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Riordan Evaluation 1
Riordan Manufacturing Business Process Evaluation
Rev. Leon Kilpatrick Sr.
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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 sub-
assemblies 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. Riordan’s 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.
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Riordan maintains precise storage guidelines regarding their raw materials and
product components. Storage space and costs are factors when considering the
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.
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The following flow diagrams from Riordan’s 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
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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 sub-
assemblies 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
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raw materials and sub-assemblies into the inventory database will speed up the
process and eliminate data entry errors.
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.
Raw materials arrive from supplier
Raw materials moved to storage
Scheduled Orders
ScanningDevice
SCMS
Finance Department
Storage Facility
SCMS generates request for supplier payment and customer billing
Request for materials needed to complete scheduled orders sent to storage facility
Raw goods received are scanned
Scheduled Order Information Scanned
Raw Goods ordered
SCMS generates request for raw goods to be ordered
Manufacturing and Shipping
Final product info sent to SCMS
Materials needed to complete orders sent to manufacturing plant
Inventory Storage data sent to SCMS
Customer
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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 Riordan’s 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,
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(8) Supplier Security Guidelines that extends Riordan’s 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.
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References
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/
RioMfgHome002.htm
Riordan Manufacturing. (n.d.). Riordan inventory management. Retrieved May 13,
2009, from
https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/Ops/
Riordan%20Inventory%20Management.pdf