Question 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? “Timbuk2 is more than a bag; it is more than a brand…” If you have an opportunity to go to the web site www. timbuk2. com, you will find out something… Timbuk2 is so different, so unique. I think you will have a bag that you need by click on the box customize bag, which means you can design your bag by yourself, create the shape, size, logo, color and so many options of your bag.
On the other hand, you can buy a bag by a normal way; they have a large amount of samples on the website which was divided to 6 different articles such as messenger, laptop, tablet, backpack, tote, travel, accessories. Each article also has many list that make the customer easier to choose the bag he or she wants. Just by some clicks, the bag will come to your door only 2 days. I cannot believe that they can make the bag and delivery only two days. That is so impressive of delivery speed. Timbuk2 bags are not only unique but also quality.
Quality is the main completive dimension of Timbuk2 which is driving the sales of the company. Timbuk2 bags are very durable because “Timbuk2 bags are worn daily for decade, or more, accompanying the owner through all sorts of defining life events. True to Timbuk2 legend of indestructibility In the case of Timbuk2’s new laptop bags sourced in China, their competitive priorities are not so different from the custom messenger bag. First of all, they still have their key competitive dimension “Quality”. It is really obvious that quality of the products is the key to success of Timbuk2’s quality.
The customers feel very satisfy with the quality of product they purchased from Timbuk2. Their laptop bag’s designs still attract a lot of people because they were designed in San Francisco. Moreover, Timbuk2 visit their factory in China every four to eight week to ensure the production process is going smoothly and the quality of the products. Secondly, their cost of production is much lower than before because the laptop bags were sourced in China. They can get cheap worker from the mass labor force of China and inexpensive raw material.
In this case, they can use the price as their competitive priority to beat the market. They can provide high quality products at an affordable price. That satisfies the customers a lot because nowadays people pay more attention to the price of things they want to buy. Finally, they still provide the customers with really good and fast delivery service. With the company in China, they can use mass production to deal with the increase in demand in the future. That can be possible because they are receiving rave reviews which can increase their popularity and strengthen their brand name.
Question 2: Compare the assembly line in China to that in San Francisco along the following dimensions: (1) Volume or rate of production, (2) required skill of the workers, (3) Level of automation, (4) Amount of raw materials and finished goods inventory. (1) Volume or Rate of Production: One of the reasons, Timbuk2 chooses China as a new factory is that the wage of workers in San Francisco is absurdly high comparing to China. Timbuk2 brought many heavy machines to Chinese factory to produce more products even given the relative complexity of producing bags.
In the San Francisco assembly line, they tend to do that they only manufacture some products specifically to order. So they make small amount of products to make them be more high quality to focus their loyal customers. (2) Required Skill of the Workers: In the Chinese assembly line the workers have specific task for each of workers. They are grouped and distributed every line. For instance some workers were responsible for sewing or others for cutting and so on. So don’t need to much more skills to do that task. Just they need to know what they take part on.
Also the task which is dangerous or hard to do will be disposed by machine. In the San Francisco assembly line, on the other hand, make some products which the customers ordered. So the products should be unique and high quality. That means to achieve these needs to have high skill. So the workers should be able to adapt their skills in deterrent kind of goods. (3) Level of Automation: The Chinese factory is more high level of automation than San Francisco. Since the factory produces only a product. The machine much more be used in production line comparing that in San Francisco.
The San Francisco factory need to make specific products ordered before. So it needs technical skill of worker rather than automation. (4) Amount of Raw Materials and Finished Goods Inventory: The china factory needs to have much more raw materials to produce. One reason is that the volume of china is greater than that in San Francisco. Also it is more automated. So when they used up the material they can continually use that material. So it accumulates many materials. On the other hand, the San Francisco factory has small volume of raw materials comparing to china.
But it has many kinds of materials to make goods ordered by different kind of customers favor. Question 3: Draw two diagrams, one depicting the supply chain for those products sourced in China and the other depicting the bags produced in San Francisco. Show all the major steps, including raw material, manufacturing, finished goods, distribution inventory and transportation. Other than manufacturing cost, what other costs should Timbuk2 consider when making the sourcing decision? Diagram (China) At first, the raw materials were brought into the factory in order to manufacture the new product.
Raw materials were assumed to provide by some suppliers in China. Factory in China may be bigger than San Francisco so they can also play as a warehouse which store all bags produced. Although in order to adapt the market demand , in particular high season , Timbuk2 need to hire or create the independent warehouse to specify storing more amount of product . And then the main ware house will follow the request from sales office which is the location that makes trading with other wholesalers or retailer about the pricing.
When they have agreement about the mutual benefit, sales office will call warehouse to provide cargoes for their customers. Sales office also provides similar service for individual consumer who buys the bag through website. Another function of website in China supply chain is that they receive ideas or new designs from San Francisco and send all information to factory in order to begin producing that new design. Diagram (San Francisco) The supply chain for depicting the bags produced in San Francisco could be simpler than in China because in San Francisco, factory only produces the bag which is ordered by direct customer.
They can have warehouse but the warehouse could be inside the factory to eliminate the expense. Then customers order their own design by website and send information directly to factory so that after manufacturing, warehouse will ship the finished good for consumer. Other than manufacturing cost, what other costs should Timbuk2 consider when making the sourcing decision? Except the human resource cost, Timbuk2 also face some external cost. For example, company could have to pay for the transportation if they don’t have those staff.
Timbuk2 can require customers paying for that kind of fees , though customer will complain and be not satisfy about their services and Timbuk2 cannot actively control the timing delivery if they are not belong to them . Storage cost will occur sometimes if the supply goes over above market demand, as the result of many inventories in warehouse. Company need spend cost to improve the quality of holding cargoes such as preventing from humidity, animal damage …. Furthermore, there are various other incidental costs like processing, handling fees, and taxes among others, that have to be considered in sourcing decisions.
