The Tao of Timbuk2
Yes, it is different. The differences : cost of price, coping with changes in demand, flexibility (able to change/develop new product), support it (after sales support), environmental impact
1. Consider the two categories of products that Timbuk2 makes and sells. For the custom messenger bag, what are the key competitive dimensions that are driving sales? Are their competitive priorities different for the new laptop bags sourced in China? For the custom messenger bag, the key competitive dimensions that are driving sales are high-quality custom (bags are worn daily for a decade), reasonable price, high differentiated design (customers select the basic bag configuration, size, color, pocket and strap options themselves), convenience in purchasing (customers can buy bags that are tailored to the exact specifications they like by just getting on the website), quick delivery speed (sent by overnight delivery directly to the customer), flexible and very quick new product introduction speed (people design new products online everyday). Since the new laptop bags are made in China, the shipping speed is not as quick as that of the messenger bags made in San Francisco. But other competitive priorities are not so different, especially for the retail price, which is lower comparing to the other laptop bags of the same quality, features and functions. Since these bags are more complex to build and require more labor and a variety of different machines (more expensive) to produce these products, to keep the prices lower for the consumer, outsourcing the manufacturing of these bags is necessary. Putting up factories in China makes labor costs cheaper, though the design was still built in San Francisco.
Tao of Timbuk2 case
Question 1. Some of the key dimensions that are driving sales for the messenger bag are due to the wide custom ability the customer has control over. Every feature the customer has a choice of what he or she wants. Also, two day delivery makes the customer extremely happy. Another main cause for the consistent sales is due to the fact the bags are made in the USA. The new laptop bags might be cause for concern by customers ordering in the USA because they are being crafted in China, customers can not relate as well to a company when their product is being made elsewhere. Timbuk2 preaches that quality will continue to be at its best.
2. The assembly line in China and San Francisco have similarities and differences when comparing the volume or rate of production, required skill of workers, level of automation, and amount of raw materials and the inventory of finished goods. In San Francisco, Timbuk2 found it most effective to have work cells of 5 employees manufacture bags from start to finish as they filled customer’s orders. All employees were trained on all tasks to produce a bag so that a “bump-back” process was used to balance the workload. Having each worker move down the sewing line seems like it would also help keep workers alert by having them move around instead of sitting or standing at one station all day. The rate of production is not so different for the assembly line in both China and San Francisco as Timbuk2 has fine-tuned their production line to make it as efficient as possible in every factory. But the volume is higher in China as China is more efficient and it is able to deliver more quantity at low price since wage rate is low. Much as in SF, the China factory employs a team of hardworking and good-skill craftspeople. So required skill of the workers is much the same. The Timbuk2 website says, “We still manufacture all our custom products in San Francisco and we manufacture our ready-made products in China and the Philippines”. Since most of the Timbuk2 bags are handmade and reflects the beauty and the finest quality which cannot be achieved through automation and machineries, we can infer that level of automation must be higher in China. The business requires cheap raw material and must opt for minimizing finished goods inventory. Manufacturing customized bags is much cheaper in
San Francisco. More importantly, China does not provide material advantage because most of the important material comes from Far East. Purchasing materials on a weekly basis allows Timbuk2 to keep its inventory and waste costs down by ensuring only what is needed is bought and used. Besides, since most of the bags are produced and delivered after the customers design and submit the orders,Timbuk2 is able to keep the finished goods inventory low.
San Francisco is as follows
Volume or rate of production : China is more efficient and it is able to deliver more quantity at low price since wage rate is low Required Skills of Workers : The productivity of Chinese worker is low whereas San Francisco labor is more skillful Level of automation : Level of automation is high in China . Nevertheless the design and presentation requires best quality craftsmanship . Most of the Timbuk2 bags are handmade and reflects the beauty and the finest quality which cannot be achieved through automation and machineries Although China is most appropriate for mass production of bags . However customize bags require skills , crafting ability and hand work Amount of raw material and finished goods inventory : The business requires cheap raw material and must opt for minimizing finished goods inventory . Manufacturing customized bags is much cheaper in San Francisco . More importantly China does not provide material advantage because most of the important material comes from Far East . Furthermore shipping cost has an impact on the overall cost . In to ship bags from China to San Francisco through ocean carrier it costs 0 .10 per bag and takes 4-6 weeks to reach the premise . In case of air frightened an individual bag incurs 15 transportation cost and it takes 2-3 days to reach San Francisco . It further incurs an outbound domestic freight cost of 3 per bag
3. Please see the appendix.
4. Discuss the production processes that may be required to produce each category of bags, in terms of: – Make-to-stock, Assemble-to-order, Make-to-order, Engineer-to-order . – Process focus, Repetitive focus, Product focus
– Project, Work-center (job shop), Manufacturing cell, Assembly line, Continuous process – Continuous, Repetitive, Batch, and Intermittent processes | Custom messenger bags | Laptop bags |
Types of firms | Assemble-to-order | Make-to-order |
Process strategies | Repetitive focus | Repetitive focus |
Project layout | Manufacturing cell, Assembly line | Assembly line | Production system | Intermittent, Repetitive | Continuous, Batch | 5. What would be potential order qualifiers and order winners for each category of bags? | Potential order qualifiers | Potential order winners |
Messenger bags | Reasonable price, multi-functions, good features | Customize design, quality, quick shipping | Laptop bags | Brand, design | Low price, quality |