RIORDAN MANUFACTURING PAPER - UOP CIS/319

Riordan Manufacturing Paper

Riordan Manufacturing has grown from a small plastics research and development firm to a multinational plastics manufacturing power in the brief span of 14 years. This growth has seen Riordan expand their operation to multiple manufacturing and distribution points across North America and China. Riordan now services over 32 customers of varying size, including automotive parts manufacturers, aircraft manufacturers, the Department of Defense, appliance manufacturers, and beverage bottlers. This rapid growth, enabled through a series of acquisitions, an excellent product line, and aggressive sales, has enabled Riordan to increase market share while maintaining excellent customer relations and competitive pricing. However, this growth has presented the company with a variety of operational challenges that need to be addressed as Riordan Manufacturing, Inc. moves into 2005 and beyond.

In this proposal, the Operations Team is recommending a series of systemic changes that improve Riordan's manufacturing and inventory processes, utilizing computer systems to increase efficiency.

Riordan Mansion, Flagstaff

Riordan Mansion, Flagstaff

Riordan Mansion, Flagstaff

This was created to answer the service request logged by Hugh McCauley, COO of Riordan. The directives of this service request were further detailed by Maria Trinh, CIO of Riordan. In a memo dated September 10, 2004, she stated:

The primary goals of the project are:

Document current environment

Forecast of business technology needs for the next five years

Recommendations on systems integration, acquisitions and consolidations

Based on these goals, the Operations department has identified areas of Riordan's business that will yield a significant cost advantage if altered and improved:

Not enough information being shared between customers, sales, finance, manufacturing, and management.

Customers cannot place orders direct without human interaction at Riordan's offices. Customers cannot order during non-business hours at this time.

No real-time inventory system. No visibility into finished product and raw material inventory levels. No verifiable inventory levels without manual counts.

Disparate IT environment. Servers not centralized creating extra administration time and travel expense.

Expensive IT costs. Workstations are full systems and vary by OS and system type

Connectivity between locations no longer fit business needs. Satellite link is expensive.

The financial allotment for this project is $150,000, which has already been earmarked in the FY05 budget. This plan has been constructed and will be implemented as per the directives of the Riordan mission statements.

The Riordan Corporation has a very strong company mission statement. The mission includes focus, customer relationships, the employees, and future goals. Without these mission statements, the company would not have a solid ground to build upon for strong company business.

The areas of focus include:

Six Sigma, leading edge R&D and exceeding ISO 9000 standards define the attitude and abilities of Riordan Manufacturing

We are industry leaders in using polymer materials to provide solutions to our customers challenges

Our R&D is, and will remain, the industry leader in identifying industry trends.

Customer Relationships:

We will strive to be a solution provider for our customers and not be a part of our customer's challenges.

Long-term relationships will be sought by maintaining rigorous quality controls, innovative solutions, a responsive business attitude, and reasonable pricing.

Our Employees

We will maintain an innovative and team oriented working environment.

By assuring that our employees are well informed and properly supported, we will provide a climate focused on the long-term viability of our company.

Our Future

We must be focused in achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growth.

Riordan Manufacturing has a number of key operational areas that need to be improved if the company wishes to keep pace with the double-digit sales forecasts for FY05. The recommendations for improvement fall into four distinct categories;

streamline the inventory process

provide an automated, customer-accessible ordering system (which allows customer to track products ordered in transit),

create a centralized sales database to eliminate duplicated effort and streamline communication

consolidate Riordan's distributed network infrastructure

One of the biggest improvements to be made that would assist the manufacturing, delivery and shipping systems are changes to the inventory management system. The inventory management system needs to be upgraded to a less manual, more automated system utilizing barcode technology. Barcodes would be placed on every product built and/or raw materials received by Riordan. Inventory would be scanned when picked from the shelves, would be scanned when placed on transit, and would be scanned upon arrival and departure at any Riordan facility. This would be put into place for both raw materials arriving as well as products that are post-production and ready for distribution. With accurate inventory counts, the company could better forecast low inventory levels and drive manufacturing based on the available inventory and projected orders from our customers. The system will have reorder quantities established and will auto-reorder when inventory levels get too low. This will help automate the ordering of the raw materials critical to the manufacture of Riordan products.

The company and our customers would have real-time access to order fulfillment, delivery, and inventory levels. Customers would use their password to log into the system and see if the item is currently back ordered, in the manufacturing process, in stock and/or in transit. The customer would be able to place orders directly through this system also. Riordan will provide a password-protected ordering system using a website over HTTPS. This system will interface with the inventory, sales and financing systems to facilitate easy and reliable order taking. The system will also be linked into our transportation providers' websites, allowing customers to easily track their shipments using the tracking numbers given to each shipment.

Creating visibility from a purchase and sales interface into the inventory system will greatly reduce the possibility of error in the manual sales process that we currently employ. The products that are in stock and available at any Riordan location will be shown available for distribution and relocation to any other Riordan location or could be drop shipped directly from a Riordan distribution center to the customer's doorstep. Using this new system, customers could also create automatic reorder levels by date to replenish their stock automatically. This would be one system that allows every customer to use the same format and eliminate the costly mistakes and errors that are more likely to occur in the manual order process.

Another way to streamline operations will be the implementation of a customer database. Without a centralized customer database system to track communications and reorders, we have duplicated our efforts and at times have fallen short of our commitment to our customers. Not only will this database hold customer information, but also the system will be externally accessible, allowing all field sales reps and customers to access the system either through the VPN or over a password-protected web site to check the status of their orders. Any communication between the Riordan employee and the customer will be tracked in this database. This will help avoid duplicate communication between Riordan and our customers and will show an organized, unified, and professional face to the customer. The system will also be tied into the finance management area for those customers that need to charge purchases through our Net15 and Net 30 financing terms. All transactions and shipments will be able to be viewed through the proposed online office system. The benefits of this system in Riordan's efforts to improve customer satisfaction cannot be underestimated.

The last item on the list of improvements on the list is to consolidate Riordan has distributed network infrastructure. Riordan Manufacturing is an international corporation with 550 employees and 4 locations. Each location contains four nearly identical networks that are patched together over a variety of WAN connections.

The corporate headquarters in San Jose, CA has the most modern network and will become the home base for all Information Technology. There is unnecessary hardware redundancy in the current network that is not needed in the new infrastructure plan. The following suggestions would eliminate this redundancy and provide a lower-cost IT solution for Riordan Manufacturing.

San Jose, CA Office

Remove the Gateway Router currently connecting the Research network to the Satellite Base Station.

Convert the existing Linksys switch to a Cisco 2950-24.

Cancel the existing Satellite service between the China and San Jose offices for cost reduction. Remove the Satellite Base Station and the associated equipment and sell it.

Increase the existing T1 line to T3.

Install Chinese Language modules on the servers.

Hang Zhou, China Office

Cancel the existing Satellite service between the China and San Jose offices for cost reduction. Remove the Satellite Base Station and the associated equipment and sell it.

Transfer the VOIP Router to the existing T1 line.

Convert the three existing Linksys switches to a Cisco 2950-24.

Remove the NAS and all servers from the China office and ship them to San Jose.

Pontiac, MI Office

Replace the existing Nortel 10 MB Hubs with Cisco 2950's of equivalent size. This will dramatically improve network performance in the Pontiac facility.

Remove the NAS and all servers from the Pontiac office and ship them to San Jose.

Albany, GA Office

Replace the existing Nortel 10 MB Hubs with Cisco 2950's of equivalent size. This will dramatically improve network performance in the Albany facility.

Remove the NAS and all servers from the Albany office and ship them to San Jose.

This network conversion standardizes the hardware in each remote facility. It sets Cisco, as the standard for the company is switching equipment. The elimination of hubs and the addition of switches will improve the network throughput, which will be necessary with the addition of the proposed terminal emulation system. The elimination of the satellite link eliminates an expensive piece of the leased line expense (leased line expenses = $50,400/yr). Another benefit is the elimination of unnecessary equipment, which can be sold to offset the cost of implementing the net new systems.

. Figure 1 depicts what the new, centralized; consolidated IT model will look like after the proposed changes are implemented:

The second recommendation is to implement Terminal Services at the remote offices. The reasons for this are as follows:

The existing computers at the remote locations are already scaled to handle this change with minimal effort.

The remote IT staffing can be eliminated further reducing costs to the company.

Each office can be converted individually and the problems that occur during the conversion can be ironed out as they are discovered. The overall server plan is unchanged across the corporation but we anticipate employees will need some training related to using Terminal Services. The proposed changes will help reduce Riordan's expense in licensing ($42000 per year) as well as IT related travel expenses ($22000 per year). The changes will also help streamline the operations, and assist in customer support by eliminating different operating systems and hardware platforms. This is a win-win scenario for all of the stakeholders of this project, providing a more homogenous system and reduced TCO.

The third recommendation for the current year is to implement Virtual Private Network (VPN) access to allow our sales force to connect to the company network from the field. The VPN will provide a safe, secure, encrypted channel that the sales force can use to access the corporate network. This will allow them to sell to real-time inventory levels and have access to business and financial data on the corporate network. This will improve efficiency in placing and processing sales orders. This concludes the proposed network changes for the first year.

In the second year, we are suggesting these goals:

Form a steering committee from each of the divisions with the broad goal of establishing a video teleconferencing system. This system will improve communications of the upper management teams across the company and reduce the travel costs associated with face-to-face meetings.

Increase our customer base and increase participation in all areas, including sales and all business management. (i.e. expand future partnership relations)

Revise budget estimates to reflect savings created by eliminating the outlining IT staff.

Then introduce those savings into technology improvements.

In the third Year, we recommend this goal:

Expand VPN capability to include video teleconferencing with the sales force while in the field.

In the fourth year, we recommend this goal:

Introduce web enabled, java based application server technology to streamline order management and allow our customers to place orders online.

In the fifth year, we recommend this goal:

Assess the last four years progress, and make appropriate changes to the next 4yrs budget plan and future goals of the company.

Figure 2 illustrates the projected 5-year in a flowchart for Riordan Corporation.

Figure 2

The operations department at Riordan has determined that a combination of net new automated systems (to replace manual systems) and consolidation of existing systems will provide a more efficient, cost-effective inventory and management system. This system will service our internal and external customers more effectively. This proposal has referenced the documentation detailing the current environment, has done a forecast of business technology needs over the next five years, and has made a variety of recommendations on systems integration, acquisition, and consolidation for the current year. By consolidating the IT operations to one location, eliminating costly WAN links, and creating a VPN solution, the overall efficiency of the IT operation will be increased while costs are decreased. Streamlining the inventory and ordering system, will allow Riordan to keep pace with our current and future customer base. Our inventory shrinkage will decrease, and our overall customer satisfaction will improve dramatically.

The new systems proposed will allow Riordan to bring on new business by adding new customers, leading to larger market share and greater revenue generated. Streamlining and consolidating the systems will allow Riordan Manufacturing to keep a larger portion of that revenue. This is good for Riordan, the shareholders, and the employees. However, the groups that stand to benefit the most from these changes are our customers. As per the Riordan mission statement, "We will strive to be a solution provider for our customers and not be a part of our customer's challenges. Long-term relationships will be sought by maintaining rigorous quality controls, innovative solutions, a responsive business attitude, and reasonable pricing." Each of the proposed changes will benefit our customers. The changes will create and maintain the long-term relationships that Riordan Manufacturing has valued in the past and will continue to build in the future.

Reference

Group, A. I. (2003). Riordan Manufacturing. Retrieved November 1, 2004, from http://aapd.phoenix.edu/CIST/VOP/Riordan/Internet/IndexPort.htm

A, Learning Team (November 12, 2004). Figure 1: Riordan Manufacturing Consolidated Communications Block Diagram

A, Learning Team (November 12, 2004). Figure 2: Projected 5-Year Plan