Which will concentrate on all of the cycles of manufacturing the electrical fans. This proposal will also cover how to use supply chain concepts to eliminate bottlenecks to effectively meet demands of customers.
Also this proposal will discuss production forecasting and the implementation plan of lean production using Giant Charts. Finally we have added a cover letter which covers aggregate operations planning and Total Quality Management (TTS). Material Requirement Planning Material Requirement Planning (MR.) Is a “computerized ordering and scheduling system for manufacturing and fabrication industries, it uses bill of materials data, inventory data, and master production schedule to project what material is required, when, and in what quantity’ (Business Dictionary. Mom, 2010, NP). There are three objectives to the MR. system and they are: a guarantee of product and material availability to Ordain customers, that there is a low level of inventory, ND plan for on-time delivery schedules and purchasing. The MR. system will have control, bill of material processing and easy scheduling. Currently, Ordain Is manually recording the materials they receive from their local distributor. By manually recording everything, items can be miscounted or missed completely. This can result in bottlenecks as areas run out of parts.
By implementing a master production schedule (MSP) into their China plant, Ordain can keep track of what parts are needed for each specific fan and how many labor hours It takes to produce that specific plan. The MSP would also help them attach their supply and demand levels by allowing them to input forecasts or actual order totals into the system to generate resource requirements and due dates of specific orders. By being able to input their due dates, they will be able to schedule their workloads according to the criticality of the order.
This will also help them improve their delivery times as they will be able to complete their orders in a timely fashion. New Process Design & Supply Chain Management The electric motors used In the fans are completely assembled and bought by buyers of Ordain from a local Chinese company. The issue lies in the fact that on- time deliveries for these motors are only at 93%. We suggest that the China plant look into acquiring an additional manufacturer of these motors. Doing this will help increase the percentage of deliveries and also indirectly increase competitiveness between suppliers.
This will benefit Ordain by ensuring the electric motors will be of adding a new supplier. Another improvement to Radian’s process is to implement a safety stock for certain inventories. Running out of motors will cause a bottleneck and is something that can be avoided with adding a safety stock of motors. Implementing this comes with a price however. Inventory costs will go up for Ordain. To offset this cost increase we suggest Ordain lower the stock of the plastic polymer they have.
The reason for this is that the plastic polymers used for the fans can be found in many local suppliers’ stores and therefore is easily accessible. This will allow Ordain to reduce the plastic’s stock and increase the motor’s stock. A third suggestion we believe will help improve the process is to establish a kamikaze event where lean improvements can be discussed. This will provide the forum for which improvements and waste eliminations can be adequately examined and improved upon. The last suggestion Team B has is the most drastic one.
Currently Radian’s China plant molds and sculpts the plastic polymers into what they desire. This is the type of production that the Michigan plant excels at. This production process is also very expensive and time consuming. We suggest that Ordain consider eliminating their equipment used to do this. This will reduce high operating costs and also create more space for possibly adding additional safety stock. The plastic polymers would now be produced in the Michigan plant and shipped to China.
With the extra space due to the elimination of equipment, they would be able to keep safety stock of both the motors and plastic parts in case there are delivery problems. Because Ordain has decided to move their production plant from Hangout to Shanghai, they need to look into cultivating business relationships with nearby vendors rather than have their materials shipped from distant locations. This will help to reduce transportation costs and help ensure appropriate materials are delivered when needed.
The move to Shanghai will also reduce their shipping costs as they will be laminating additional time and money they spent on getting the products to Shanghai to be shipped to their final destinations. However, the move will also cause Radian’s labor costs to increase. They can reduce this cost slightly by using their domestic plants to produce parts for their fans. Lastly, shipping is an area of concern for Ordain. They are currently using two shipping companies, which is causing confusion and higher expenses.
Ordain should contract with one shipping company and hire a shipping consultant to manage the shipping process and also be trained in maritime law and Chinese rotator. Production Forecast Ordain Manufacturing plant in China currently utilizes a make-to-stock inventory system in which the future demand for fans is forecasted based on taking the average of sales for the past three years and extrapolating it into the next year. This method assumes that the expected inventory forecast for the next year should be based on its three-year history and that trends will repeat themselves within manageable limits.
The problem with this system is that it is very difficult to accurately predict future inventory demand. Inaccurate forecasts can lead to too such of the wrong inventory (inventory that isn’t needed), and not enough of the right ones (inventory that is needed now). In addition, current projections for costs effectively forecasted in advance. Instead, they are based on annual production requirements. Adopting lean production principles can be an effective solution for helping the organization increase efficiency and productivity, while lowering costs.
These methods will allow the company to adequately adapt to unpredictable market demands. In particular, the development off production/inventory management system will be needed to help improve management efficiency. This system will be designed to properly manage quantities of safety stock, as well as set “optimal production levels and ordering points that are based on lead times of material procurement, production, and delivery as well as demand forecasts. (Alamos, 2005) This business strategy will enable the company to determine which markets are most suitable for its products, when to introduce such products and how much of the product it needs on hand, at each location, to support market needs. By utilizing such methods, the company can become more flexible to adapt to unforeseen market allocations in a timely manner. Furthermore, the amount of waste on hand in each facility can be drastically reduced or eliminated. Another possible solution is to implement an inventory replenishment method that is consumption-driven.
This way, the company will be able to provide the right quantity of inventory in the right location, using the right replenishment method. This will ensure that there are always adequate amounts of inventory when they are needed. Focusing on reducing shortages and lead times will lead to overall growth and profitability for the company. Implementation Plan Team Bi’s plan for Lean Production will be implemented in two steps. The first step, Ordain 1, will discuss the timeline of implementation for the project.
Here we split up the project into four sections. Section 1 will be the forming of teams, attaining approval from management along with an outline for Radian’s project. Also we will need to define each team members’ role and what their responsibility will be. This should take place between January 10, 2011 and January 15, 2011. Section 2 will be from January 9, 2011 to January 14, 2011 and will contain different lolls for the implementation and will be used in the actual implantation of the project.