Running head: PRODUCTION PLAN FOR RIORDAN MANUFACTURING
Production Plan for Riordan Manufacturing
â€We must be focused in achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growthâ€ (University of Phoenix,Â 2004,Â p.Â 2). Riordanâ€™s existence is dependent upon its ability to maintain and manage its very own growth and capital. Over the past years Riordanâ€™s developments has increased its capabilities to not only cater to its consumers but yet concentrate on strategies in providing detailed, accurate and enthusiastic quality control. Although these hallmarks are the streamlines to ...view middle of the document...
Conversely, the reaping benefits behind the implementation of a strategic capacity plan would allow the organization an insight on the capacity level that best supports its forecasted competitive strategy as well as its approach in achieving streamline production.
Strategic Capacity Planning
The objective of strategic capacity planning is to determine the overall capacity level of capital-intensive resourcesâ€”facilities, equipment, and overall labor force sizeâ€”that best supports the companyâ€™s long-range competitive strategy (Aquilano, Chase, & Jacobs, 2006, p. 431). The capacity level has a vital impact on Riordanâ€™s facility in China. If the capacity is inadequate, Riordan runs the risk of losing customers due to slow service or competitor entry; if the capacity is excessive, Riordan may have to reduce prices, reduce staff or carry excess inventory (Aquilano, Chase, & Jacobs, 2006, p. 431).
Riordan Manufacturing can benefit from the development of a strategic capacity plan by considering all time durations (short, mid and long range) and eliminating the bottlenecks currently present within its inventory and supplier networks. In addition, Riordan needs to include the China plant in the overall strategic planning for the organization and not treat this particular facility as a decentralized unit (University of Phoenix, n.d.). Short-range decisions (within the month) involve staffing requirements to meet demand outputs. Staffing levels could be inadequate during certain times because production demands are based on the forecasting of sales of prior years. This assumes that sales will remain constant among customers and may not allow for timely adjustment during peak periods. Mid range decisions (during the next 6 to 18 months) include hiring, layoffs, equipment purchases and new tools. Long-range decisions (greater than a year) include the approval for the acquisition or disposal of facilities, building and equipment. Riordan needs to reduce the cost of raw materials within the China plant and implement the just-in-time inventory method. This method allows for a reduction in lead times and work-in-process and will require a stable production level. Riordan may also consider cultivating relationships with area vendors and requiring minimum or guaranteed purchases in customer contracts to ensure appropriate materials requirement and timely delivery.
The theory behind lean production is utilizing the smallest inventory of raw materials while achieving a high-volume production. Therefore, product will not be utilized until that...