Introduction"Riordan Manufacturing is one of the leading plastic bottle producers in the United States and the world". (University of Phoenix virtual organization 2007) A recent study revealed inefficiencies, inaccuracies, and production and man- hour losses as a result of the currently used manual inventory process. The CEO's feared that these findings may effect and threaten Riordan's position in today's highly competitive market. As a result, they requested the inventory managerial staff to form a team of subject matter experts (SME) who will investigate the current process, and formulate proposals that will effect departmental improvement, and realize development and growth utilizing a manufacturing resource plan (MRP).
The team decided to recommend a technological alignment of all the Riordan sites, which will enhance communication abilities, adjust and speed the inventory process and establish uniformity throughout the company. The upgrade requires purchasing new computers, a bar code system, and an open source operating system.
Riordan will purchase this equipment from three highly qualified and proven companies, Dell, Traker Systems Inc., and OpenPro. These companies provide on site training and maintenance packages that guarantee efficiency, continuity, and upgrades. The proposed upgrades will affect the inventory, production, and development processes.
InvestigationA highly competitive global industry requires Riordan Manufacturing to investigate continuously and implement necessary changes that will enhance the manufacturing and distribution processes, reinforce its Mission Statement, and maintain its acquired leadership position. A recent investigation revealed that Riordan Manufacturing's master system in San Jose is outdated and the company that owns the source code is no longer in business. This issue can be remedied by purchasing and open source software that can be implemented across all plant sites. The manual inventory process is inefficient, cumbersome, results in inaccuracies, does not allow real time access to existing data, and consumes production time and man-hours.
The current manual system does not allow for real time reporting and can cause delays of up to 24 hours. Efficient and accurate inventory updates with real time access to consistent data, enhanced communication capabilities, instant response time, and immediate inventory adjustments can be achieved by upgrading the inventory system capabilities and implementing a uniform control process at all the Riordan Manufacturing sites.
The Pontiac and Albany plants must be technologically upgraded to the capacities of both San Jose and Hangzhou before the enterprise resource planning software can be installed. In order to update the system capabilities of both these plants, Riordan must purchase new computers, printers, windows exchange servers, Cisco 3600 routers, full T1 and a faster Ethernet. To establish uniformity in the inventory process it is necessary to purchase bar-coding software and tools for all four Riordan sites.
The Chief Information Officer and his staff have generated a list of hardware and software upgrades and have categorized them into two categories mandatory and optional. The company viewed products from a company called Bar-coding Inc. "Stockroom Inventory software provides an economical way to track inventory in just a fraction the time it would take to count and monitor the items manually. Automatic scanner provides accurate information, and allows for immediate reporting". (Barcoding.com 2007) This system however proved to be rather pricey, so instead the company chose to go with Traker systems and OpenPro.
The mandatory items are as follows: Bar code system, Open source program (Open Pro was the ERP software of choice), full T1 line, ten computers, two servers, and two routers. The optional items are as follows: GPS onboard navigation system with weather and traffic tracking systems, automated storage facility, external wireless wide area network, and DS3 line.
The recommended systems upgrades for each of the Pontiac and Albany plants are: Five Dell Optiflex units with a Windows 2000 operating system, a Windows exchange server, and a color printer. The recommended bar-coding system, to be installed in all four Riordan plants is: "The Traker System inventory software, which is a fast and accurate user-friendly system that provides software and scanners and a 30-day free technical support program. The Traker System inventory software is in use at a large number of Fortune 500 companies and has established a reputation for quick start up and ease of use". (Traker Systems 2007) The cost of the computers (ten), servers (two), printers (two), routers (two), and high- speed upgrade at both locations is $25,000. The cost of the Traker System per location (four locations) is $27,500. The total Traker System's installation cost, which will include training, downtime, miscellaneous expenses, and maintenance, is $120,000. "The Open Pro MRP system including customization and training is 10,000 per plant site". (OpenPro 2007) Total project including communications upgrade cost is estimated at $185,810.
These upgrades are estimated to save labor time and reduce inventory loss by at least 10%. Riordan's total inventory, at all it sites, fluctuates monthly from $350,000 to $1,500,000 with seasonal adjustments. Reduction in labor costs will be minimal, as current inventory personnel will be reduced through attrition and reassignment. Riordan's average annual inventory is approximately $1,850,000. Estimates show that with real time response, inventory reduction may be up to 10%, which will release the annual capital expenditure of $185,500. Inventory loss is expected to decrease by a minimum of 5%, this represents annual savings of $92,500. The total annual cost savings is conservatively estimated to be $277,500, and the total project cost is $185,810, thus our break-even will be reached in 8 months.
Though an alternative to these upgrades would be to outsource inventory control, the current infrastructure at Riordan and the cost effectiveness of in-house maintenance provides internal control and real time response capabilities.
The investigative study revealed that the current inventory system has numerous weaknesses and no strengths worth noting. The system was verified to be extremely labor intensive, inefficient, and oftentimes contained inaccurate entries that resulted, once a year, in the shut down of a plant for reconciliation. Identified data collection points included customer surveys, material supplier surveys, and interviews with employees, and statements made by plant managers at each of the Riordan Manufacturing locations. The foremost weakness is the hand written forms that are required to be completed daily and that are oftentimes illegible which lead to either, assumptions or, a search for the writer. The search and question cause employee distractions, which in turn cause interruption in the work process.
The daily work process begins with the receipt of raw materials, whereby the shop supervisor has to compare the receiving documents with the scheduled orders report and reconcile any discrepancies before unloading the shipment. Following the acceptance of shipment the report is given to the receiving clerk who manually enters the data into the inventory system. A form is filled at the end of each factory shift that records material usage and consumption. An inventory clerk collects these forms and manually inputs the material consumption into the inventory system. After the entire manufacturing process is completed, the final assemblies are accounted for on yet another inventory form and manually entered by a clerk into the inventory system. The inventory staff and clerks, despite their varied experiences, were found to be well informed and well trained in the use of the existing system. When asked to explain how much time is spent in reconciling the annual inventory, several of them pointed to the weakness of the system.
Eliminating the time-consuming hand written forms will provide immediate improvements and cost savings. Accurate records of raw materials received will increase the effectiveness of the inventory process. Inventory accuracy will help to eliminate the yearly reconciliation. Prompt shipment notification to customers and the billing department will eliminate shipping and billing delays.
The systems' upgrade proposal should eliminate all manual data entries. All raw materials should arrive to the plants with a coded purchase order that is marked accordingly and can be easily scanned into the new system. Marked raw materials with coded purchase orders begin the inventory automation cycle. The tracking cycle continues into storage and onto the factory floor where the materials are fragmented, consumed, and reshaped into new products. The completed product is marked, inventoried and sent to the shipping department. The shipping department notifies the customer about the arrival date, the finance/billing department issues a billing statement, and the cycle is complete. Design will explain the role and effects of the upgraded system.
DesignThe goal of this project is to effect the technological alignment of all four of the Riordan Manufacturing plants, and to introduce an inventory bar-coding system that will update the company into the 21st century and align it with its competitors.
Currently, an inventory clerk, manually inputs the raw materials received, the type of each material, and the vendors' names. A wireless bar-coding system will eliminate manual tracking, and optimize the inventory process. The bar coding system proposed for use is made by a company called Traker systems Inc. "The Enterprise Edition of Inventory Traker is designed for large corporate business customers. The package includes all the following features: A wireless handheld bar code reader/scanner, Bar code integration software, asset tracking, reporting and charting wizards and a robust inventory database.
This product is designed for either distribution facilities or manufacturing environments. The Data Export wizard provides simple data export that uploads to an accounting management center. The current specifications call for either windows XP or windows 2000 with an Intel Pentium 4 minimum". (Traker Systems 2007)Five new computer systems are recommended for purchase for each of the Pontiac and Albany plants. The first computer will be used at the point of raw material entry - receiving. (All raw materials will be tracked via the original manufacturer's bar codes). The second computer will be placed at the warehouse storage shipping/packaging area, and the three remaining computer systems will be placed in the inventory stockroom area.
These units will all be Dell Optiflex 2.6 MHz units, running windows 2000 operating systems, 60 gig hard drives and 1GB Ram. The Pontiac and Albany plants do not currently have a dedicated server for inventory management. Adding a Windows exchange server will allow each location, on a daily basis, to upload in real time the raw materials on hand and the final product assets' reports to both corporate and the finance department.
Upgrading the current fractional T1 to a full T1 will improve speed for both the Pontiac and Albany plants, and so will upgrading to a Cisco 3600 router and phasing out one of the 24 port 10Mbps hubs by a faster Ethernet 100 base T gateway switch in Pontiac. Two new color printers will be placed in the inventory stockroom, even-though all inventory computers will have access to print via the server. Regardless of whether the applications involve manufacturing, assembly, distribution, or warehousing, these upgrades offer a large return on investment, and effectively improve performance that is required for growth, development and a competitive global market. Implementation will explain the procedures that set everything in place.
ImplementationThe implementation phase is the performance part of the project, the step that brings the project to realization and thus, requires the establishment of specific and well-defined milestones. The milestones are: Hardware and software acquisition, IT staff and company personnel training, equipment installation, and user training and acceptance.
Hardware/Software Acquisition and InstallationA purchase order must first be sent to Dell and Traker Systems Inc. to confirm interest in the purchasing of equipment and verify the kind and type of equipment needed. Both Dell and Taker System Inc. guarantee delivery of equipment to the designated sites within 14 days after the receipt of the purchase orders. Dell will provide the Albany and Pontiac plants with the Optiflex units, servers, routers and Ethernet connections, Traker Systems Inc. will provide all four Riordan sites with the bar-coding system and wireless scanners, and Open Pro will complete the process by linking all Riordan's systems with their ERP software.
Riordan IT personnel will be trained, on-site, by Dell, Traker, and Open Pro IT specialists prior to equipment arrival. IT personnel will load the necessary software on to the new hardware and test it, as soon as installation is completed. All the new systems will be tested by trained IT department personnel before it is installed in its designated departments. Once the IT department completes the necessary tests, all the equipment - computers, printers, routers, cables, and software - will be installed in the respective departments and tested again. Traker Systems Inc. will continue with the on-site software training program that had been started prior to equipment arrival. Traker training will include running, maintaining, trouble-shooting and upgrading the newly purchased bar-coding packages.
Hiring/Training PersonnelAll Riordan employees at the Pontiac and Albany plants receiving new computers will be trained by IT staff before the system installation is complete. Upgrading the computers to Windows 2000 might require very little employee training because, the majority of Riordan employees are already highly qualified computer users. It is, however, necessary to train all the clerks and inventory staff on the use of the new Traker software system. "Traker Systems Inc. provides a 30-day training program, included in the price of the package, to the IT staff and the clerks who will be using the software". (Traker systems 2007) Training IT staff guarantees that department time will not be lost in the future on the training of new employees/users.
User AcceptanceThe efficiency and speed of both the new computers and new software will gain automatic acceptance from the well-trained users - clerks and inventory department staff. The new upgrades will eliminate hand written forms, manual input of materials, and other error filled tedious and time consuming activities. Clerks and inventory department staff at Riordan Manufacturing will finally join the age of technology (the 21st century). "An automated accounts payable system is included in Open Pro's MRP software". (OpenPro 2007) Products which will help Riordan Manufacturing calculate future profitability, and dramatically improve its financial status.Once the implementation process is completed, the maintenance phase begins.
MaintenanceSystems maintenance plays a major role in an organizations success. In addition, many factors contribute to maintaining a solid and mature computer system that will be efficient and accurate. Planning, maintaining data, and keeping the system current is the key step to achieving organizational goals.
Systems maintenance involves checking, changing, and improving the system to make it useful. Analyzing the organizations current computer system might be beneficial, because many upgrades may be needed. Old systems can be more expensive to repair, and less efficient. Another factor to consider when upgrading the old system is productivity. Analyzing the data generated from the old system, can be useful in determining the actual productivity and efficiency the company needs. Final analysis reveals areas that need improvement can be addressed by the organization, and a plan can be put into place.
Computer hardware and software maintenance may also be a concern for the organization.
Proper maintenance in both areas can increase productivity for the company. Utilizing current hardware and software technology can enhance the performance of the computer system. Many organizations are investigating autonomic computing systems, which enable computers to manage and maintain themselves. This new method is a benefit to companies providing a cost effective approach, by reducing computer maintenance expenses more focus can be directed towards other operations within the company.
Another process that can be used for the maintenance of the computer system is systems review. Systems review compares the performance and benefits of the system to make sure they are operating as intended. This process has a major impact on the overall maintenance system. Reviewing current systems in the organization can uncover the need for upgrades to the system. Organizations outgrow current computer systems because of growth and development. Analyzing the design and use of the system can increase productivity and revenue, and decrease maintenance repair costs.
There are two types of review procedures organizations can use; they are event- driven and time-driven. A problem, opportunity, merger, or market for a new product triggers an event- driven review. Reviewing current small problems, organizations can avoid major problems by continuously improving the current systems operation and responsiveness. Keeping the system current can also decrease maintenance costs and increase efficiency and productivity throughout the organization.
A time-driven review is performed after a specified amount of time. ApplicationPrograms can be reviewed every six months to a year. With a set schedule, a system is monitored to insure proper operation. If there is an existing problem new developments need to be implemented and changes made. With this approach, organizations can ensure the current systems are operating as expected. These two approaches are used by organizations globally, to increase efficiency, and productivity. Therefore, organizations can benefit from these two systems to improve their overall operating costs, and achieve their goals.
ConclusionThe realization of technological upgrades will update Riordan Manufacturing to the 21st century, and enhance its role as a leader in the competitive industry of plastic bottle production. These upgrades will substantially improve the communication system within the company, increase productivity and production, and affect a profit in 8 months. The in-house IT department and the vendor's maintenance program will allow Riordan Manufacturing to continuously develop and update technological needs, thus preserving its role and status in a highly competitive global market.
ReferencesBarcoding.com (2007) On-site bar coding repair. Retrieved May 7, 2007 fromhttp://www.barcoding.com/services/onsite-barcode-printer-repair.shtmlOpenPro (2007) ERP software solutions. Open-source ERP, manufacturing ERP software. Retrieved May 5, 2007 from http://www.openpro.com/proic.htmlTraker systems (2007) Inventory control software. Retrieved May 5, 2007 from http://www.trakersystems.com/index.shtml