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Running head: RIORDAN MANUFACTURING BUSINESS SYSTEMS 1

Riordan Manufacturing Business systems Shawn Craig, Riley Dodgens, Giovanni Figueroa, and Helen Praria BSA/310 December 21, 2011 Tarik Iles

RIORDAN MANUFACTURING BUSINESS SYSTEMS Riordan Manufacturing Business Systems

Riordan Manufacturing is a subsidiary of Riordan Industries, a Fortune 1000 enterprise ("Riordan Manufacturing: Home page, 2003-06). Dr. Riordan, a chemistry professor, founded it in 1991. Riordan Manufacturing has progressed from a research and development facility to a global producer of plastics for appliances, beverage containers, the automotive and aircraft industries, and the U.S. Department of Defense. Cutting-edge research and development is done at Riordans corporate headquarters in San Jose, California. In addition, Riordan Manufacturing has plants in Albany, Georgia, Michigan, and China. In keeping with its mission to continue as a leader in the polymer materials industry, Riordan has requested a comprehensive summary of the business systems it needs for effective management. The departments included in this summary are Finance and Accounting, Human Resources, Legal Department, Sales and Marketing, Operations, and IT Security. Finance and Accounting Riordan Manufacturings Finance and Accounting (F and A) Department is segregated in each of its plants in Albany, Georgia, Michigan, California, and China. Each office sends its data to the corporate office in San Jose, which consolidates the information. According to Riordans intranet site (2003-06), the basic components of each system are:

General Ledger Accounts Payable Accounts Receivable Order Entry Procurement Sales and Purchasing History Invoicing and Shipping

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Payroll Financial Reporting EDI* Bar Code Reading* EDSS (Executive Decision Support System)*
*

San Jose Only

When the Michigan and Georgia plants were acquired, the compatibility of the Finance and Accounting systems was not addressed ("Riordan Manufacturing: Finance and accounting overview, 2003-06). Each facility uses different software and hardware for its F and A Systems. Consequently, the data sent to the corporate offices is in different formats ranging from improperly coded data files to hard copies that must be entered by hand. The result is a labor-intensive process that is usually not completed until 15-20 days after the month ends ("Riordan Manufacturing: Finance and accounting overview, 2003-06). Costly and laborintensive monthly audits are also required. The lack of compatibility also makes compliance with new government reporting requirements very difficult. The Riordan Manufacturing individual Finance and Accounting Departments must be upgraded and integrated with a new software program that will facilitate seamless compatibility. The recommendation will be to use the Sage Peachtree Complete Accounting program (Version, 2012) to accomplish these goals. Sage Peachtree has ranked high in many reviews of accounting software systems. The Sage Peachtree Accounting Program consists of the following modules:

Customers and sales Vendors and purchases

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Inventory and services Employees and payroll Banking (Sage Peachtree Complete Accounting 2010, 2011.)

One major advantage of this accounting program is its ability to integrate seamlessly with Microsoft Excel, Outlook, and Word 2003-2010 ("Accounting Software Review," 2011.) Sage Peachtree Complete Accounting is also certified to meet the Payment Card Industry Data Security Standards (PCI-DSS) for customers who process credit card payments in the program through integration with Sage Exchange (Sage Peachtree Complete Accounting 2012, 2011). Two of Riordans branches, San Jose and Georgia, already run on a Windows-based system. The provider Michigan was using is no longer in business. Setting up Michigan with a windows-based system and all three with the Sage Peachtree Complete Accounting 2012 program will provide the desired seamless compatibility between the branches that Riordan corporate is looking for. Other benefits include reducing the resources needed for the budget process and the ability to track, analyze, and interpret the companys financial data. Human Resources The Human Resources department (HR) for Riordan Manufacturing currently has an existing business system in place called the Human Resources Information System (HRIS). This current business system contains a broad coverage that identifies and regulates the many HRrelated issues on a day-to-day basis. Riordan has relied on the current system since 1992, which allows the department to keep track of the employees personal information, rate of pay, tax information, date of hiring, and vacation hours accumulated. The HR staff keeps track of the employees personal information by using the Microsoft Excel program utilizing the spreadsheet feature. As the need arises to make any changes to the employees information, it is submitted to the HR management, which in turn, passes the written

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changes of employees information to the HRs payroll clerk, who enters these changes into the computer. Additional important personal information such as workers compensation has been outsourced to a third party, who in turn records and stores its own records. The HR department has also established an employee handbook that explains in detail the method of documenting the organizations policies and procedures. The employee handbook system explains policies in detail, like the employee compensation program, the setup of global operations, and labor relations, recruitment, training, and development practices. The role that the HR department plays in the organization is more than just policies and procedures. The HR departments principle role is in the support afforded to the entire organization. The departments ongoing purpose is to create, through the companys employees, successful business outcomes by placing employees in the correct positions, to support the organizations many business systems, management, and labor force. Riordan Manufacturing currently employs 550 people and can be classified as a diverse company. Riordans goals are to keep its employees in a team-oriented atmosphere that promotes both consistency and innovation. By keeping its employees informed on a regular basis and giving them the right support, Riordan can remain focused on the future direction of the company. The focus of Riordan Manufacturing is Six Sigma. Six Sigma is the leading edge research and development, exceeding ISO 9000 standards, and defines the attitude and abilities of Riordan Manufacturing. The success of Six Sigma relies on the employees ability to make decisions based on data, finding the initial cause of the problem, identifying defects based on customer feedback, and the elimination of variations. The HR department will be a key factor in Riordan maintaining its Six Sigma status by placing well-qualified individuals in the correct positions. The HR department interrelates with other business systems in the organization such as Finance and Accounting, in that reparation benefits for employees are the responsibility of HR, and that HR maintains the (HRIS) System,

RIORDAN MANUFACTURING BUSINESS SYSTEMS which is part of the financial systems package. Both the HR departments and the companys strategic priorities should be in alignment. By aligning the strategic priorities, the HR department can help the company achieve its goal of continued profitability. Legal Riordan Manufacturing has a Legal department consisting of the Chief Legal Counsel, Lowell Bradford, Rick Ethridge, and a consulting law firm of Litteral and Finkel, who are on retainer. The Chief Legal Counsel is responsible for approving the legal decisions in the company, including all work forwarded to Litteral and Finkel. Riordan has had a working relationship with Litteral and Finkel since the companys beginning and has a personal relationship in addition to business. The Legal Counsel handles the day-to-day legal issues forwarded by each of the department heads. In addition, the Legal Counsel handles the patent applications for the company. Riordan maintains ISO 9000 status, which means that all legal issues need to be addressed to maintain the companys quality operations. The consulting law firm of Litteral and Finkel provides advice for tax laws, employment issues, and matters involving immigration, workers compensation, labor law, regulations, and

real estate issues. A global law firm, Litteral and Finkel can quickly assist in international legal matters for Riordan Manufacturing. However, as a recommendation, analysis should be undertaken to see if this arrangement is best for the company or should the company source all legal matters internally. Riordan Manufacturing will continue to need and rely on legal services to stay competitive no matter the arrangement. Sales and Marketing The Sales and Marketing system of Riordan Manufacturing is designed to keep track of sales and marketing over the past years and what is currently being implemented in actuality.

RIORDAN MANUFACTURING BUSINESS SYSTEMS

The system is designed to increase sales by advertising and showing their current and potential clients how stable and reliable they are and have been. Two main areas that will be discussed of the Sales and Marketing system are the Marketing Information System and the Sales Plan. The Marketing Information System is divided into different groups. They include historical sales, files of past marketing research, marketing plans, design awards, sales database, production records, profit and loss statements by item, group marketing budget, and marketing budget anticipated results. The Sales Plan is divided into three parts:

Part 1: Strategic sales objectives with corresponding financial goals and roll-out schedules.

Part 2: Tactics by marketing mix, timing, and relationship to strategic sales objectives. Part 3: Customer relationship management strategies.

These major areas of the Sales and Marketing system are what make Riordan Manufacturing such a strong and stable company.

Previously, Riordan would track most of its sales data by using paper and pencil. In the most recent years, an implementation of electronically filing this information has become quite efficient. With this new integration, the sales department can record orders, deliveries, and payment dates by order, unit, and the dollar amount of each product. These include plastic bottles, fans, heart valves, medical stents, and custom plastic parts to be examined by product groups, customers, and sales. This will also include price paid, cost, margin, and discount given to each customer.

RIORDAN MANUFACTURING BUSINESS SYSTEMS Past marketing plans and results from past market research studies are stored in file cabinets in the marketing department. The marketing organization wants to build on past knowledge. This is why the company wants to keep these documents safe and secured. The

only way is by scanning the documents electronically so they can be stored in a secure database for ease of accessibility. Riordan is implementing a method to store its sales database by using management software. This will help to organize the business major and minor customers. The software will be used to understand better and anticipate customer needs. A new integration of a customer management system will accompany a new team selling approach that will soon be rolled out. A production plan maintains records of the number of units produced of each item by shift, which can be rolled up to the product group and year. The marketing department with the support of the finance and production departments maintains profit and loss statements, by item and by group. Riordan has historical and current annual budget allocations for marketing communications and marketing research. Marketing communications activities include sales force promotions, price and volume discounts to key accounts, public relations, brand development, tradeshows, events, sponsorships, customer user group underwriting, literature, and other collateral material. Marketing research expenditures include market size and opportunity studies, customer focus groups, and brand development research. The sales plan is to achieve a $50 million revenue mark in two years. The purpose is to help the sales organization prioritize activities and resources in an effort to meet or exceed the stated sales objectives. The objective was developed by the executive team and involves the input of the line managers closest to the day-to-day operations. The plan will be achieved through increased sales to existing customers by increasing sales force promotions, price discounts, customer user group services, expanded sales to new customers by implementing

RIORDAN MANUFACTURING BUSINESS SYSTEMS

public relations activities, trade shows, brand development, and sales force promotions. Part 1 is achieved by increasing sales to existing customers and expanding sales to new customers. Existing customers are expected to account for 60% of the incremental sales that will get Riordan to its $50 million mark. Taking a consultative sales approach will help to understand the current needs, anticipate, and influence the future needs of its customers. The plan is to work with customers before they release request for proposals (RFPs) so they are developed around the products, services, and solutions the company offers. Some activities that will be conducted to help include sponsor and coordinate industry specific user group meetings, active support of the new services solutions development, and customer needs action plans. The other 40% of the incremental sales will be through sales to new customers. The company can reach new customers by attending tradeshows and leveraging market research reports. Activities to increase these sales include each sales team member attending six tradeshows in a new industry or segment, completing nine sales calls on new customers, and signing two new customers with first orders over $50,000. Part 2 is achieved by product, pricing, promotions, and place research. Marketing and product development are committed to developing products and value and add services to help compete to win bids. Riordans pricing strategy will remain the same as previous years, a cost-plus method. Sales managers have more advantages when working with customers and can assign discounts to customers without approval of headquarters, provided the sale still meets the minimum profit margins. Promotions run in two categories: sales team promotions and customer promotions. Employees reporting under the sales group are eligible for the sales bonus program if all goals and initiatives for existing customers are successfully completed in the given quarter. For every new customer added who spends $100,000 on his or her first order, the sales manager will receive a $5000 bonus, plus an additional $2000 to

RIORDAN MANUFACTURING BUSINESS SYSTEMS allocate to any supporting team members. Customers will be excited about the companys promotion to buy 100 cases of the same item and get five cases free. A completion of a comprehensive market study is in process and will be available soon. The results of the study will help Riordan achieve a better direction for industries, segments, and geographies for the best opportunities for growth. Part 3 is achieved through customer relationship management strategies. The new sales information system will help better understand customers needs so that the company can shape products and solutions to respond to those needs. In addition, the

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shaping and nurturing of new customer relationships is in effect. This will be possible by going beyond and reaching out to those new potential clients. Resources will be provided such as financial incentives, tradeshow funding, and market research reports to enhance and support team members efforts. Operations The daily operations in manufacturing for Riordan Manufacturing have shown to be profitable for many years. As new procedures and technology come to market, Riordan Manufacturing needs to invest to stay on top in the industry. New business system procedures need to be implemented to ensure Riordan Manufacturing does not fall behind. A look at the current business system shows that implementing a few technological upgrades will greatly reduce the amount of paperwork, which has the potential to become lost or not completed correctly from human errors. The first area to evaluate is the raw materials receiving system. As the raw material from suppliers arrives, the shipping documents are checked against scheduled incoming orders. At the end of the working day, this paperwork is given to the inventory clerk. The type of material, vendor, and quantity are entered in the database. Only after the working day has ended, and the information is entered can this information be reviewed. This procedure can be upgraded to a

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barcode and scanner system that will enter the information as the material is received. This will allow the information to be reviewed in real-time. The next area is the manufacturing system. The manufacturing team fills out a Raw Materials Usage form and gives the form to the inventory clerk. The inventory clerk enters this information into the database. At the end of the working day, the manufacturing team fills out another form indicating the number of subassemblies and final products produced. This form is given to the inventory clerk for entry into the database. This procedure can be upgraded by the use of barcode scanners. This will track the raw materials used, as they are needed. When containers are filled with the subassemblies and final products, these containers are given a barcode and scanned for tracking. This will allow the reviewing of the total of product at any time.

Finally, there is the final product shipping system. Orders are received via phone, fax, or by the sales staff. This information is written on a sales order form. From this form, ordershipping documents are produced. The order is filled and shipped. This procedure can be updated by eliminating most of the paperwork. The orders can be entered into the system, which the shipping department will see and fill. The use of barcode scanners will be used to assemble the orders in a holding area until the delivery truck arrives. When the product is pulled from inventory to the holding area, it will automatically be deducted from the inventory and listed into the amount shipped log. This new system will require the purchasing of new equipment, barcode printers, and scanners, additional computers and software, and the training of employees on how to use the new system. This new system will need to be installed into each of the manufacturing plants.

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The main office will also need access to all of the information from the manufacturing plants. A cloud-based system will need to be installed for this to be feasible. With the use and reliance of this much business information kept on many computers located in different parts of the country and even outside of the country, information system security is critical. Before any type of security system can be implemented, a risk assessment must be completed. A risk assessment determines the level of risk to the firm if a specific activity or process is not properly controlled (Laudon & Laudon, 2010, p. 311). Once this process is completed, a security policy to protect the companys assets will need to be written. The security policy drives policies determining acceptable use of the firms information resources and which members of the company have access to its information assets (Laudon & Laudon, 2010, p. 312). An authorization policy and authorization management system will also need to be implemented. Once all of the procedural information has been completed, the installation of the software and hardware can be installed. Firewalls, intrusion detection, and antivirus software are the first essential tools needed. The company can invest in the needed hardware and software along with the addition of an Information Technology Department for each plant and home office, or it can outsource the security to a company like BT Counterpane, VeriSign, or Symantec. These companies are highly known in their industries for their support and service. The outsourcing will also cut down on the time it will take to have a complete and functional information technology security system up and running. Conclusion Riordan Manufacturing could benefit from many new upgrades to its current business systems. These upgrades involve the purchasing of new hardware, software, equipment, and services. Each of these will need to be integrated into each of the manufacturing plants and the

RIORDAN MANUFACTURING BUSINESS SYSTEMS home offices to ensure compatibility throughout the entire company. By upgrading, the company will see a significant difference in the time spent completing paperwork and tasks. This has the potential to save thousands of dollars over the following years. The upgrades are

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needed to keep Riordan Manufacturing on top of the plastics industry. Time-is-money is not just a saying; it is a way of doing business. With new software in the Finance and Accounting Department, the companys money can be tracked more accurately and with fewer errors. The new software in the Human Resources Department will assist in maintaining more accurate employee records. The Legal Department can benefit from an internal legal department. The Sales and Marketing Department will have more success by reevaluating its department and creating a new marketing and sales plan for the upcoming years. The implementation of a computer-based filing system will also cut down on paperwork and time. The daily operation of each plant will become more efficient and accurate with a new barcode and scanner setup. Finally, the Information Technology Department will need to implement IT security measures to maintain the companys integrity. All of the changes made to the business systems mentioned will assist in ensuring Riordan Manufacturing stays the leader in plastic product manufacturing for many years to come.

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References Accounting software review. (2011). Retrieved from http://accounting-softwarereview.toptenreviews.com/ Laudon, J.P., & Laudon, K.C. (2010). Management Information Systems: Managing the Digital Firm (11th ed.). Upper Saddle River, NJ: Prentice Hall. Riordan Manufacturing (2003-06). Retrieved from https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/RioMfgHome002.ht m Sage Peachtree Complete Accounting 2012. (2011). Retrieved from http://accounting-softwarereview.toptenreviews.com/peachtree-review.html

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