Organizational Issues And Trends

Introduction

The COO, Hugh McCauley has requested that a service request SR-rm-001 process evaluation be written for Riordan Manufacturing. The need is a suggestion of changes that will improve the inventory or manufacturing process for the company. To recommend changes for the inventory process, the computer system will be used and new tools and software will need to be used. Ultimately creating a proposal for system upgrades and improvements implemented for cost and time efficiency.

Executive Summary

Riordan Manufacturing is a global manufacturer of various plastics with annual revenues of $46 million. The two year sales objective for annual revenues is to reach $50 million while maintaining the current cost structure. The incremental revenue will originate from new customers as well as by quickly responding to customer’s requirements and developing new products. Currently inventory assets exceed $7.8 million and are projected to grow as new products are developed. Managing the inventory cost and accuracy at four of the Riordan Manufacturing locations will not be feasible with the current inventory management process and systems.

The intent of this project is to recommend a centralized inventory management system that will allow Riordan Manufacturing to manage efficiently inventory globally and reduce inventory cost by 20%. Additionally, the new inventory management system will prevent inventory inaccuracy and increase productivity in purchasing and logistics by accurately forecasting demand for materials.

The new inventory management system must be developed and integrated into the global operations within six months to achieve a 20% inventory cost reduction by the end of 2008. The inventory management system will allow for many different currencies, and users of multiple languages. Manufacturing operations will also use the system to determine the productivity and manufacturing yield in each of the manufacturing facilities to decrease variance. The inventory management system will also be integrated with the billing system to notify customers when products are shipped.

Solution Design Requirements

The inventory management system must allow for the following requirements:

• Use the existing hardware infrastructure (computers and terminals)

• Must be able to integrate peripheral devices such as bar code scanners, printers, RFID tags, and PDAs into the existing system.

• Must be able to be accessed by multiple simultaneous users globally

• Must have a GUI interface

• Data must be maintained and backed up in a secure Data Center for quick retrieval.

• System must allow for exporting of data to be used by other applications such as Excel for analysis.

• System must have online help guide in native language.

• System must allow for multiple user and security accounts so different users can do different function.

Procedures and Policy Statements

In reviewing the current inventory management system of Riordan’s Manufacturing changes need to be made as currently existing is three manufacturing plants located in Georgia, Michigan and California…plus a joint venture in the People’s Republic of China and each of these manufacturing plants are currently operating as an individual entity.

Currently when raw materials are received at a manufacturing plant, a receiving supervisor compares the shipping document against scheduled incoming orders. At the end of the day, the receiving supervisor gives the log of all raw materials and associated shipping documents to the receiving clerk who enters this information into the inventory system. As raw materials and sub-assemblies are taken out each day, an inventory usage form is completed and given to the inventory clerk to enter into the inventory system. After all orders are fulfilled and loaded for shipment, copies of the orders shipped are entered by the receiving clerk into the inventory system. The current process is susceptible to inventory inaccuracies due to human input error in multiple locations. With the improved system, these vulnerable areas need to be eliminated as indicated in the flowchart below.

A centralized computer system that all departments of the manufacturing plant can access will help the organization with various cost savings. Riordan can use the existing hardware infrastructure such as the computers and terminals and upgrade it with software to improve productivity. By using integrated peripheral devices such as bar code scanners, printers, RFID tags, and PDAs it will reduce the amount of data entry that the various clerks must enter into the inventory system and reduce errors. The new system must allow entered data to be accessed by the other manufacturing plants as a way to use historical and statistical data to predict upcoming usage.

Conclusion and Recommendations

Riordan Manufacturing has a problem with their inventory system, too much is a manually run process. This needs to change to become a centralized inventory management system. The desired changes would allow for a streamlined less hands-on process. This company needs a complete overhaul of their computer system that dates back to 1992. The changes of inventory control are necessary to maintain accuracy and ultimately through a creation of a central database for the entire company. A database connecting all the branches would be the best long-term goal for the computerization and unity of the company. This service request is limited by a budget of $150,000 as such is restricting itself to the inventory system.

Using the budget allotted the suggestion is to purchase:

Microsoft Enterprise Edition 25,000x4=100000.00

Cordless Barcode Scanner Kit 543.80x6= 3262.80

RedBeam Inventory Tracking Software Standard Edition 390.80x3= 390.80

Barcode Printer 672.00x3=