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Riodarn Manufacturing Inc. is a leader in the plastic industry. With advanced technologies Riordan has created innovative plastic design that has given the company international recognition. Still Riordan has room for improvement and they are looking to increase their margin of profit by minimizing costs and working more efficiently by eliminating current problems and implementing new strategies. This paper will examine strategic capacity planning, ideas to improve lean production and a breakdown of the supply chain process for Riordan??™s electric fans.
Strategic Capacity Planning
According to Chauhan, S., Nagiz. R., and Prothy, J. (2004), ???strategic planning is long-term planning and usually involves selecting providers and distributors, location and capacity planning of manufacturing/servicing units, among others.??? Riordan Industries has a mixture of in-house and outsourced production facilities, and capacity planning is critical for every one.
According to Chase, R., Jacobs, F., & Aquilano, N., (2006), ???A capacity cushion is an amount of capacity in excess of expected demand.??? Unfortunately there is not much information on the Riordan website to indicate whether the issues experienced stem from a lack of capacity cushion. Most issues are arising from more distribution-related areas. In the case of the Albany bottle plant, a significant constraint has been show to exist in the delivery part of the supply chain. When trucking finished product to customers in the Northeast using Huffman Trucking, winter weather issues have often created delivery delays, most likely resulting in lost customers, dissatisfaction and reduced revenue. This topic might fall under the topic of strategic supply chain planning, however the two concepts are somewhat overlapping. Returning to our first definition where capacity planning involves wisely choosing distributors, in this case we can say that the trucking company represents a flaw in the strategic capacity plan, as they represent a bottleneck that limits capacity to deliver product, even if it can be manufactured on time. A better plan would consist of choosing a more reliable delivery mechanism, possibly rail, which would be more scalable in volume as well.
In the case of the Chinese operation, the words of Chauhan, S., Nagiz. R., and Prothy, J. (2004) seem to apply: ???In the context of supply chain design we usually consider two aspects in the selection of partners: the qualitative aspect and the quantitative aspect. The qualitative aspects are the primary selection criteria, such as the financial position of the partner, quality policy, previous history, adaptability towards change of product type or market situations.??? The Chinese supplier appears to be struggling in various areas, especially the outsourced fan motor supplier, who has a dreadful record of on-time delivery. Any capacity discussions will be constrained by this bottleneck, not to mention the risks associated with them motor company??™s pollution and human rights issues, and Riordan would do well to choose a better partner.
The main issue facing the Pontiac plant would be the ability to rapidly create new dies for new products, which requires availability of skilled labour, as opposed to plant capacity which is less in focus due to small production runs and customization.
Strategies for Lean Production
Businesses are constantly researching methods to be more efficient and effective. To be sustainable locally and globally lean production is critical. Lean production is not a new concept but Toyota is attributed with mastering the methodology and implementing lean production as the premier system for success (Koteinkov, V, 2001). Do the most with just the right amount of staff and the correct amount of goods to produce the product. A working definition of lean production is an integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, work-in-progress and finished goods (Chase, R. B., Jacobs, F. R., & Aquilano, N., 2006).
Riordan Manufacturing, Incorporated uses some of the tenets of lean production in their China plant. If Riordan commits to 100% to lean production process several areas become apparent for reworking when interfaced with the ten rules of lean production (SearchManufacturingERP.com (2010):
??? Eliminate waste
??? Minimize inventory
??? Maximize flow
??? Pull production from customer demand
??? Meet customer requirements
??? Empower workers
??? Partner with suppliers
Areas that need immediate attention are:
??? Consolidate Data Collection: historic data has been recorded using paper and pencil; a portion has been microfiche and current data is managed electronically
??? Relocate Hangzhou plant to Shanghai: current port Riordan is shipping from is not meeting the needs; containers are trucked to Qiantang Port; sail to Shanghai Port offload; trucked to another part of Shanghai Port and loaded again to be shipped to their final destinations
??? Coordinate and designate date (s) for orders: periodic orders for quantities of fans against last year contracts are received randomly throughout the year; inventory cannot be constant to meet the demand; a safety stock is necessary for the polymer material and Riordan relies on the company supplying electric motors to have enough motors in stocks
??? Forecasting: China is forecasting sales worldwide. Utilize US operations to determine an accurate forecast for US
??? Select one delivery method: fans may picked or shipped; two areas must be maintained for fans dependent upon the destination
??? Select one shipping company: two similar shipping companies are being utilized; maintaining areas and orders for each shipping company; if cost is similar select other criteria which will distinguish the best shipping company and create a seamless flow
??? Processing similar and like items: similar fans and part processing is not in the same area; increasing queue time
Pull Production for Customer Demand
??? As the fans are being assembled the amount of material for the next stage is predicated on what is needed to complete that batch at that stage; no extra materials; upon full assembly all materials have been used to complete a specified batch; currently orders are received randomly prohibits pull production
??? Worker dissatisfaction has been increasing according to internal surveys; needs to be addressed to increase employee buy-in
??? Going Green initiative is receiving push-back from employees; needs to be addressed and employee feedback encouraged to increase employee buy-in
??? Employees offer more than labour; ideas need to be sought and feedback encouraged
Partner with Suppliers
??? A uniformed, deliberate criteria applied to selecting suppliers needs to be implemented; using two different shipping companies is wasteful; creating a partnership with one company will eliminate duplication which increases waste and potential for error
??? Yin Motors provides all the fan motors; currently Yin on time delivery of motors averaged 93% which does not meet Six Sigma standards; Yin is under investigation for water contamination and the source of a health risk to the community; Yin is located in Hanqzhou; Riordian has considered alternate sources for the motors; excellent time to sever the partnership and partner with a company meeting Six Sigma; a company in Shanghai and light of the investigation to minimize Riordan coming under stringent scrutiny by CCDC who is investigating all businesses for use of carbolic acid;
Riordan is a Six Sigma business, which has a tenet for eliminating waste. Sigma Six and Lean Production overlap in principles. By examining areas of inefficacy and waste Riordan can become streamlined and more productive. By creating a culture for continual improvement Riordan will remain sustainable.
Riordan has in place as their focus to exceed ISO 9000 standards. The mission of Riordan encompasses many of the tenets of Lean Production:
??? Striving to be a solution provider for the customer
??? Team oriented working environment
??? Rigorous quality control
Riordan is primed to embrace Lean Production. By eliminating duplication of sales teams, consolidating data, producing fan parts customers need when needed and not stockpiling parts, minimizing inventory; producing the fan part to specs and stopping the process when quality is not met and correcting at point of compromised quality; regulating JIT flow and minimizing setup times Riordan will have accomplished implementing Lean Production and meeting their mission.
Process Supply Chain
The process supply chain consists of two different stages in two different plants each
bottle has to go through simultaneously; usually the products are made in large batches
and transferred from one plant to another by The Huffman Trucking Company.
Rates of transfer changes from load to load, usually full loaded trucks cost less than half
loaded trucks because no additional cargo should be found to fill the truck and no stops to be
made to deliver additional cargo. The process begins at Albany, GA facility where the
the bottles are produced; the production forecast is done according to contracts made
with customers at the beginning of the year, customers do not receive full delivery but small
batches depending on the customers needs. The facility has a safety stock at all times of raw
material and popular bottles to be able to supply customers when they need and avoid
penalties in the contract and to keep customers satisfied with the services and accurate
delivery dates, which is one of the main goals of Riordian.
Riodarn can benefit like many other companies have by implementing Just in Time in time lean production method. The strategy will help Riordan will lower the final price of the product by keeping the cost of production low as well as shipping costs. JIT will have a considerable impact in the amount of labour in China, but the gains are more valuable to the company and to the costumers who will pay a lower price for a same quality product.
In conclusion, with the implementation of new strategies that will improve manufacturing, delivery and apply the changes in its production plan, Riordan has the potential to pull themselves away from the back becoming a world leader in the plastic industry as well as being very successful in the production of electric fans. Furthermore, the Riordan will put them in the position to expand giving them more business opportunities in the near future.
Chauhan, S., Nagiz. R., and Prothy, J. (2004), International Journal of Production Research. 01 June 2004, vol. 42, no. 11, 2197??“2206. Retrieved May 7, 2010 from http://www.eng.buffalo.edu/~nagi/papers/chauhan2.pdf
Koteinkov, V., (2001). Lean Production 7 Principles of Toyota Production System. Retrieved from the web May 6, 2010 http://www.1000ventures.com/businessguide/lean_production_main.html
SearchManufacturingERP.com (2010). Retrieved from the web