Supply Chain Design- Riordan Manufacturing
March 31, 2014
Supply Chain Design-Riordan Manufacturing
Every organization has their own manufacturing strategy, depending on the type of organization will depend on the strategy to have the best end result. Understanding the strategies and how they are used can help the manufacturing process. Riordan manufacturing is a Fortune 1000 organization which produces multiple products, throughout this paper Team C will explain Riordan’s manufacturing strategy and the details that go into a manufacturing strategy. Riordan’s Manufacturing Strategy
There are three different types of manufacturing strategies that an organization can utilize, which include the Chase Strategy, the Combination Strategy, and the Level Strategy. At Riordan, the manufacturing strategy in which is employed is the combination strategy. With the combination strategy the company must “vary the output by varying the number of hours worked through flexible work schedules or overtime” (Jacobs & Chase, 2011 pg. 534). With this strategy the company can vary the number of work hours to match the production needs of the business. At Riordan, production is forecasted based on averaging sales for the prior three years on the fans. The company assumes that “history will repeat itself within manageable limits” (Riordan Manufacturing, 2013). Riordan does, however, also receive periodic orders for fans that are not budgeted for in the production planning causing a need to increase production at various times of the year.
The benefit of using the combination strategy is that the company does not hire and layoff employees throughout the year. The combination strategy allows Riordan to alter work hours to “match production quantities to orders” (Jacobs & Chase, 2011 pg. 534). Riordan can allow schedules to be flexible and utilize overtime for employees when necessary. The Chase Strategy will layoff when production is low and this can cause employees to slow down their performance to prolong the impending layoff. However, the Combination Strategy eliminates the fear of layoff from the employees and gives them a sense of security in knowing that despite the production levels, they will have a job. Having strong production projections is what allows Riordan to utilize the Combination Strategy. Performance Metrics
Performance metrics are tools that businesses can use to determine the efficiency of production. There are various types of performance metrics that a company can use; however in evaluating the performance of Riordan’s electric fan supply chains the two most relevant metrics would be the productivity metric and the efficiency metric. “Productivity is the ratio of output to input” (Jacobs & Chase, 2011 pg. 117). This metric is useful to Riordan because the company can determine the ratio of the dollar value of the output and dividing it by the cost of the inputs. This ratio helps the company to determine if the they are spending more in labor and parts then they are generating in sales. For an organization in which generating sales is the primary goal, this is an important ratio to know. The productivity ratio determines whether or not the company is generating as much of a profit as it should or if too much money is being spent in order to make money.
The second metric that is beneficial to Riordan is the Efficiency Metric. This metric “is a ratio of the actual output of a process relative to some standard” (Jacobs & Chase, 2011 pg. 117). This metric is beneficial in determining if employees are meeting production standards or not. If employees are not meeting production standards, this means that they are not producing enough of the product. Therefore, this can be costly to the company as it can cause the company to not meet orders received for product. The more efficient that an employee is, the more efficient the company will be in meeting the...
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