Riordan Evaluation 1

Riordan Manufacturing Business Process Evaluation

Rev. Leon Kilpatrick Sr.

Riordan Evaluation 2

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