Every company pays lots of attention to short-term and long-term strategy developing as this program will be the company’s financial and operational guide during the next few years. The main goal of every strategy is to ensure annual profit and turnover increase along with the maintenance of the old sales market and gaining new markets. Keeping and maintaining the planning department is a well-known practice for every large corporation. They keep constantly searching for new ways to reduce costs, improve operational efficiency, and increase financial assets. Riordan Manufacturing is not an exception.
To maintain a sustainable profit, Riordan management decided to improve manufacturing process for the electric fans produced in Hangzhou, China. It is required to analyze the strategic potential industry planning and lean production for the new process design, and the supply chain process in order to ensure perfect quality control. Management offers to relocate electric fans manufacturing to China with implementation of effective logistic system to help decrease operation costs.
First, Riordan offers to increase capacity, reduce shipping costs, and achieve shorter production time frames, which will compose strategic production plan. To do it, the Riordan current equipment is needed to be evaluated.
Second, capacity planning includes calling in each department to the workflow process. Attention must be paid on increased production along with additional service line development. That will help to ensure the long-term period for the company strategy along with the impacts in labor needs (Rashmi, 2006).
Third, the implementation of a lean production technique to the industry process is called JIT (Just-In-Time) (Lai & Cheng, 2009). JIT system allows Riordan to produce and deliver as much products to the customers as it is required. That helps to avoid product stagnation on the warehouses and eliminate waste while manufacturing the product. Since JAT system produces smaller batches, the orders are processed after receipt, controlled and immediately fixed once there is any problem (Black, 2008).
The other key part of the strategy is the roll-out of a Kanban production control system. That system helps to regulate the JIT flow in supply chain process to achieve better results (Khanna, 2007).
The management of the company also offers to assign responsibilities for the quality of output for each employee. If a worker finds a quality issue, he must release a visual signal or stop the conveyor. They believe that in such a way they will support corporate strategies for long-time success and help to eliminate waste.
The management of the company never forgets about the workforce which also plays key role in any production. The company is planning to use motivational tools such as compensation and benefits. That will attract and retain best employees and help to improve labor productivity along with qualitative and quantitative characteristics of the goods. Human recourses department is constantly developing new incentive programs for staff members, who help Riordan to be prosperous and always be on the top of the market (Havaldar & Cavale, 2007).
It is a well known fact that every strategy has its weak parts. The designed strategy does not have to be ineffective since our population lives in the world of technology and informational triumphs which grow faster and faster. A strategy, designed today, will be outdated tomorrow. That is why the strategy, which has been developed by the company earlier, also has its disadvantages.
First, Hangzhou plant depends on the single source supplier for the motors used in fans, which can lead to industry stop in case the supplier has issues with its product. The management is trying to find the solution by cooperating with other companies which are ready to supply the needed product. The other way to solve the problem is begin to store a safety stock of motors to avoid delivery issues from the supplier as it has been before.
Second, there is a logistical problem, founded by the operational management team during receipt of delivery from external suppliers (Rushton, Croucher & Baker, 2010). Company does not only designs goods, but also delivers it to the customer. That process has a multiple system, needed to be done well and tracked, to be sure that all the departments commit consolidated operations. To move the product to the exit port in Shanghai, it is required to pass several stages. It is expensive and takes a lot of time for delivery along with shipping damage potential while moving the product many times. The goods can also be damaged during transport. One of the solutions is to provide the storage of the goods closer to the final destination of Shanghai. That will help to prevent potential damage of products and allow reducing costs. The other way to solve that problem is to organize a make-to-order process (Fogliatto & Da Silvera, 2011). To do it, it is necessary to implement an electronic current stock data reciprocal exchange. That will allow the plant to know about the retailer fan stock and improve forecasting when the next shipment is required. The following move will make an operational process more costly.
Third, an organizational process suffers because of lack of computerized design system. It causes delays in production. However, introduction of a computerized design system will improve and accelerate production of the final custom fan. Sending documents with the required information via e-mail will help avoid lengthy procedures for the preparation of contracts for orders. New system will allow to reduce the production processes’ lead-time, and can be used to new client orders. This is also related to strategic planning. “Strategic capacity planning is defined as a technique used to identify and measure total capacity of production. Planning helps the organization in decision of future requirements and ensures that operation costs are supported on a minimum possible level without loss of the quality and provides it remain competitive to achieve the long-term growth plan” (Kempf, Keskinocak & Uzsoy, 2010-2011).
Riordan effective management is an example for many companies and students all over the world. It keeps the company on the top of its sales market all the time. Leadership team is being in constant strategic developing process, aimed at a success on financial and operational levels within the company. Relocation of Riordan productivity to China allowed the management to reduce costs of product performance, ensure enterprise cheap labor force, enter a new lean manufacturing process, establish transport communications, and adjust the process to suppliers.