OPS 571 Riordan Process Design WEEK 6 FINAL PAPER
OPS 571 Riordan Process Design WEEK 6 FINAL PAPER
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Running head: PROCESS DESIGN FOR RIORDAN MANUFACTURING 1 Process Design for Riordan Manufacturing Team OPS571 July 6, 2010 Teacher PROCESS DESIGN FOR RIORDAN MANUFACTURING 2 Introduction Riordan Manufacturing’s owns three plants: Albany, GA where plastic bottles are produced; Pontiac, MI where it handles the company’s custom plastic fabrication, and Hangzhou, China that currently operates a decentralized unit of the organization producing electric fans. When creating a process design for Riordan’s fan production operation, it is important to create a holistic production system that addresses several different aspects of production, including total quality management, material requirements planning (MRP), process design, supply chain considerations such as justintime manufacturing and Six Sigma, accurate forecasting methods, and a means of implementing change. Total Quality Management One of Riordan’s principal focuses, as outlined in its mission statement, is on lean Six Sigma (University, 2002). Six Sigma emphasizes fast delivery and minimizing costs, while delivering the highest quality products to customers (George, 2004). The needs of the customer drive everything under Six Sigma and the determination of what exactly the customer wants and what is relevant to the customer leads to process improvement. Studying production data and process workflow improves process and delivery speed, which in turn improves customer relations and increases profitability (George, 2004). Riordan’s Six Sigma projects should always start by studying what their consumers want, and analyzing the consumer focus when comparing Riordan to their competitors. All of this is based on production efficiency data, production numbers, and workflow processes. Riordan must manage their Chinese operations more effectively by using more resources to track and mine relevant data specific to their processes and order flow, which involves: (a) receipt of components by truck, (b) molding fan blades with colored pellets, (c) PROCESS DESIGN FOR RIORDAN MANUFACTURING 3 trimming excess plastic from blades, (d) assembling the blades, housings, and motors, (e) packaging and shrinkwrapping, and (f) conveying to loading dock and shipping to the customer. An important tenet of Six Sigma is that queue times and production cycle delays have to be minimized, and this is done by improving both quality and speed (George, 2004). There must be a welldocumented template, such as a checklist, for how exactly work is done, and how work moves between people and workstations. A possible process improvement would be to combine the processes of molding and trimming into one area, and to merge packaging and conveying into one work area. These improvements, combined with improved training, communication, and empowerment of the Chinese staff over their own job functions would create the efficiencies necessary to realize a reduction in operation expenses. Justintime (JIT) manufacturing techniques may be used to manage inventory levels and control workinprocess (WIP) inventory. As with Six Sigma, JIT manufacturing focuses on eliminating waste and continuous production improvement, fabricating the exact right component at the right time and place, with a specific emphasis on eliminating anything that does not add process value but adds costs to production (Agrawal, 2010). By eliminating redundant, wasteful steps, one of the goals of JIT is realized: inventory moves towards zero through the elimination of waste. Additional means of streamlining processes are (a) to relocate the workstations so that they are closer together, thereby reducing product transit time, (b) using any idle time of down time for the maintenance and repair of equipment, and (c) developing closer supplier relationships. All of these strategies add value to Riordan’s Chinese operations and support their corporate goals of lean Six Sigma, realizing a reasonable profitability level, PROCESS DESIGN FOR RIORDAN MANUFACTURING 4 strengthening the Riordan brand and giving it a competitive advantage, and attaining a 10 per cent reduction in operating expenses (University, 2002). ISO 9001 Quality Management Since Riordan Manufacturing believes that they are the industry leader in plastics and that they apply the most innovative manufacturing disciplines, such as Six Sigma and International Organization for Standardization (ISO) 9000, they must ensure that all key players, executives, board members and specialists are certified and trained in order to maintain their standing in the current market. They must also ensure that the tangible products that they are manufacturing are of high quality control and innovative to attain high customer service standards. ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization, and is administered by accreditation and certification bodies. The rules are updated, as the requirements motivate changes over time. Some of the requirements in ISO 9001:2008 (which is one of the standards in the ISO 9000 family) include: (a) a set of procedures that cover all key processes in the business; (b) monitoring processes to ensure they are effective; (c) keeping adequate records; (d) checking output for defects, with appropriate and corrective action where necessary; (e) regularly reviewing individual processes and the quality system itself for effectiveness; and (f) facilitating continual improvement. Master Schedule and Material Requirements Planning In Riordan’s Chinese facility, MRP will run off of the master schedule for fan production. The master schedule is for the finished product, the fans, and should be administered by a master PROCESS DESIGN FOR RIORDAN MANUFACTURING 5 scheduler. The duties of the master scheduler at Riordan include coordinating exactly what is to be produced and prioritizing work flow based on constant load planning meetings with manufacturing, marketing and sales, purchasing, and plant management, balancing the needs of sales with the limits of capacity, changing workflow and order priorities accordingly. The MRP system will then run off the master schedule, and will add value by creating schedules for specific parts required to produce the fans (Chase, 2005). A wellreviewed production schedule based on input from all departments will balance conflicting objectives, efficiently use resources, and keep inventory levels low (Soares, 2009). The creation of a master scheduler position is critical to Riordan’s manufacturing success as this person is ultimately responsible for unifying the needs of different functional areas and making sure they are all on the same page through regular meetings and schedule adjustments. Based on the master production schedule, Riordan will be able to create an efficient MRP system, which will run the requirements necessary to have all needed fan components on hand in time as dictated by the master scheduler’s production schedule. The MRP system has three main goals: (a) regulating inventory levels, (b) prioritizing different items and orders, and (c) planning load capacity for the production system (Chase, 2005). Riordan’s MRP process can be summarized as follows: orders for fans make up the master production schedule, and then a bill of materials (BOM) file is used to list each component of the fans, specifying quantities of motors, polymers, and other assembled parts necessary to make each order item on the master schedule in their respective quantities. Finally there is an inventory record that lists data such as number of components on hand and number of units on order (Chase, 2005). The master PROCESS DESIGN FOR RIORDAN MANUFACTURING 6 schedule, BOM file, and inventory record form the basis of the MRP system, and will create an order schedule for Riordan’s production. Forecasting With Qualitative and Quantitative Methods Riordan would benefit from a mixture of two different types of forecasting: grassroots qualitative forecasting and weighted average quantitative forecasting. Grass roots is a type of qualitative forecasting that emphasizes creating a forecast from the bottom up, meaning sales staff would submit their projected order demand for fans, then they would be totaled and reviewed by management, who would in turn create a forecast ordering components and safety stock based on the input from their sales staff (Chase,2005). This forecast would then drive the inventory requirements for the warehouse and would then be input into the manufacturing system, used in conjunction with the master production schedule and MRP. A forecast for Riordan’s fan production could also be based on the quantitative approach of time series analysis, which involves using data from previous product demand to forecast or predict future demand (Chase, 2005). One way to build a forecast is with a weighted moving average, which gives unequal weight to each month’s forecast data based on previous sales (Chase, 2005). For example, Riordan could create a weighted moving average forecast for the month of July that assumes over a three month period, its ideal forecast is based on 50 per cent of 10,000 units sold for June, 40 per cent of 8,000 units sold for May, and 30 percent of 12,000 units sold for April. The formula to calculate their weighted moving average and forecast July’s sales in terms of fan units for month four would be 4=¿ 0.50(10,000)+ 0.40(8,000)+ F ¿ PROCESS DESIGN FOR RIORDAN MANUFACTURING 7 0.30(12,000), which would yield a sales forecast for July of 11,800 units. In this scenario, the most recent sales data carries greater weight in the calculation. A New Process Design for the Production of the Riordan Electric Fans Riordan’s current operation process is not sufficient for the organization to achieve a competitive advantage. Over the past years the organization has faced delivery delays, purchases from local Chinese manufacturers have not provided the required stock material based on production forecasts, and as a consequence only 93% of stock is delivered on time (University of Phoenix, 2010). Before designing a new production process, Riordan has to eliminate all the bottlenecks in the production (inventory and manufacturers). Selecting alternative suppliers of motor fans will improve production schedules and help to balance the company’s global forecast and improve customer satisfaction. In addition the company should apply Just in Time strategies focusing on reducing raw material costs, eliminating waste and continuous production improvement. Figure 1 represents a flowchart the new process design for the production of the Riordan Electric Fans. Figure 1. Delivery of Raw Material Receiving Supervisor 100% raw material received Log is given to the inventory clerk Move raw material to the factory Inventory clerk enters information on the system Manufacturing Process Fans Finished on time Dispatch to the customer PROCESS DESIGN FOR RIORDAN MANUFACTURING 8 Gantt Chart/Implementation A Gantt chart also known as bar chart was named after Henry L. Grant (Operations Management for Competitive Advantage, 2006). A Gantt chart is an important tool that helps an organization keeps track of different projects at the same time. It will also help manage the time a project will last and in which order each task needs to be addressed, which helps to keep projects on time and on budget. In the case of the Riordan plant it was suggested that ten projects be assigned to be completed in one year starting January tenth. These projects are: (a) the elimination of bottlenecks, (b) a new match system (test time), (c) definition of roles and responsibilities, (d) team training, (e) review of new match system, (f) the review of a new match system (real time), (g) implementation of the new match system, (h) implementation of JIT strategy, (i) quality control of fan production, and (j) production and forecasting (Figure 1). Among these ten projects the implementation of the Match System can be classified as priority one. The Match system will streamline the receiving process. By streamlining the receiving of raw materials Riordan will achieve a reduction of 10% of the operating expenses because Riordan will use less storage and less people handling the raw material before they get to the factory. The implementation of the Match System will take one year and it is divided into two stages. Stage one is the test time that includes creation of the program to Riordan specifications and testing for glitches. Stage two will be the training of employees on the program and the use of Match system in real time. Finally, a creating of a master scheduler position is required. The investment on a master scheduler will increase the communication between sales department, finance, management, and manufacturing needs. This crossfunctional position will act as a control tower to make all the process more efficient by reducing bottlenecks. With this plan ready to be delivered it is imperative to understand that these projects will fail if all the workers involved and the management team is not committed to success. PROCESS DESIGN FOR RIORDAN MANUFACTURING 9 Resources Agrawal, N. Review on just in time techniques in manufacturing systems. (April 2010). Advances in Production Engineering and Management, 5(2). Retrieved June 22, 2010 from EBSCOhost database. th Chase, R., Jacobs, F., & Aquilano, N. Operations management for competitive advantage (11 ed.). New York: McGraw Hill/Irwin. Retrieved June 22, 2010 from University of Phoenix, OPS571. George, M., Rowlands, D. & Kastle, B. (2004). What is lean six sigma? (1 ed). New York: McGrawHill. Murdoch, J.. (2009, June). The exception to a general rule. The Estates Gazette,117. Retrieved September 21, 2009, from ABI/INFORM Trade & Industry. (Document ID: 1756532861). Soares, M & Vieira, G. A new multiobjective optimization method for master production scheduling based on genetic algorithm. (June 2009). International Journal of Advanced Manufacturing Technology, 41(5/6). Retrieved July 6, 2010 from EBSCOhost database. University of Phoenix. (2002). Riordan manufacturing portal simulation [Computer Software]. Retrieved June 22,2010 from University of Phoenix, Simulation, OPS571. PROCESS DESIGN FOR RIORDAN MANUFACTURING 10 Appendix Start Duration Activity End Time Time (Days) 1. Elimination of Bottlenecks Jan10 365 Dec11 2. New Match System (Test Time) Jan10 182.5 Jun11 2.1. Definition of roles and responsibilitiJan10 30 Feb11 2.2. Team Training Jan10 30 Feb11 2.3. Review of New Match System Feb10 150 Jun11 3. New Match System (Real Time) Jul10 180 Dec11 3.1. Implementation of the New Match SystemJul10 30 Aug11 3.2. Implementation of JIT Strategy Jul10 182.5 Jul11 3.3. Quality Control of fans production Jul10 30 Aug11 3.4. Production & Forecast Dec10 30 Dec11
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