply chain. Retrieved from Logistics Viewpoints: http://logisticsviewpoints.com/2012/02/16/guest-commentary-safety-stock-helps-buffer-against-variability-in-the-supply-chain/
Wells, D. (n.d.). The advantages of an MRP system. Retrieved from eHow Money:
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