BERMO INC.

Case Study: Bermo Inc.

Case Study: Bermo Inc.

How much should Bermo expand capacity, and where?

Bermo should expand its working capacity, at the present location by hiring more employees and implementing better management and manufacturing practices. Bermo does not need to go to Mexico or any other country as the company neither can afford it nor it will be a good decision. Bermo can expand its capacity by transforming itself to be a lean manufacturing company. The following picture shows if the entire mass production of the Bermo company is reconfigured into a lean manufacturing factory. The final assembly lines are converted to mixed model final assembly; this levels the demand for subassemblies and other components. The rate of production is determined by recalculating the monthly demand into a daily demand and trying to make the same product mix every day. (Womack, 2000)

The subassembly lines are rearranged into U-shaped cells. The daily output from these cells is balanced to match the demand from final assembly.The traditional job shop generates a variety of unique products in low numbers with its functional design. It is redesigned into U-shaped manufacturing cells that produce families of component parts.

Lean manufacturers focus on sole-sourcing each component or subassembly (that is, they do not have multiple vendors supplying the same components), sharing their knowledge and experience in linked-cell manufacturing with their dealers on a one-to-one foundation. For lean automobile manufacturers, the final assembly plant may have only 100 to 400 suppliers, with each supplier becoming a lean or JIT vendor to the company. In the future, the number of vendors supplying a lean manufacturer will decrease even more. (Adler, 2003)

Background of the Lean Manufacturing

In contrast to the push production used by almost all other manufacturers, Toyota's concept was referred to as pull production. Moreover, they tended to expose problems by reducing inventory for materials, work-in-process, and then solved those remaining problems thoroughly. Lean manufacturing is a name applied to these ideas and methods. Toyota used its own term, Toyota Production System (TPS), instead of using lean manufacturing.

Producing products without waste and providing them to customers is one of the essential functions in manufacturing companies. In the current economic situation, many manufacturers like Bermo have moved or planning to be moving to Mexico and to China. Therefore, manufacturers especially in North America must maintain/achieve cost competitiveness by completely eliminating waste from their manufacturing processes and gaining the competence to achieve these processes. Although there are several ways to categorize wastes, this paper simply categorized them into the following three:

Material waste

Equipment waste

Operation waste

Finally, these are all related to the waste of money. In short, the company must remove waste from these main production factors.

Material Waste

Toyota paid special attention to the waste of overproduction. Products or parts produced above the necessarily required are mainly categorized into material waste. However, costs of equipments and operations are added to material costs corresponding to the progress of production processes. When the product or the part is not used, all costs incurred by the ...