Riordan Manufacturing, an industry leader in the manufacturing of plastic injection molding, has hired our organization to analyze its current Materials Resource Planning (MRP) and Enterprise Resource Planning (ERP) systems in an attempt to reduce raw materials and finished goods inventory costs and to acquire a comprehensive plan that includes a complete requirements definition and a design and implementation proposal.
Riordan is seeking a solution to improve the tracking and management of its raw materials and finished product inventory across all its plants, located in San Jose, California; Albany, Georgia; Pontiac, Michigan; and Hangzhou, China. The four plants have a total of 550 employees. The company’s internal stakeholders are the receiving, shipping, and sales departments, inventory clerks, and technical staff. The external stakeholders are manufacturers, suppliers, and clients.
Riordan strives to continue to be an industry leader in polymer materials manufacturing and distribution. The improvement of raw materials and manufacturing inventory management will help Riordan to achieve its goal of establishing long-term customer and business relationships by implementing rigorous quality controls and ensuring timely deliveries to clients. The company’s ultimate objective is to tighten inventory and reduce cycle times so that human capital is available for sustained growth.
Our organization will design an MRP solution to support Riordan’s commitment to revamping its inventory management of raw materials and finished goods. Scope Currently, management of receiving inventory tasks and tracking of products throughout the manufacturing cycle are handled separately by each plant at Riordan Manufacturing. Therefore, the scope of the project is corporate-wide; all four data locations should be tightly meshed by the recommended solution. Riordan’s concrete aim is to reduce costs by 10% and cycle time by 15% through better inventory management.
The solution provided should allow Riordan to abandon much of its labor intensive inventory, to cut down on shipping and ordering paperwork, and to eliminate many of its raw material procurement headaches. The company will be able to acquire raw materials more efficiently and to decrease delays in shipping if an up-to-date, company-wide MRP system is in place. Real time inventory management will save the company time and money and allow administrators to make timely strategic decisions.
To satisfy those objectives, our organization will develop, install and integrate three MRP/ERP modules into the current Riordan infrastructure at its plants in the USA and China. The three modules, which comprise Raw Materials Receiving, Manufacturing with Inventory, and Final Product Shipping, will optimize the flow of information in Riordan’s mostly manual inventory processes. The solution must integrate with or replace the company’s present MRP systems and provide opportune updates to the centralized inventory database.
MRP, according to SM Thacker and Associates, hinges on the principle of “[w]hat you need, minus what you have got, you need to get (in time for them to be used)” (2005, ¶2). That concept underscores the critical role of timing in business operations. In regards to deliverables, the scope of the Riordan Manufacturing system can be broken down as follows: Internal Deliverables 1. Reduce finished goods inventories 2. Manage raw materials more efficiently 3. Track products throughout the manufacturing process 4. Manage receiving processes across all plants 5. Reduce costs by 10% . Reduce cycle time by 15% 7. Reduce labor intensive manual inventory 8. Eliminate raw material procurement problems 9. Enable an easily accessible inventory system company-wide 10. Integrate inventory management with MRP and ERP systems 11. Use intuitive tools to handle daily processes 12. Interface with the customer billing system 13. Support input of sales 14. Support shipping and receiving data 15. Automatically calculate inventory processes External Deliverables 1. Shorten customer response time 2. Decrease delays in shipping 3. Automate shipping and ordering processes
Ultimately, these deliverables will improve Riordan’s quality control across all plants and ensure the company’s commitment to future growth by providing a greater amount of working capital. Project Feasibility Riordan has in its budget $150,000 for this project. This limits the options available to the company. Plant employees possess strong technical skills and are well aware of the actions that potentially could be automated. The technical staff has the ability to undertake an important portion of the system’s installation, which will save the company money.
Provided a highly portable solution is utilized transition time should be minimal. Although successful MRP can not be achieved without continuous training of the workforce, introducing additional automation to Riordan’s numerous manual processes should prove successful since the plant workers have demonstrated to be technically competent. In general, phasing in the new system will not demand significant adjustments from the employees. Moreover, the company’s investment will be recouped by the boost in overall productivity that will derive from migrating to a more automated and user-friendly resource planning solution.
Other factors that will increase operational efficiency are the reduction of manual input errors and the availability of accurate and readily available data as a result of the introduction of a company-wide scanning inventory system. These financial and infrastructural considerations prove the project’s feasibility. Current Operating State Riordan Manufacturing has developed a set of procedures that are utilized across all plants to ensure consistency in the tracking of raw materials during receiving and manufacturing and for managing finished goods inventories.
Unfortunately, most of these procedures are manual as can be seen in Figure 1 on the next page. At present, the raw materials and finished goods inventory systems are not centralized. Each manufacturing facility has an independent MRP/ERP system and submits inventory updates to the company’s central inventory database at the end of each day by various manual methods, making corporate-wide management of such processes extremely difficult. A majority of the ordering, shipping, usage and receiving tasks are performed manually, which can result in incorrect inventories and delayed deliveries.
The customer billing and shipping system does not interface with the inventory database. Final product shipping information must be extracted from the billing system and input into the inventory system manually. Since the shipping order receiving reports are received once a week, there is no flexibility in shipping schedules. To make matters worse, scanning devices are not utilized at any of the plants. Expectably, this decentralized approach to inventory management is costing Riordan time and money.
A detailed description of the individual processes follows. Figure 1. Existing MRP processes at Riordan Manufacturing Order fulfillment process Orders are entered into the customer billing and shipping system when they come in. Once the order is filled, the order shipping team draws products out of inventory based on information in the customer billing and shipping system. The “orders shipped” documents are utilized as input by the inventory clerk for entry into the inventory system at the end of each day. Receiving process
When trucks arrive with shipments, the receiving manager compares and validates the shipping documents with the shipping order receiving reports, which are distributed to each receiving plant at the beginning of each week so that actual shipments can be compared to the report. Once the documents are validated, the raw materials are verified and moved to the raw materials plant. The raw materials inventory and shipping document information is entered into the inventory system at the end of each day. Raw materials inventory process
When raw materials are drawn out of inventory, an inventory usage form is updated by an inventory clerk at the end of the day and entered into the inventory system. Therefore, Riordan suffers from the lack of an inventory system that integrates all plants. No corporate-wide raw materials procurement can be done without real time inventory data. Manufacturing and building sub-assemblies When sub-assemblies and final products are built, they are added to inventory as final product. Current Network Riordan currently has partial T1 lines serving its WAN.
This translates as limited bandwidth for updates. A thin client solution would be ideal because less network traffic is generated. Such technology provides faster throughput, which allows for real time updates. Requirements From the previous description, it can be concluded that Riordan Manufacturing’s approach to resource management is outmoded and can benefit greatly from the introduction of a new integrated system. The proposed system requirements are: 1. Establish a universal server and thin client at each manufacturing plant 2. Automate inventory management by purchasing barcode readers 3.
Set up Wireless Access Points (WAP) in each warehouse 4. Create/purchase inventory tracking software The universal server and thin clients would make up an internal network and allow the management of inventory to be company-wide in contrast to the current plant-wide system. Plant thin clients could tie into the plant server and all plant servers would tie into the universal server. By installing barcode readers, inventories could be updated in real time with barcode readers transmitting data WAP every time an item is received or issued.
This new automation requirement can be used with an MRP inventory tracking program that can generate production, inventory, and cost reports for the entire company in real time. Tables 1 and 2 on the next page classify requirements into functional and non-functional. Differentiation between both types can be established thus: “Functional requirements are associated with specific functions, tasks or [behaviors] the system must support, while non-functional requirements are constraints on various attributes of these functions or tasks”.
Once the order is filled, the order shipping team scans products out of inventory based on information in the customer billing and shipping system. This precludes the need for inventory clerks manually updating inventories. Receiving process When trucks arrive with shipments, the receiving manager scans in shipping document and compares and validates the shipping documents with the shipping order receiving reports, which are distributed to each receiving plant at the beginning of each week so that actual shipments can be compared to the report.
Once the documents are validated, the raw materials are scanned into the inventory system and moved to the raw materials plant. Raw materials inventory process When raw materials are drawn out of inventory, they are scanned out of inventory immediately. This eliminates the manual procedures of the inventor clerk and eliminates the creation of an inventory draw form. Manufacturing and building sub-assemblies When sub-assemblies and final products are built, they are scanned into inventory as final products. Future network architecture
Riordan will need to install wireless access points to serve the thin client scanning devices at each plant. Windows terminal server licenses must be purchased to support clients and serve the inventory application. The application must be portable and extendable and integrate with the customer billing system and MRP/ERP systems. On the following page, Figure 2 depicts the system architecture and illustrates the interplay between the four plants and the various participants in the process. ———————————–. Fig. 2. Riordan Manufacturing’s Future Inventory Operations
System Components The essential elements of an MRP system are classified into inputs and outputs. In the input category, the proposed system will use a master production schedule (MPS) to analyze demand for the products manufactured by Riordan. This MPS details the types of end products, the quantity required, and the production time (or dates) (Wikipedia, 2006, ¶7); all of those parameters are functions of demand. Other important inputs are inventory logs, which show the availability of materials in stock as well as orders—and backorders—from vendors.
Billing documents provide information about cost and specifications of the materials and components required for production. In the area of outputs, the proposed solution contains two units: Purchasing Schedule and Production Schedule. Both offer strategic recommendations for material and subassembly acquisition and product manufacture by combining a timetable with item quantities based on the calculations of demand derived from the MPS (Wikipedia, 2007, ¶8). Additionally, the system will generate a number of reports, including fully formatted purchase orders and receiving reports.
Table 3 lists the inputs and outputs discussed in this section in combination with system triggers, whose functions were described in Future Operating State, and system participants. Table 3. MRP System Components TriggersInputsOutputsParticipants -Shipment arrives w/documents -Log of material received each day -Shipping documents -Raw materials receipts -MPS -Shipping documents -Inventory logs -Bills of raw materials received-Purchasing schedule -Production schedule -Purchase orders -Receiving report-Suppliers/receiving -mgr/Receiving -Inventory clerk, receiving
Those components will be organized into the tri-module structure mentioned earlier: Raw Materials Receiving, Manufacturing with Inventory, and Final Product Shipping. System Architecture In addition to the thin client network architecture discussed elsewhere, the following are key technical features of the proposed solution: 1. Software – Servers will run on UNIX operating systems with the latest patches applied and client stations will run on Windows OS with patch updates. All software, whether off-the-shelf or custom-made, will be approved by the Information Technology Review Board.
The inventory application will reside on a Windows terminal server located in San Jose, California. That server connects to the inventory database in the same facility. The advantage of maintaining a terminal server at a single location is that it requires fewer resources. 2. Hardware – MRP and ERP systems will reside on Sun systems. All other applications will reside on Intel platforms and blade servers. Handheld scanning devices (barcode readers) will be located at each plant. Routers and WAPs connect the various units to the WAN. . Interfaces – The inventory system must interface with the MRP/ERP systems. It must also interface with the customer billing system. Cost Analysis Table 4 on the following page presents a detail of the funds needed for the various phases of the project’s development. The design fee includes analysis and research activities previous to design proper as well as testing and reviewing costs. In addition to the actual deployment, implementation encompasses documentation and initial training for system operators.
Subsequent maintenance services are not included in this table. Parts acquisition makes up two thirds of the total cost of the system while the balance is labor costs. In the parts category, hardware purchases represent 60% of the total, while software constitutes 20%. In the labor category, hardware makes up 36% of the total, while software comes to 10%. Table 4. Cost Detail for MRP Project CategoryNameCost (parts)Resource cost (labor) Design17,000 ImplementationInstall/training20,00010,000 Wireless installationRouter/cards5,0002,000 CablingSome CAT52,0002,000
Clients/ServersServer for scanning software or use existing blades3,0004,000 Scanners (wireless)Handheld; 10 per plant50,00010,000 Inventory Management SoftwareTuppas Raw Materials Inventory sys. 20,0005,000 Estimated Project Totals$100,00050,000 Maintenance and Support Our organization will provide ongoing maintenance and support services according to the following procedures: Maintenance 1. A Source Code Control System (SCCS) program will be used for all source code modifications. SCCS will be installed and utilized by developers and programmers for all changes and maintenance where required. . Network maintenance will be the responsibility of Riordan’s SysAdmin personnel. 3. Preventive maintenance will be determined by the system administrator (SA) and project managers assigned by Riordan with consultation if needed, by our company. 4. Adaptive maintenance will be implemented by developers and programmers and coordination with SysAdmin personnel is essential. 5. All preventive, adaptive and corrective maintenance will be reported to developers and programmers via a ticket tracking system, which is suggested to be purchased be Riordan and installed accordingly. 6.
All stakeholders will have accounts to access the ticket tracking system to report changes needed or suggested for the new system. Major changes to this system may require an SA to conduct an analysis and research before changes may be implemented. 7. When an issue has been submitted via the ticket tracking system, depending on the complexity of the issue the turnaround time or eta of the issue to be resolved may be as short as three days or as long if not longer than two weeks. 8. When the ticket has been submitted the acknowledgement time of the ticket will be within twenty-four hours.
At this point, the developer will send a confirmation email of acknowledgement and within this email will be an eta of delivery of service or resolution as requested. Support 1. A help desk will be implemented in order to provide user help. 2. Riordan is suggested to set up a 24 hour hot line for emergency support of the system to assist users or answer questions company-wide. A help desk is a permanent IS department that provides end-user support for a wide range of systems and software. Help desks are staffed by personnel trained to install, operate, and troubleshoot application software. . Tutorials will be embedded into the applications in order for users to gain quick answers to their questions. 4. A FAQs page will be linked to each aspect of the users system in order to further provide quick answers to common questions. 5. User documentation will be easily accessible to all stakeholders in order to help to ensure clear understanding of the entire process of the system. 6. System help documents will be created and handed over to Riordan’s system support teams in order to help to provide fast hands on training to technical personnel. .
During implementation, a certified a trainer will be available three times a week in order to provide hands on training to upper level personnel users, who may then become prepared to provide further training to other personnel with in the company. 8. All aspects of the system will have a questions and answers document associated with it for both user and system support personnel. 9. Specification technical documents will detail our service contact information as well as contact personnel names. 10. Help desk will assist with online documentation and troubleshooting, consists of resident experts, and provides user access to technical personnel for technical issues” (Satzinger, Jackson, & Burd , 2004, p. 129). Assumptions and Constraints This study will now consider the various assumptions upon which development of this project is based. Along with the assumptions, a brief consideration of contingencies, of the form “if-then,” is introduced. The project’s constraints will be discussed next. 1.
As stated earlier, the scope of this project encompasses Riordan Manufacturing’s four data locations. This scope cannot be reduced once the company approves the proposed development plan. If this assumption proved false, then our organization would have to redesign the system. 2. Through the various stages of the project’s lifecycle, Riordan and our organization will maintain open and flowing interaction; any change in requirements, no matter how slight, will be communicated immediately. This coordination is essential for the successful development of the project.
A deficiency in this area would impact detrimentally the quality of the final product and would result in delays and other inconveniences that could affect the company’s business operations. 3. Riordan’s approval of the proposed design and its implementation strategies represents the company’s commitment to the project’s timetable through its various milestones. Failure to adhere to the established schedule would also result in impaired performance in key areas of the business. 4. As required by the project, our organization will be granted access to all secure areas of Riordan’s computing environment.
In return, our organization will notify Riordan of any accesses to sensitive data and will keep logs of those instances. Our organization adheres to the most stringent practices of secure information processing. After installation, this access will be an ongoing requirement for maintenance purposes. Without this clearance, it would be impossible for our organization to migrate the needed databases to the new system. 5. Requests for server outages will be submitted to the responsible parties at Riordan with as much advanced notice as possible.
Our organization will proceed with server outages only with Riordan’s consent. However, it is understood that these outages are a necessity throughout the implementation phase of the project. If the company would not accommodate such procedures, our organization would not be able to continue with the installation of the system. 6. Because of tight interconnectedness between software and hardware requirements for this system, Riordan’s approval of the design means commitment to the proposed technologies and architectures as pertaining to choice of servers, network devices, and other equipment specified in the proposal.
If this assumption proved false, our organization could not build a system that would meet the established criteria. 7. Riordan’s resources, such as funds, personnel, time, facilities and other logistics, will be available to our organization as required by the different phases of the project’s lifecycle. Without those resources, the system simply cannot come to fruition. 8. Since studies show that MRP systems tend to overstate capacity, it is assumed that production rates will have to be adjusted by factoring in “lost production time due to finite shared resources, changeovers and breakdowns” (Advanced Process Combinatorics, 2006, ¶2).
The following three assumptions pertain to concrete aspects of implementation and support: 1. It is assumed that Riordan will purchase and install Ticket Tracking software to assist in processing changes, maintenance, enhancements and other issues regarding this system. 2. It is assumed that Riordan will set up three different training sessions which will enable our company to train system user and system support personnel. 3. It is assumed that Riordan will implement a twenty-four hour hotline help desk and make this available to all stakeholders company wide.
The development and implementation of a system are normally counteracted by a number of significant constraints, and identifying them from the outset is crucial for the success of the undertaking. In this context, constraints are understood as “conditions outside the control of the project that limit the design alternatives” (United States, 2003, ¶8). First among those constraints are timeframes and deadlines imposed by suppliers, governmental regulations, market dynamics, competing tasks, and company policies, i. e. functional requirements. These conditions are external to the project lifecycle per se and do restrict to varying degrees development and implementation options as they exert pressure on phase completion and delivery of sub-systems. Testing and reviewing practices, while never abandoned or significantly abridged, may have to be adjusted to those time constraints. During the implementation stage, the idiosyncrasies of the company’s work culture and other such environmental variables are bound to surface and impact the march of the project.
Even though our organization makes every effort to design with high standards of usability in mind and to provide thorough training and responsive support, the transition from an old way of doing things to a new one always disturbs traditions and routines, regardless of the complexity of the project. These required adjustments expectably generate apprehension and confusion and the attitudinal factor does affect the phasing-in of a new system. In general, the availability or, more precisely, the scarcity of key assets constitutes the most common constraint that this project, as any, has to face.
Funds are one such resource; as it has been indicated elsewhere, the $150,000 cap placed on this project does limit the end product’s features and functionality. Similarly, time constraints, which were introduced earlier, play a pivotal role in shaping up project development. These constraints are not circumscribed to the impositions of deadlines and the normal end-of-project rush; they are also related to the necessity of adjusting to strict business isochronisms. An example of those isochronal actions are billing cycles, in which external forces (vendors) interact with internal policies.
Another vital resource is, naturally, the human element; having discussed work culture, it is important now to address the skill level of system operators and end users. Intensive training notwithstanding, limitations in technical proficiencies do pose considerable challenges during the implementation phase. Although the competence of Riordan’s technical staff has been ascertained previously, employee turnover, organizational changes, the exigencies of continuous in-house training, and the consequences of operator errors and slow assimilation of new features still have to be weighed in when forecasting the success of a system.
Success Measures The success of an MRP system can be determined by the following criteria: raw materials are available for production and final products are available for delivery to customers, low levels of inventory are maintained, and delivery and purchasing schedules are timely (Wikipedia, 2006). Inaccuracy of data is one of the primary reasons why MRP solutions fail. The implementation of bar scanning software to track raw materials and product inventories will alleviate the manual input processes that result in inaccurate data. The following benefits will be realized: 1. Automated, fully functional inventory in and out processes 2.
Accuracy and up-to-date inventories 3. Improvement in cycle times 4. Reduce inventory costs 5. Gains in employee satisfaction Metrics generated by the system itself as well as by other sources in the company will be used to gauge the performance of the MRP solution in comparison with the existing most manual process. Among those metrics are fulfillment of threshold dates (order completions, shipments, etc. ), cost per job, availability of materials, forward traceability, manufacturing times, turnover and shelf-life statistics, stock level errors, customer satisfaction, and other measurements of productivity and efficiency.
Summary Our organization has been contracted by Riordan Manufacture to design and deploy a global MRP/ERP solution aimed at managing efficiently its manufacturing and inventory processes. Prominent among the solution’s requirements is to integrate Riordan’s four plants into a fully meshed system. Thus, the scope of the project is enterprise-wide. In order to refine the scope analysis, our organization has produced a list of internal and external deliverables that represent the project’s milestones with high granularity.
Our organization has determined the feasibility of the project based on the availability of resources and the infrastructure of our client. Although the budget allocated for the system may restrict some of the options that could add functionality to the system, Riordan can fund the proposed solution with all its mandatory requirements without having to solicit loans. An assessment of the current processes that our solution will supersede shows that, currently, those operations are manually performed.
Furthermore, the existing inventory system is decentralized; there is no real time updating or coordination between the company’s plants. Manual input and decentralization spawn errors and delays that affect Riordan’s conduct of businesses. Having identified those issues and the business requirements for the solution, our company has designed a system that is fully automated and corporate-wide. This study detailed the software and hardware specifications, the network architecture, the costs, the assumptions and constraints, and maintenance plan, and the measures of success for the project.
Based on this extensive analysis, our organization is confident that the proposed will improve Riordan Manufacturing’s resource management by furnishing tools that will have a beneficial impact on the company’s overall productivity.
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