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Analysis for Riordan's Chief Operating officer

Essay by   •  August 8, 2011  •  Case Study  •  2,142 Words (9 Pages)  •  1,883 Views

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Executive Summary

Riordan's Chief Operating Officer, Hugh McCauley has submitted a service request to improve Riordan's Inventory and manufacturing process. Riordan Manufacturing is a global plastic manufacturing plant with major locations in Albany, Georgia, Pontiac, Michigan, San Jose, and Hangzhou China. Recently Riordan did a study which revealed inefficiencies, inaccuracies, and production and man hour losses because of the currently used manual inventory process. Riordan has feared that these findings may effect and threaten Riordan's position in today's highly competitive market. McCauley would like to utilize the computer system to become more efficient and have business requirements created to see what is needed for system upgrades and improvements to be submitted to the IT department.

Riordan's inventory management and control system is split into three categories. These include raw materials receiving; manufacturing; and the final product shipping. Each of those three areas requires improvement in the process which requires upgrades of existing computer systems.

Riordan's Current Process

Currently Riordan processes the receiving of raw materials by manually entering the receipt of the materials. The receipt of this material is not updated in the system until the following day. When looking at the inventory manufactured, the raw materials are being used and then reported to an inventory clerk who inputs this information into a system, again this is being done manually and may not be updated in the system for days. For the final product shipment, currently orders come in from the sales department, telephone and the fax. The sales orders are entered into the customer shipping and billing system. Based on the shipping document generated each day, the shipping department will load the trucks with the products specified. Next the inventory clerk updates the inventory system based on the shipping documents, which is another manual process.

Need for Change

Currently there are a lot of manual entries being made and it is not being done in a timely manner. Inaccurate information is being entered due to human error. Over ordering and discrepancies are happening with inventory and raw material, and overproduction is occurring due to the process and the time frame in which people are inputting entries. After reviewing the overall efficiency Team B has discovered the need to streamline their inventory management department.

Proposed Plan

With the use of RFID (radio frequency identification) chips and readers the process of receiving raw materials, production of final products, and shipments can easily become more accurate, timely, and efficient. RFID chips allow materials to be tracked real time with the help of readers. Implementing an automatic tracking system will lower the cost of labor, speed up manufacturing, increase use of manpower, and decrease the amount of over ordered materials, and increase accuracy and efficiency.

Business Requirements

Riordan Manufacturing is a worldwide plastics manufacturer with their major clientele being automotive aircraft manufacturers, parts manufacturers, beverage makers, appliance manufacturers, and the Department of Defense. Riordan is a manufacturing company and manufacturing defined is the transformation of raw materials into finished goods for sale by using equipment and processing systems. The problem is that the process that Riordan is using is out of date, slow, and is not very efficient. Updating the software will help the company to utilize their available recourses, carefully plan their actions, prepare for unexpected problems, organize their departments, reduce expenses, and increase their revenue (Riordan Manufacturing 2008). Timing and materials coordination are critical functions through these processes and they determine the level of profitability (manufacturing.gaorfid.com). Receiving materials, inventory and manufacturing and final product shipment are all phases within the company that have to be documented to make sure all materials are there and accounted for throughout the process, and this is necessary. Right now it is all done manually which leaves room for a lot of errors, by updating the system and process Riordan would still be able to meet their business requirements but do it faster and more efficiently.

System Changes to Enhance the Existing Process

Team B is suggesting that the process be changed from a manual entry of materials through the processes to a Real time tracking system using RFID chips and readers. Implementing real time tracking will make locating any given material and its location, at any given time, and during any stage from the time it enters as raw material and leaves as final product shipping possible. Manufacturers can benefit from the RFID technology because it can make processes more efficient and improve supply chain responsiveness (Definitions and Expectations). According to a study by AMR Research, "early RFID adopters in the consumer goods industry reduced supply chain costs between 3 and 5 percent and grew revenue between 2 and 7 percent because of the added visibility of real time tracking through the chips provided (Definitions and Expectations).

How RFID Works

RFID is a type of data collection technology that, unlike barcodes or scanners it requires no line of sight or manual scanning, it wirelessly exchanges information between the tagged object and a reader through radio waves that are tuned into the same frequency. The tagged objects can be read in different orientations at very high speeds.

Chips and Tags

The actual tag can be as small as a grain of rice or thin and flexible enough to be put into a bar-coded label, this is what information is stored on and this is what is used to track materials with the help of the readers. Chips are placed within a tag that can be attacked to the actual materials, pallets, a truck hauling the materials, or to a box carrying the products. Tags hold information on each item, such as "serial numbers, configuration instructions, location, times the item passed through a certain zone, even temperature and other data provided by sensors (Definitions and Expectations)." There are a variety of different tags used for different situations. Some have different read/write ability, some are for one time use, depending on the environment in which there are needed they have a range of durability available.

What is Required for an RFID System

One or more tags,

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