Ops 571 - Production Plan for Riordan Manufacturing

Production Plan for Riordan Manufacturing

OPS/571

May 9, 2011

Riordan Manufacturing employs over 500 hundreds personnel and its projected earning is $46 million annually. The company is owned by Riordan Industries, and the corporate headquarters' is located in San Jose, CA. Riordan has plants in several locations. The plant in Hangzhou, China produces plastic fan blades and fan housings. Electric fan motors are procured from a third-party and pulled together with the plastic parts. When this is accomplished the fans are sold as a finished item for consumption. This is a joint venture with Riordan Manufacturing working alongside a small group of Chinese national. For the purpose of this assignment Team C will discuss the strategic capacity planning and lean production for the new process design and supply chain process for the electric fans at Riordan. In strategic capacity planning the company must view the three time duration: short range, intermediate range and long rang. While looking at the lean production special attention is given at the integrated set of activities, designed to achieve high volume production using minimal inventories of raw materials, work process, and finished goods (Chase, Jacobs, & Aquilano 2006).

Capacity Planning

Capacity planning provides a platform for determining the capacity level for those resources dependent on the capacity of the company, including the facility, equipment and, size of the labor force. This planning must be in line with the company's long range competitive strategy to avoid allowing competitors to enter the market, nor to allow excess inventory to stagnate.

Riordan Manufacturing has several capacity planning issues within the China plant. The initial issue is that of laxity within the supply of the plastic polymer used to direct inject into the molds for the fan parts. It may be cheaper to have the plastic parts for the fans shipped in rather than incurring the capital expenditures of these machines from year to year.

The second capacitance issue comes with the way fans are ordered from customers. The projected sales come from an extrapolation of the previous three years sales. The customer orders only a few fans at a time, which may not meet the number of fans projected. If the plant has an excess of orders the resulting bottleneck can cause the customer to look elsewhere for the fans needed.

The final capacitance issue involves the motors not kept on hand to assemble new fans with. The company relies on an outside vendor for the fan motors; none are kept in stock for excessive orders. This causes a bottleneck when the assembly team needs the fan motor for orders.

Lean Production

Lean production will lead the way for the new process design of Riordan. "In the 1990s, many companies adopted the term lean in place of JIT to emphasize the goal of systematically eliminating waste throughout their operations" (Chase, Jacobs, & Aquilano, 2006) [The citation for a direct quote needs the page number] . Lean production is an integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, work-in-process, and finished goods" (Chase, Jacobs & Aquilano, 2006) [Needs page number] .

Riordan already follows Six Sigma and ISO 9000 in its production and to further Riordan's mission for enhanced Lean Production, the company will follow the Toyota Production System design. The Toyota Production System design was developed to improve quality and productivity and is predicated upon two philosophies central to the Japanese culture: elimination of waste and respect for people. Riordan is already dedicated to its employees to maintain a team oriented work environment that will aid in attacking waste, exposing problems and bottlenecks, and achieving streamline production.

Fujio Cho, president of Toyota, defines seven waste elements that need be reduced in an organization: waste from over production, waste of waiting time, transportation waste, inventory waste, processing waste,