Systems Development Analysis Riordan Mfr

Systems Development Analysis

Team B

Fundamentals of Business Systems Development / BSA375

University of Phoenix

James Kape

March 9, 2005

Systems Development Analysis

Riordan Manufacturing is a plastics company. They have several markets and two factories. Riordan has requested that Team B complete an analysis and evaluation for the development of a Manufacturing Resource Planning (MRP) system to track and manage raw materials and finished products. The goal is to reduce cost for raw materials and finished goods.

To do a complete evaluation Team B will identify the current process being used by Riordan and do an analysis on it. They will be looking for areas in which steps can be removed or changed. They will be looking for areas of duplication or possible missed steps. They will focus on eliminating unnecessary purchases at too high of prices. They will build purchase processes in which partnering with vendors may create deep cost cuts based on volume purchases. Team B will also focus on the movement of completed products and evaluate the time to market. Recognizing that until the products are delivered Riordan cannot bill their customers. Team B will assess the current mode of moving the items from the factory to the customer sites.

The final measurement of the completed project will be the percentage of savings quantifiable over a year as well a projected savings over a three-year period. Was money saved on raw materials as well as was the time to market for finished goods minimized? Will Riordan be able cut the time in their current purchase to billing interval? Those items will be used to determine a measurable success.

Given there is no way to interview the company staff due to time constraints and logistics, Team B gathered the companies existing systems documentation. They also requested the company's financials, network drawings, and historical documents. The following briefly outlines the findings.

In 1991 Dr. Riordan founded Riordan Plastics, Inc. His focus was on research and development in plastics and polymers. In 1992 venture money was gained and Dr. Riordan purchased a fan manufacturing company in Pontiac, MI., changing the company name to Riordan Manufacturing, Inc. In 1993 a plastic beverage company was purchased in Albany, GA. Then again in 2000 the company took a turn toward the international market and opened a plant in China. The entire fan manufacturing operation was moved to China and the Pontiac factory became the special assembly site.

Each of the factories manages their own supplies, finished goods inventories and delivery. They negotiate their own contracts with their supplier's. All of the factories keep a stock of supply as well as some finished products to enable a quick turn around on express orders. The determination for how much supply is based on customer demand and current agreed upon delivery intervals. In the United States, Huffman Trucking is used to deliver the finished goods, their rates ratchet up, as a load is smaller than a full truck. In China they use a couple of delivery companies, creating a competitive environment. Albany and China do the most purchasing and shipping. Pontiac does little as it is the special assembly site and will usually purchase supplies as customer demand fluctuates.

The same Inventory Management and Control system is used for each factory. The shipments come in, are verified, unloaded, and moved to the factory. The shipment data is given to the inventory clerk to enter into the inventory system. Manufacturing uses sub-assemblies and gives the usage data to the inventory clerk for entry into the inventory system. When the final products are complete the data is given to the inventory clerk to enter into the system. Sales orders are taken via phone or fax and entered into the customer shipping and billing system. A shipping document is created each day signaling for orders to be created, trucks to be loaded, and products to be shipped to customers. The shipping document is given to the inventory clerk and entered into the inventory system.

Financially Riordan is in great shape. Their sales went up and their liabilities went down. They have grown in every area and as a result are faced with the common problems of most growing companies by having a small homegrown system. This system worked well when they were small, but does not work as well now that they are a much bigger company.

Team B observed several areas that could stand to use some tweaking in order to improve the process control and associated systems. In order to address the request of building an improved Manufacturing Resource Planning system to save money on raw materials and finished goods, our findings are as follows.

We recommend a process be built for purchasing and receiving goods that is consistent company wide. This system will be tied into corporate headquarters with dialy reports generated showing materials used from receiving, through production, and all the way to the shipping company. This system will help to utilize the weight and strength of the company to leverage relationships with suppliers that will benefit the company. The finished product sales and shipping will by tied to this system. The same philosophy will be used when selling to the customers and utilizing shipping companies.

We suggest the corporate purchasing department take over all raw supply purchasing. They will negotiate with multiple local suppliers for each factory. This gives them different sources in the case of shortage or problems with the main vendor. The ideal would be to locate a vendor that supplies products in Albany and China and use them as the major supplier. In all cases, contracts will be signed with negotiated intervals for delivery as well as quality of product requirements. Riordan will guarantee yearly monetary amounts to chosen suppliers as well as furnish them with forecasts of their quarterly needs. The monetary amounts will be determined by breaking up chosen quantities to each chosen vendor. As an example, if there are two vendors, Riordan guarantees 40% to each at a guaranteed cost with every 5% over that amount ordered ratcheting the cost down by an agreed upon amount. This gives Riordan the ability to go to an outside source if necessary to obtain a cut on the cost if they choose to use their existing suppliers. It also lets the suppliers know there are other vendors being used and that they need to remain competitive. The contracts shall contain statements guaranteeing deliveries are on time and if they are late or the quality of the