Evaluating Financial and Technological Solutions for Enhancing Operational Efficiency at Riordan Manufacturing

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Riordan Manufacturing Paper1Evaluating Financial and Technological Solutions for Enhancing OperationalEfficiency at Riordan ManufacturingRiordan Manufacturing PaperXXXXBSA/500XXXXAnalyze Riordan Manufacturing's financial performance and identify key issues related to itsaccounting systems. How would implementing an Enterprise Resource Planning (ERP) systemaddress these issues? In your answer, discuss the benefits of ERP integration, potentialimprovements in efficiency, and the company's financial outlook, including debt managementand profitability. Your answer should be between500 and 700 words.

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Riordan Manufacturing Paper2IntroductionRiordan Manufacturing, Inc. is a leader in plastic injection molding. The organizationoperates in the United States and China. The company employees 550 people with annualearning $46million. The parent company, Riordan Industries, has revenues in excess of $1billionand is a Fortune 1000 enterprise. The company was founded by Dr. Riordan, a chemistryprofessor, in 1991.Company’s products includePlastic bottles (Albany, Georgia plant)Fans-all sizes (Hangzhou, china plant)Heart valvesMedical stentsCustom plastic parts (Pontiac, Michigan plant)Major customersAutomotive parts manufacturersAircraft manufacturersDepartment of defenseBeverage makers and bottlersAppliance manufacturersIn 1992, Riordan used venture capital to acquire a fan manufacturing plant in Pontiac,Michigan. In 1993 Riordan purchased plastic beverage manufacturing plant in Albany, Georgia.

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Riordan Manufacturing Paper3The company’s vision for the future is to be ‘focused in achieving and maintaining reasonableprofitability to assure that the financial and human capital is available for sustained growth’.The Michigan plant is running software developed by a vendor who is no longer inbusiness. The Georgia plant purchased a software application from a different vendor than theMichigan plant. When Riordan purchased the Michigan and Georgia plants the incompatibilitiesof the Financial and Accounting (F and A) systems was not addressed.Data from the (F and A) systems is provided to the corporate office by data files andhardcopy. The hardcopies must be re-entered in the system and the data files have to beconverted to the proper account codes. Closure of the General Ledger, Income Statement andBalance Sheet is labor intensive and can take up to 15-20 days after the end of the month.Riordan has compliance issues with new government required reporting and monthly audits arecostly and labor intensive.This situation is unacceptable to Riordan Enterprises and istransparent to its customers and supplierswho receive invoices, payments, etc. from theoperating entities in the same manner prior to the acquisitions.

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Riordan Manufacturing Paper4Enterprise Resource PlanningEnterpriseresource planning or ERP software is high-end accounting software for largebusinesses. ERP is complex and expensive, but it provides a platform for seamless integration ofthe business functions. ERP software can handle the manufacturing, inventory, and shipping,invoicing, and accounting for a firm (ERP Facts, n.d.). The ERP is valuable for global operationsbecause it handles currency conversions, various accounting standards, and foreign languages.The ERP is integrated with Supply Chain Management (SCM) modules e.g. customer orderentry, purchasing, and inventory. Account modules include general ledger, accounts payable,accounts receivable, and employee hours and attendance.The ERP accounting system should include web integration so that Riordan can manageglobal operations. This web-based solution will make business information available in real-time. The accounting software that Riordan presently uses is not flexible or able to adapt to thefirms changes in its organizations structure. Companies can use capital and resources moreeffectively if they could monitor and track information that flows from individual businessdepartments and units.Accounting software and ERP are completely different from each other. The accountingsoftware allows synchronizing the accounting details and bills. The enterprise software allowssynchronizing from every department into one central location, prevents data redundancy, and itis centrally updated from every department. The use of web-based systems allows employees,external business partners, suppliers, and customers to obtain real time data anytime from anyplace (ERP Wisdom, n.d.).

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Riordan Manufacturing Paper5Web-based ERP systems have modules such as manufacturing, production, accounting,human resources management, and inventory on the Internet. Server-based ERP cannot provideupdated information on the Internet. When Riordan needs to make immediate decisions onproduction with business units around the world, the web-based system is a better choice. Theemployees can see the pricing, profits, and inventory from anywhere. The employees will be ableto hold meetings, sales analysis, and view each unit’s budget over the Internet (ERP Wisdom,n.d.)Accounting SoftwareHundreds of accounting software programs is in circulationand finding the right one forthe needs of anorganization is a challenge. Finding the right program is about knowing the sizeof thecompany and the needs that will benefit the company in the most efficient manner. Theright program should be able to fix bugs if necessary and be able to be upgraded in the future ifnecessary. Pricing also plays a big role in deciding what accounting software to purchase.Riordan Manufacturing has encountered some problems with their current accountingsystem in that the different divisions of the company use different systems to conduct business. Itlooks like the Georgia and Michigan plants use a different program than the San Jose plant.Delaysin the financial reportinghave led to decreased investor confidence and lack of futurecapital investment. Finance and accounting documentation errors led to inaccurate data andcostly retroactive audits (Perry, 2006).The different departments of accounting such as accountspayable, accounts receivable,andorder entry need to be maintained by one system and anindividual server withmirroring will suffice for the above needs and,of course, a proper backupsolution will be forsafekeeping of this data (Perry, 2006).

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