Riordan Mfg. Case Study - Internal Business Systems

Service Request SRrm012

Corporations rely heavily on their internal business systems. These business systems consist of departments such as finance and accounting, human resource, legal, sales/marketing, and operations. Riordan Manufacturing, Inc. contains all the necessary business systems to operate for day to day activities. However, the current business systems are not primed for optimal efficiency. Information on current issues and suggestions on resolving companywide issues will be addressed.

Finance and Accounting

The three Riordan Manufacturing locations have independent finance and accounting business systems. The locations are the Georgia plant, the Michigan plant, and the San Jose corporate office. All information is transferred to the corporate office located in San Jose, CA. The finance and accounting information is consolidated into the corporate finance and accounting operating system. This consolidation process is where additional funds and processes are wasted.

All locations consist of basic components such as general ledger, accounts payable and accounts receivable. Specific components that are only managed at the corporate office, in San Jose, CA, include EDI (Electronic Data Interchange), bar code reading, and EDSS (Executive Decision Support System). During the acquirement of the Michigan and Georgia plant, the compatibility between the different operating systems was not considered.

A network diagram of the San Jose location shows they are operating in a Windows Server environment. This location is running IBM server software, as they have (3) IBM servers documented. The San Jose site is using a UNIX ERP/MRP server, so they have UNIX as well. MAC operating systems are used since the site is operating 15 G5’s from the Macintosh Corporation.

The Michigan plant has a vendor developed software application, and the attendant source code for the finance, accounting and process application. The vendor is no longer in business. The application runs on a pair of DEC Alpha’s using the VMS operating system, VAX4000 workstations and programmed in C.

The Georgia operation of Riordan Manufacturing is dedicated to manufacturing plastic fans. Georgia had outsourced to a vendor (different from Michigan) to develop the software application, and the attendant source code for their finance and accounting system. The system runs on a pair of AS400’s using the UNIX operating system. The Georgia system also makes use of PC’s (windows) as workstations and is programmed in RPG400.

Apparent issues exist with the different finance and accounting systems located at each location. These issues cause incompatibility and wasted company resources. San Jose uses a Windows based system and is entirely dependent on the application. Michigan has software that is aging and cannot be updated. Michigan’s system also runs on VMS. Georgia runs on a UNIX system. These different operating systems cause a data convergence nightmare.

The data produced from each site is sent to the main office where it must be either re-entered or reformatted due to incompatibility. This extra work can be daunting and must be resolved. Consider for a moment that an income statement, balance sheet and an audit is completed each month. All this data can take an extreme amount of time to read and convert into one type of output. As things stand Riordan Manufacturing is hemorrhaging money regardless of how their product is doing.

The solution is to consolidate the three finance and accounting systems in order to cut costs. Since the three systems are already paid for, they should be examined first to determine if any are viable for company wide use. The system in Michigan is outdated due to the vendor being out of business. The San Jose site is rigid and may not conform to company needs as the business continues to evolve. The Georgia system seems viable since the vendor is in business, and the source code is available. The system would need to be tested to see if it can handle operating on a large scale. Another option is to purchase from an entirely new vendor and use that system throughout the company.

Legal

Riordan Manufacturing consists of a basic legal business system. This system has worked well for the corporation since its inception. Unfortunately, the simplicity of the legal business system has allowed for wasted expenses.

All legal matters are processed through the Chief Legal Counsel, Lowell Bradford. Mr. Ethridge, with the assistance of Mr. Bradford, handles all patent applications. In addition, all contracts and legal questions are referred to Mr. Bradford from department heads.

A legal firm is available in certain instances such as litigations, real estate matters and tax issues. They are all closely monitored. The legal firm, Litteral&Finkel, and Mr. Bradford must approve all legal matters passed on to the firm. The legal firm is on retainer. Once the firm handles a legal matter, these funds are placed into use. If a balance remains after the depletion of the monthly funds, Litteral&Finkel bills Riordan Manufacturing for the remaining dues. The firm absorbs any remaining funds regardless of use. These wasted expenses are where a possible problem lies.

Every major corporation relies heavily on a legal firm, and the expenses are extreme. A special relationship exists between Riordan Manufacturing and Litteral&Finkel. The special bond has its benefits, however, the business process should be examined to determine if the relationship is causing excessive expenses. If excessive funds are consumed by Litteral&Finkel then a new business process should be considered.

Human Resources

Human Resource (HR) is an important department within Riordan Manufacturing to ensure that human capital is working productively and symmetrically. Special attention is made to the human resource department since Riordan Manufacturing’s mission statement weighs heavily on producing quality products and maintaining the business systems of the company. The human resources department has three interrelated business systems. These are training and development, recruitment, and the HRIS system.

The training business system within Riordan is monitored by one employee through the use of an excel program. The implementation and training of the employee is documented. A sub-system concerning workforce safety is also available. This sub-system does not have an interrelationship with the training documentation at this time. This convergence of data should be looked at closely to improve this sub-system.

Riordan Manufacturing uses multiple methods of recruiting employees. They