Riordan Manufacturing Supply Chain Design Team B 1

Topics: Supply chain management, Manufacturing, Production and manufacturing Pages: 10 (1633 words) Published: April 25, 2015


Riordan Manufacturing Supply Chain Design
Norita Howard, Al-Malik Jensen, Candice Johnson,
Alenna Jones, Winston Meikle, and Manoela Viera
OPS 571 / Operations Management
Professor Barbara Harpin-Fuller
December 2, 2013
Riordan Manufacturing Supply Chain Design
A supply chain is the process of moving information and material to and from the manufacturing and service processes of a firm (Jacobs & Chase, 2011). Two components encompass the focus of the supply chain: the production, planning, and inventory control process and the distribution process. The supply chain is part of daily business operations and directly affects productivity, efficiency, and financial profitability. Proper management of the supply chain ensures a business delivers quality, cost-efficient products to customers while remaining competitive in today’s global market.

Team B provides a review of Riordan Manufacturing’s (RM) production strategy and describes supplier relationships and how they affect the supply chain. Finally, Team B explores how lean production principles and inventory requirements can be used to determine appropriate supply chain processes. Electric Fan Manufacturing Strategy

RM uses the level production planning strategy of maintaining a stable workforce to produce electric fans at a constant output rate (Jacobs & Chase, 2011). Shortages and surpluses are absorbed with inventory levels, order backlogs, and potential lost sales (Jacobs & Chase, 2011). Employees benefit from stable work hours at the cost of increased inventory levels, increased potential of lost sales, risk of obsolete products, and decreased customer service (Jacobs & Chase, 2011). Electric Fan Supply Chain

RM’s supply chain process flow in Figure 1 provides raw materials to the manufacturing plant and warehouse at the input end and the supply of completed plastic fans to the customer on the output end of the supply chain (Jacobs & Chase, 2011). The supply chain for the individual manufacturing processes is detailed in Figure 2. Figure 1

Riordan Manufacturing Supply Chain

Figure 2
Manufacturing Department Supply Chain Process

Supplier Relationships and the Supply Chain
RM uses vertical integration as the framework for structuring supplier relationships. A vertically integrated process allows RM to control supply chain activities. Strategic activities are a key source of competitive advantage. Instead of outsourcing non-core activities and maintaining only core competencies under management control, RM evaluates each activity using required coordination (the difficulty of ensuring how well activities integrate with the process), strategic control (degree of loss that would result if supplier relationship were severed), and intellectual property techniques (Jacobs & Chase, 2011). Other types of losses important to consider include specialized facilities, knowledge of major customer relationships, and investment in research and development (Jacobs & Chase, 2011). RM does not outsource activities requiring frequent information exchange but instead outsource highly standardized, well understood, and easily transferrable activities to specialized business partners. Such strategic planning led to RM offshoring their entire fan operation from Pontiac, Michigan, to Hangzhou, China in 2000. This decision allowed RM to operate in a more feasible location, expand exponentially, and maintain financial stability (Jacobs & Chase, 2011). Electric Fan Supply Chain Metrics

A performance measurement system is vital for businesses to operate efficiently and effectively. According to Jacobs and Chase (2011), “process performance metrics give the operations manager a gauge on how productively a process currently is operating and how productivity is changing over time” (p. 116). Two metrics used to evaluate the performance of the RM’s electric fan supply chain are utilization and productivity. Utilization measures the rate at which...
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