Bsa 375 Fundamentals of Business Systems Development - Riordan Service Request Rm0002 Project

Riordan Service Request RM002 Project

Learning Team C:

(Steven Brown, Beryl Griffin, Virginia Meakins, David Moore, and Albert Tranchilla)

BSA/375 Fundamentals of Business Systems Development

Greg Middaugh

July 14, 2006

Statement of Scope and Goals:

Our first goal of this proposal is to simplify the inventory process by implementing more efficient methods of inventory control, tracking the inventory at every major step in the production process, and automating the accounts payable with the accounts receivable.

The second goal of this proposal is to coordinate the ordering of raw materials to coincide with the need for production output.

Thirdly, we want to improve communication and coordination between all four plants.

And finally, another goal of this proposal is to illustrate how to develop, or purchase a program for material requirements planning to reduce costs and decrease the time between the purchase of raw materials and the shipment of the finished products.

In summary, the goals of this project are to increase production efficiency, and reduce inventory costs, while tracking the progress of the raw materials to the end result of the finished products as they are shipped to the customers.

This team's proposal will reveal the needs and challenges faced by Riordan Manufacturing, as well as some possible recommendations for solutions, improvements and upgrades.

Supporting Measures of Success:

In order to objectively judge the success of any changes to Riordan's process of receiving raw goods and tracking finished inventory products, it is necessary to institute a system by which improvements can be tangibly measured. These measurements will need to be relatively easy for stakeholders to read and understand, particularly so for those individuals who must approve this proposed project. The areas that would be targeted for measurement criteria include the net savings in materials and production costs, increased productivity, an increased profit margin, and increased worker satisfaction.

All stakeholders will be affected by this project, whether it is the workers who must implement changes in their procedures, or the accountants who must be able to justify the costs on paper, or the department heads who must ultimately approve or reject this project proposal. For that reason, we would include in our proposal measurements displayed in graphic form, whether it be tables, charts, or graphs and we would make good use of color to maximize the ability to easily read the data. These would be included in both the hard copy of the proposal and in any visual PowerPoint presentation that we might prepare as well.

There are four specific areas where we would focus attention in measuring results. The first area is in the reduction of raw materials cost. We believe having a more real-time inventory system will eliminate raw materials sitting unused, resulting in fewer raw materials on-hand and lowered materials costs that can be easily measured and demonstrated. Secondly, we feel that this new bar coding application will speed up the inventory tracking process, resulting in increased productivity. Next, we believe the combination of reduced raw materials costs and increased worker productivity will result in an overall increased measurable profit margin for the company. Finally, while it is not as easy to demonstrate quantitatively, we believe increased efficiency of the new system will result in increased worker satisfaction.

Feasibility Study:

Currently, Finance and Accounting Systems in the three American plants are all different and not compatible. The California plant has an integrated, Windows based ERP system. Their system is designed specifically for plastics processors, but the license doesn't include source code. It would be difficult to adapt this model for the other two without considerable additional expense, and without source code it has been difficult to integrate successfully with the other systems. Michigan has a DEC Alpha pair using a VM operating system with VAX 4000 work stations. Georgia has a pair of AS400s using a UNIX operating system, programmed in RPG400, with PCs running Windows as workstations.

When balancing, some information must be sent by hardcopy and re-entered, which is labor intensive. Monthly balancing is 15-20 days after month end. Some data can be received as data files but must be redirected and account numbers changed, also labor intensive. Outside auditors require monthly audits, both costly and labor intensive. Each plant does its own invoicing, payments, etc. Reports required by the government are difficult to handle.

Revision of the Finance & Accounting system is a priority. Since each plant produces different items, a customer that needs items from different plants must deal with each plant separately. Accounts receivable and accounts payable processes are redundant and not conducive to automatic billing, which could be done with a good RMP system. And since the systems aren't compatible, it's possible that other systems are also redundant and that some data isn't being processed correctly at all.

Accounts receivable appears to have decreased over the past year, while notes receivable have increased. Due to incompatibility of the systems, some of this could represent accounts not being billed or payments being improperly recorded. It could also reflect errors in transmission and conversion of data or errors in manual input of data.

At the same time, accounts payable and liabilities have increased. The costs associated with production have increased and the cost of administrative expenses has increased by nearly $.5 million in the last year alone. The net result is that it appears profits have decreased. Again, errors in transmission or conversion of data or errors in manual input could be part of the problem.

An expenditure of $150,000 has been approved to study the problem with accounting and a system has been found which will cost $1,350,000. The Vice President of manufacturing has requested an expenditure of $1 million for manufacturing equipment and supplies.

Sales:

Each salesperson keeps his or her own customer records. Some use paper and pencil, some use computers. There is no way for the company to

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