Technology / Project Management
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Autor: anton 04 November 2010
Words: 1707 | Pages: 7
Riordan Manufacturing MRP Evaluation Project
Scope of the Project
Riordan Manufacturing can continue to expand by reducing the inventory cost of raw materials and finished goods. Riordan currently has a legacy MRP Information System (IS) in place, and this project provides an excellent opportunity to upgrade the infrastructure to allow for a more cost-efficient way to track inventory.
Goals of the Project
Riordan would like to develop or acquire an MRP system that will track and manage raw materials and finished product inventory across all plants to help ensure reduced inventory costs throughout the entire company.
The exploratory committee has identified the following as the Business Objectives for this project:
â€¢ Accurately track and manage raw materials and finished goods
â€¢ Reduce inventory cost of raw materials and finished goods
â€¢ Improve MRP infrastructure
Measures of Success
The following tasks will be performed to measure the success of the project at six (6) months and one (1) year:
â€¢ An inventory analysis validating the accuracy of tracked inventory
â€¢ A cost analysis comparing the cost of inventory management to previous reports
â€¢ Hire an IS analysis firm to analyze the new Riordan MRP systemâ€™s efficiency
Statement of Scope, Objectives, and Constraints
Riordan Manufacturing needs to reduce the inventory cost of raw materials and finished goods. To reduce these costs, Riordan would like to develop or acquire an MRP system that can accurately track and manage raw materials and finished product inventory across all plants.
I am investigating the feasibility of developing or acquiring an MRP/MRPII information system to ensure that Riordan can accurately track and manage raw materials and finished goods and reduce inventory cost of raw materials and finished goods. In addition, I am going remove legacy technologies in order to improve Riordanâ€™s MRP communication infrastructure.
The following constraints exist for this project:
â€¢ Financial - The approved budget for this development project is not to exceed $750,000 for hardware, software, and technical analysis purchases
â€¢ Time â€“ Due to upcoming financial deadlines, this project needs to be running parallel to the legacy system in six (6) months, with full implementation completed in twelve (12) months.
â€¢ Resources â€“ There are no in-house staffing resources to complete this project. A third party technical analysis team will provide the technical expertise needed for this project to complete in the time specified.
â€¢ Organizational Policies - In order to provide continued quality merchandise and service, Riordan is committed to:
o Six Sigma, industry-leading R&D and exceeding ISO 9000 standards
o Staying the industry leaders in manufacturing plastic products
o Providing solutions for customers
o Maintaining long-term relationships
o Maintaining rigorous quality controls
o Providing innovative solutions
o A responsive business attitude and reasonable pricing
o Assuring that employees are well informed and properly supported
â€¢ Culture - The cultural constraints are the buyers, especially in the worldwide market. Buyers of the different plastic products look for a company that will guarantee quality products and services. Ace targets three types of buyers:
Current Business System
The Current MRP System
Riordanâ€™s current MRP system is spread among all four offices. The MRP server specifications and connection types are:
â€¢ San Jose, CA â€“ One (1) IBM pSeries 6E4 UNIX ERP/MRP server communicating over a T1
â€¢ Albany, GA â€“ One (1) HP-UX UNIX MRP II server and one (1) HP-UX UNIX ERP server communicating over a fractional T1 (256k)
â€¢ Pontiac, MI â€“ One (1) RS6000 IBM-AIX UNIX MRP II server and one (1) HP-UX UNIX ERP server communicating over a fractional T1 (256k)
â€¢ Hangzhou, China - One (1) IBM pSeries 6E4 UNIX ERP/MRP server communicating over a T1
Currently, the legacy servers handle all of the MRP and MRPII processes and all data is transferred over a 1.5MB or 256k data line. This project will re-engineer the MRP information system to allow for accurate and efficient product tracking and management. In addition, an upgraded LAN/WAN infrastructure will be provisioned, allowing for faster, more secure data communications.
Business Functional Requirements
Riordan is a global leader in plastics manufacturing. In order to continue this leadership, the management of Riordan realize that critical need to upgrade their legacy MRP/MRP II information system. As a result, the CTO of Riordan will assume the leadership of this effort and the management of the projectâ€™s activities. This section defines the Business Functional Requirements for the upgrade project.
Information Technology Requirements
â€¢ Assume primary responsibility for all technical changes needed for the upgrade: A third-party technical analysis group will assume all technical responsibility for the upgraded MRP/MRP II IS. This includes design, implementation, initial support and maintenance, and user training and support. The CTO has full authority over IT business requirements and organizational changes as necessary.
â€¢ Acquisition of all hardware and software to support the upgrade: The technical analysis group will be responsible for acquiring the necessary hardware and software needed to implement an upgraded MRP/MRP II IS. The third party will be responsible for initial operation and maintenance of the new system until users are trained.
â€¢ Integration of old MRP/MRP II procedures into the new system: Procedures that that originate from the legacy system will be integrated into the new MRP/MRP II system, if possible. The IS will be designed and implemented to minimize procedural changes; the third party will fully consult with the CTO on any potential changes.
â€¢ Training new IT personnel to support and maintain the new MRP/MRP II IS: The third party will be responsible for training IT employees to support and maintain the new IS. The IT employees will be informed of the system architecture and operations so that technical familiarity with the system resides in-house.
Riordan expects a decrease in raw material and finished good cost and improved tracking accuracy, which will require employees to be able to maintain and support the system that provides these requirements. The addition of an IT department that will handle the functions of the MRP/MRP II system will prevent Riordan from relying on expensive third-party support and maintenance.
Description of the New Business System
The process flow has adapted to the new MRP IS and will follow the same high-level procedures:
â€¢ The orders and forecast for each time period for each end item are subtracted from the stock on hand plus any scheduled receipts to give the day to day projected available balance
â€¢ If the projected available balance falls below zero the MRP program will suggest rescheduling an existing order. If there are no orders to re-schedule, the MRP will create a planned order to correct the projected available balance
â€¢ The planned order quantity is set to just enough to restore the projected available balance (lot for lot), a fixed quantity multiple (lot size), or can be a number of more complex calculations involving minimums, maximums, multiples etc...
â€¢ All planned orders offset by the lead time either create purchase orders or are exploded into the component parts using the partâ€™s bill of material
â€¢ Planned orders at one level are exploded into projected gross requirements at the next level down in the bill of material
â€¢ The above steps are repeated for all components
Detailed Design Process and Design Specifications
Riordan will be replacing the multiple ERP/MRP/MRP II servers with the HP ProLiant BL p-Class blade server model. This model is quickly and easily expandable and has specifications that far surpass the total processing power of all four plants. The maintenance cost of the aging servers outweighs the price to purchase a new, up-to-date server.
Riordan will be consolidating the multiple ERP/MRP/MRP II servers into one HP ProLiant BL p-Class blade server. The server will have additional blades added for backup purposes. This allows for central management, support, and maintenance. This also prevents multiple IT personnel from being hired in each plant. The single server will be housed in Riordanâ€™s San Jose Global Headquarters.
Riordan will be replacing the full and fractional T1s at each site with 45MB T3 line. The T3 will allow for faster data transfer rates to the single MRP server and will accommodate the expected growth of the company.
The current legacy MRP software will be replaced with JDEdwards EnterpriseOne Oracle based software. This software allows Riordan to update their MRP process while maintaining current procedures. The software is divided up into fully customizable modules so that the entire application does not have to be purchased or installed.
The MRP upgrade project for Riordan will require the purchase of network hardware, new MRP software, provisioned T3 data lines, third-party IT services, and the addition of approximately six IT employees. The estimated cost for these items is:
â€¢ Hardware: $40,000 for eight blade servers and racks
â€¢ Software: $60,000 for one network license
â€¢ T3 Lines: $4,000 installation and $10,000/month
â€¢ Third-party IT service: $150,000 for a total of 2,000 man-hours
â€¢ Six IT employees: $240,000/year
. The overall cost of implementing the proposed system in the first year is $610,000. Costs for the second and subsequent years are less than $360,000. These costs are relatively low, because the addition of IT staff will prevent third party support and maintenance costs.
Examining the benefits of the proposed system requires a closer look at the objectives of the project. The first objective is to accurately track raw materials and finished goods. The new MRP software will allow for more intricate inventory tracking with minimal re-training. The same overall procedures will be followed, but a more powerful system will maintain accurate inventory calculations.
The second objective of the project is to decrease the inventory cost of raw materials and finished goods. The new MRP system will allow for better tracking of goods, which prevents lost materials. This, in turn, will allow Riordan to reduce the cost of inventory and allow us to gain sales with lower customer prices.
The third objective is to improve the MRP infrastructure. Removing the legacy equipment and slow data lines will allow much more inventory to be processed. This will increase productivity throughout all of the plants.
Riordan Manufacturing will more than recover the expenditures of this IT project within two years of the upgrade. Riordan will experience an increase in sales and a decrease in inventory loss due to accurate and low-cost inventory management. On-going costs will be minimized with an internal IT department handling support and maintenance of the new system. All of the projectâ€™s objectives have been met, and Riordanâ€™s expectations have been fulfilled.
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