Make to Stock Strategy
Riordan Manufacturing implements the make to stock strategy in their business. This strategy involves having the manufacturing company match production with consumer demand forecasts. This strategy forecast demand to determine how much stock should be produced. (Jacobs & Chase, 2011). This strategy is beneficial to the company because the fans are seasonal and it allows the company to produce the product during the slow season and can be used during the peak season. This allows for the process to run at a constant rate throughout the year (Jacobs & Chase, 2011). Riordan manufacturing forecast the demand of fans by taking the average of sales for the last three years and extrapolating it into the next year (rorodan 2013). Riordan ...view middle of the document...
Riordan hires the right amount of employees to avoid the tangible and intangible costs of hiring and laying off employees due to not needing them. This strategy allows the company to be able to focus in meeting the demand for the goods and not needing to provide overtime to its employees or have to invest additional money in training new employees. This strategy can have a drawback if Riordan has inaccurate forecasts causing having excessive inventory.
Supply Chain Metrics
Metrics are used to tell a firm how the progress is flowing. Two metrics used to evaluate performance in Riordan is productivity and efficiency. Productivity is the ratio of output to input. This is measured in monetary units by taking the dollar value of the output (goods and services sold) and dividing by the cost of all inputs (material, labor, and capital investment) (Jacobs & Chase, 2011). Riordan designs customized electric fan products under individual contracts. They ensure they use the productivity metric to be able to see if it is efficient for their company to sell the customized fan products. The company determines the final cost of the product after the product is completed to estimate the cost of the production quantity. Efficiency is the other metric used with Riordan. Efficiency is the ratio of the actual output of a process relative to some standard. It is also used to measure the loss or gain in a process. This metric is used by Riordan to be able to determine if the customized fan products are beneficial to the company. This will reflect if it is efficient to spend time in making these products depending on how many contacts they receive.
Jacobs, F. R. & Chase, R. (2011). Operations and Supply Chain Management (13th ed.) Boston, MA: McGraw-Hill Irwin