Opreation managment – Case Study Example
Operation and Supply Chain Management Question What determines sales for the messenger bags include the bag quality, the ease of the design interface, faster delivery and of course the sense of ownership that the customers derive from the self-design process. A customer will be extremely delighted by the opportunity to customize his or her own bag and have the real thing as designed delivered at their door step in a span of two days. That personalized touch was the key sales driver as it connected to the emotions of the customers. The customers developed a sense of attachment for the product.
The competitive priorities are very different for the new line of laptop bags that the company is sourcing from China. With the new line of laptop bags, customization does not seem to be priority. Timbuk2 believes that the long period through which it has dealt with its bag customers has enabled the company to figure out what the average bag customer wants from a bag in regards to fabric type, design and functionality. Timbuk2’s strategy is founded on the assumption that there’s a segment of bag customers out there who necessarily don’t want to get involved in the design process but they still require a good quality bag. It is based on this assumption that they should not promote personalized bag concept in the China operation and instead opt for purely a volume and quality driven competitive priorities which can be delivered at a much lower cost to the company. The company seems to believe that the China operation will meet the expectations of an average customer. Also, the delivery time from China will obviously be longer than the lead time for the custom messenger bags. With its China operation, Timbuk2 is just but substituting effectiveness in delivery with efficiency in production – leveraging on product flexibility but compromising on delivery reliability.
The assembly line in China will produce higher volume since it has a higher rate of production. Admittedly, the execs at Timbuk2 have claimed that the China factory has more labor and a variety of machines to produce the bag (Roberts & Richards 76). The assembly line at the China factory is more immediate and has a lesser lag time as the workers do not have to wait on a specific design from a customer. The products are designed by the San Francisco operation and then forwarded to China for production. The workers at San Francisco are required to have a higher skill level as the customers have tasked them with the responsibility of delivering the bags as designed. This requires a high level of craftsmanship with extra attention to detail. Comparatively, the workers in China are working on pre-designed templates which are just passed along the production line with the occasional check for fault. The China operation requires a higher level of automation because of the generic quantities expected to pass through the assembly line – this will also require more raw materials. Finished goods inventory is also higher in China due to the longer time taken to deliver the products to San Francisco for retailing.
Besides the manufacturing costs, Timbuk2 should also factor in the distribution costs associated with moving the products from China back to San Francisco for retailing.
Diagram 1 – San Fransisco Operation
Diagram 2 – China Operation
Robert, Jacobs. & Richard, Chase. Operations and Supply Chain Management. 2013. New York, McGraw.