Riordan Evaluation

Riordan Manufacturing Business Process Evaluation Rev. Leon Kilpatrick Sr.

Riordan Evaluation

Riordan Manufacturing Business Process Evaluation Executive Summary

Learning Team A has evaluated Riordan Manufacturing's inventory management processes for all locations per Service Request SR-rm-001 as requested by Hugh McCauley, COO. This report suggests specific systems changes to become more efficient by improving computer system utilization. These changes include automating the clerk process by implementing a Supply Chain Management System (SCMS) that utilizes a portable scanner to directly enter data into the inventory system. This change eliminates the filling out of paper forms and manually entering the data into the system. The results are savings in time, workload, and elimination of data entry errors. With closer tracking of inventory in real time, Just-in-Time (JIT) inventory practices are now possible, so that only the raw materials needed are ordered, and only subassemblies that have customer orders are produced. SCMS will also allow accurate, on-time customer billing and on-time payments to raw material suppliers.

Business Requirements
The following business requirements have been identified: Each of the four Riordan Manufacturing locations requires its own inventory management system (Riordan Manufacturing, n.d.). Communication from customer shipping and billing system to the inventory and receiving system is required (Riordan Manufacturing). A set of common procedures is required for receiving raw materials, tracking product manufacturing, and accounting for inventories (Riordan Manufacturing).

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Process Improvements
In order to improve the efficiency of Riordan Manufacturing, a more effective supply chain management strategy must be implemented. Riordan has four locations around the world. All plants are having supply chain problems except for the R&D department, located at their headquarters. Riordans R&D department uses Six Sigma and exceeds ISO 9000 standards (Riordan Manufacturing, n.d.), making it, according to Riordan Manufacturing, ,,,the industry leader in identifying industry trends (para 3). It is recommended that the other locations be modeled after the R&D site. Each location will need its own Supply Chain Management System (SCMS) to maintain their inventory as incoming materials are received and outgoing orders are filled. A central SCMS should be created to manage inventory against itemized product needs, location, quarter, and forecasted order requirements. An SCMS scanning system is recommended for inventory control to automate the clerk process currently in use. The use of portable devices (PDs) (e.g. thin client, PDA, etc.) can be networked to the SCMS to provide a convenient method of scanning inventory. When new inventory is received, the financial department will be notified to facilitate the processing of invoices to avoid late payments to vendors. As product is prepared and shipped, the SCMS updates inventory and places material orders to ensure rapid replenishment of raw materials and prevent any delays caused by inadequate supplies of raw material. A weekly and monthly inventory count, as well as an annual wall-to-wall inventory should be set up as a Quality check to ensure proper control and compliance with receiving and shipping processes. Riordan maintains precise storage guidelines regarding their raw materials and product components. Storage space and costs are factors when considering the

Riordan Evaluation amount of stock to keep on hand. In conjunction with SCMS input, customer orders should be projected to limit storage of raw materials and completed subassemblies. Raw material orders and manufacturing schedules can be based on those projections to reduce inventory of both raw materials and completed subassemblies,

making certain sites will have the required materials at the required times. This process is known as Just-in-Time inventory control.

Riordan Evaluation The following flow diagrams from Riordans intranet website illustrate current inventory management processes.

Figure 1.0: Process flow diagram for receiving and inventorying raw materials. The inventory clerk does not receive the shipping documents or the raw materials log until the end of the day. The clerk enters the information from the paper forms into the inventory system. This is a batch process. As a result, when the inventory system is viewed during the day, the information is a day behind. Data entry errors can also occur. With a portable scanning device, the receiving area supervisor can input data into the SCMS as the raw materials arrive during the day. This results in real-time data

Riordan Evaluation entry, so the inventory database is always up to date. By scanning the data directly into the system, data entry errors are eliminated.

Figure 1.2: Process flow diagram for tracking raw materials and sub-assemblies removed from inventory during the manufacturing process. The manufacturing staff fills out an inventory usage form for the raw materials used, and another form for the subassemblies built. Both forms are on paper, both given to the inventory clerk to enter into the inventory database. Use of portable scanners that enter data directly from the

Riordan Evaluation raw materials and sub-assemblies into the inventory database will speed up the process and eliminate data entry errors.

Raw Goods ordered SCMS generates request for raw goods to be ordered Raw goods received are scanned Scanning Device SCMS generates request for supplier payment and customer billing Finance Department

Raw materials arrive from supplier

Scheduled Orders

Scheduled Order Information Scanned SCMS

Raw materials moved to storage Inventory Storage data sent to SCMS

Request for materials needed to complete scheduled orders sent to storage facility

Final product info sent to SCMS

Customer
Materials needed to complete orders sent to manufacturing plant

Storage Facility

Manufacturing and Shipping

Figure 2.0: Efficiency opportunity process flow diagram presented by Learning Team A. This flow illustrates the end-to-end process improvements as a result of implementing a SCMS system.

Supply Chain Management System Security Guidelines

This section presents a summary of proposed supply chain management system (SCMS) security guidelines for Riordan Manufacturing.

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Elements of Supply Chain Security

Supply chain management system security functions for the proposed Riordan SCMS should include: (1) A Risk analysis that provides the basis and rationalization for the implementation of the security measures. The analysis should be reviewed from time to time and updated to reflect business operational changes. (2) Access Controls that prohibit unauthorized access to the system and buildings as well as provides for I.D. verification, recording, and tracking of personnel (company and supplier) that have access to the system and buildings. (3) Personnel Security that addresses issues related to the screening of employees, prospective employees, and suppliers, as allowed for by law. (4) Security Awareness Training designed to communicate and insure compliance to Riordans security policies and procedures. (5) Procedural Security that records and verifies the addition and removal of goods into and out of the supply chain. Contingency plans should also be included within the scope of procedural security. (6) Documentation/Information Security to insure that vital information is protected against being replaced, lost, or erroneous. This includes computer information and access safeguards as well as controlling access to the information systems. (7) Incident investigations standards that defines the processes to be used for the timely reporting of lost and missing resources as well as variances in the inventory/manufacturing/shipping process,

Riordan Evaluation (8) Supplier Security Guidelines that extends Riordans supply chain management security to its suppliers. This should be in the form of written security agreements that include preventive control measures. (9) Crisis Management and Disaster Recovery Plans that outline disaster recovery procedures. This should include the advance planning and creation of processes that directs the company on how it should operate in extraordinary circumstances. Depending on the level of sensitivity involved, these processes may include the emergency storage of proprietary information (e.g., hard drives, removable storage, etc.) and/or the destruction of said information to prevent compromise. In establishing and implementing supply chain security it is important to enlist executive support. In order to provide for a standardized and consistent security framework, all security policies / guidelines should be properly documented to ensure compliance.

Riordan Evaluation References

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Stair, Ralph M., & Reynolds, George W. (2006). Fundamentals of information systems (3rd ed.). Boston: Thomson Course Technology.

Riordan Manufacturing. (n.d.). Riordan Manufacturing home. Retrieved May 13, 2009, from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/RioMfgHo me002.htm

Riordan Manufacturing. (n.d.). Riordan inventory management. Retrieved May 13, 2009, from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Ops/Riorda n%20Inventory%20Management.pdf