China plant operates as a decentralized unit of Riordan Manufacturing. Parts are purchased by buyers in the China Plant’s purchasing department from a local Chinese company. While this company attempts to maintain adequate quantities of electric motors in stock to meet all its order requirements, its on-time deliveries over the past year have averaged only 93%. Part of the China’s plant’s business is a make-to-stock operation in which the future demand for fans is forecasted based on taking the average of sales for the last three years and extrapolating it into the next year.
Pontiac facility has to maintain sufficient stocks of a wide variety of raw materials in order to quickly respond to customer requests for new custom plastic parts. Riordan Manufacturing uses the Huffman Trucking Company to ship all of its products in the United States. Rates for shipping a full truckload of cargo to a single destination are lower than shipping partial loads. Higher rates for less-than full shipments. Improvement Ideas that may work for Riordan Manufacturing:
The China plant is a decentralized unit of Riordan Manufacturing, which I would think would not be the best idea for Riordan. All facilities need to have communication with Riordan’s headquarters. China needs to have its own process for running Riordan’s China Location, but have to maintain contact, and obtain approval from Riordan Headquarters, before major projects are started. The China plant purchases parts from a one local manufacturer, and plastic from one local manufacturer. The China plant needs to find other plants that will also produce and ship parts to them, because the China plant cannot rely only on one organization for parts, and one organization for plastic products. What would happen if the organizations could not get Riordan China its parts? Riordan China would have to halt production, and then put manufacturing behind.
The China plant forecasting method may need to be reviewed for accuracy, If the organization has a couple of bad years it may lead the plant to under forecast consumer demand. Need to look at economy and consumer history too. The Pontiac Facility needs to find alternatives to carrying large sums of stock. Need to work with vendors on Just-In-Time inventory. This will help to lower costs, and help free up inventory space. Maybe the Pontiac Facility can keep a minimal amount of stock on items that are used more frequently in production. Riordan needs to look at other trucking companies that are willing to take partial shipments, so Riordan does not have to wait for full shipments. Riordan needs to look at small freight companies, or even large freight companies like FedEx and UPS who are inclined to taking partial freight loads, and can guarantee arrival dates.