Running Header: PROPOSAL PACKAGE Proposal Package Stephen J Kiser University of Phoenix March 22, 2010 Cover Letter The goal is over the next 18 months to develop a system that will allow for the production of both our generic electric fans and personalized fans offered at our China location to become a more stream line process and adopt more of a just-in-time manufacturing approach. In order to make this process a reality the IT department will sent a request to develop an automated ordering system that will allow for quick and accurate tracking of inventory level and ordering of new inventory.
The IT department will also be requested to order new bar coding systems that will allow for all merchandise and raw materials to be bar coded, and will decrease the time needed to verify new shipments. The suggestion will also be made to supplement the supply chain by adding an additional provider of electronic fan motors since the company currently being used does not have a perfect track record of dependable on time deliveries of needed inventory.
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Supplementing this provider will increase the successfulness of the company’s change from a stock-to-market approach to a just-in-time manufacturing approach. Materials Requirement Plan Materials Requirement Planning is an integral part of any manufacturing based business. According to The Free Dictionary’s definition of materials requirement planning is that this system “provides the user with information about timing (when to order) and quantity (how much to order), generates new rders, and reschedules existing orders as necessary to meet the changing requirements of customers and manufacturing” (2009). This definition of materials requirement planning illustrates the importance of having an excellent system in place to make certain that ordering needed materials is done in an orderly fashion that allows for the needed materials to be on hand, but will not result in an instance of having excessive amounts of inventory in stock that will need to be held for long periods of time, or that may not be used at all.
For this reason Riordan needs to develop a strategy that will allow for a computerized inventory system to be utilized, which will allow for ordering to be done when materials reach a certain point so that the company doesn’t experience any down time due to insufficient amounts of inventory. One method that can be utilized to increase the efficiency in the current method of shipping and receiving raw materials would be to have a computerized system that automatically orders materials bases on sales projections entered into the system by the shipping supervisor.
When orders are received the current technique is to have all orders checked first by the shipping supervisor and then unloaded by a team of employees. However, this could be streamlined as well and each incoming package be labeled with a bar code that the unloading team could then scan and after the truck had been completely unloaded the computer system would then compare what was ordered to what was received and make adjustments accordingly. New Process Design for Production of Electric Fans Currently Riordan produces the electric fans at the plant located in China.
This allows for the company to utilize the cheaper resources and labor that is associated with this area. Currently the process that is utilized is that the plastic polymers used in the production of the fans are bought locally, along with the completed fan engines that will power the electric fans. The plant in China then injects the plastics into molding machines that create the various plastic parts that will be used in the completed project. Once the products are completed the plant will then ship these electric fans to anywhere in the World through use of FedEx.
This process design for the production of the electric fans is sound and seems not to have any negative effects associated with this process. The only changes that could possibly be made to increase efficiency are the method used in determining what amount of products needs to be ordered. Currently the method is extrapolation based on the previous three years of sales, due to the issue with on time deliveries this method is understandable, but perhaps isn’t the most cost efficient.
If the company was able to develop a more reliable supply chain than currently exist this would allow for more “real time” ordering to be done and thus the company could experience a higher degree of dynamic production capacity than currently exist (Riordan, 2009). Supply Chain for Electric Fans Currently the supply chains that exist for the Chinese plant that produces the electric fans is the purchasing of plastic polymers, used in the production of the plastic components of the fans, and ordering of the completed electric motors used to power these fans.
According to the Riordan Manufacturing website there seems to be no obvious flaws with the shipments being received of the plastic polymers or any of the miscellaneous equipment used in the production of the plastic fans. However, there is only a 93% chance that the shipments of the electric fan motors will be received on time. This may not appear to be an issue to some companies but can be extremely important when attempting to develop a real time ordering system that required on time shipment of all goods and services so as not to stop the production process.
For, this reason the easiest way to ensure on time delivery of these items would be to expand the sources for these parts outside of the one company that is currently used so that if one location cannot provide on time delivery of needed equipment then the other location can be utilized to maintain an steady shipment of the needed equipment to produce these electric fans. Productions Forecast for Electric Fans Currently the production forecast being utilized by the company is a make-to-stock production forecast model in which the company uses the past hree years of ordering data and through forecasting attempt to develop production level goals for the plant. This approach heavily relies on the idea that the past will repeat itself, which isn’t the case many times. This approach results in overproduction in times of economic downturn, while it may result in under production of products in periods of economic growth. This is why the suggestion is to create a more dependable supply chain and turn the process into a just-in-time approach, since this technique would be better suited for the individualized products that the Riordan location in China offers to customers.
This would also allow for more real time data to be used when attempting developing forecasting plans and would allow for short-term changes made to the production capacity of the plant depending on the current economic situation. Implementation Plan The first task that needs to be completed in order to make the suggested changes listed above would be to complete the database system that would be responsible for tracking inventory at the electric fan plant.
Developing this system would require that either an internal or external IT department be consulted or a plan of action be developed which would allow for the development of the software and purchasing of the hardware needed for this process. As the software is being developed the current amounts of inventory must first be entered into the new system that will be tracking the usage and ordering of the equipment needed in the production of the electric fans.
Once this information is entered the system must have minimal information entered which will allow for the system to realize when ordering new materials is needed so that the plant does not exhaust the resources on hand before a new order is received. Once this software has been installed hardware will need to be purchased that will allow for the bar-coding of merchandise and for incoming orders to be scanned and electronically entered into the system.
The second element associated with the changes being suggested is the increase in the reliability of the supply chain. First negotiations may need to take place with the initial provider of electric fan motors to ascertain exactly how many of these motors can be purchases and within what time frame and the order be guaranteed to be delivered on time. Once this information is gathered the company can attempt to set up a secondary provider of these completed motors that will ship the parts that the initial supplier may not be able to guarantee on time delivery of.
Once these negotiations have taken place this information can be entered into the ordering data base so that the system will automatically order the needed parts from the supplier that will be able to ship the equipment so the orders will be received on the specified need date. References Riordan Manufacturing. (2009) Intranet. Retrieved March 20, 2009 from https://ecampus. phoenix. edu/secure/aapd/cist/vop/business/riordan/RioMfgHome002. htm The Free Dictionary. (2009). Materials Resource Planning. Retrieved March 20, 2009 from http://encyclopedia2. thefreedictionary. com/Material+Resource+Planning