TABLE OF CONTENTS

DOMESTIC BUSINESS

Timbuk2        3

 History        4

 Question One        4        

    Question Two        5        

 Question Three        6

 Utilization of Operational and Analytical Tools        7

 References        9

                                FOREIGN-BASED BUSINESS

Shouldice Hospital_____________________________________________________ 10

        

      History___________________________________________________________ 11        

      Focused Factory____________________________________________________11

      Question One______________________________________________________ 13        

      Question Two______________________________________________________13

      Question Three____________________________________________________ 14

      Question Four_____________________________________________________ 14

      Medical Tourism___________________________________________________14

      References________________________________________________________ 16        

      How Shouldice Operates Differently Than The U.S. Counterparts__________17

                

        


 

  HISTORY

Timbuk2 was founded in 1989 by Rob Honeycutt, a San Francisco bicycle messenger with an old sewing machine. Rob’s goal was “to make a messenger bag rugged enough for real bicycle messengers, yet stylish enough to appeal to a broader market of young, hip urbanites as an alternative to the traditional two-strap day pack. Our catchy name, three-panel design, distinctive ‘swirl’ logo, and the fact that we’re ‘Made in San Francisco’ added to our cachet (). Brennan Mulligan joined the firm in 1993 to help Rob implement his vision of lean manufacturing and mass customization of these unique bags. By 1996, Timbuk2 was selling a variety of bicycle messenger bags and similar products utilizing these operational guidelines. If the company had not implemented lean manufacturing, it would have been impossible to deliver a customized product to a mass market. In the year 2000, Timbuk2 launched its “Build Your Own Bag” website allowing customers to configure bags to their own specifications. By 2002, the company employed 40 people and revenues had grown to greater than $4 million in just a year’s time.  To continue to grow profitably and after extensive research and analysis, Timbuk2 outsourced the manufacturing of specific products to China.  

Presently, this company has continued to expand, remodel its factories, opened a retail store in San Francisco and is financially thriving in their industry global wide (Cachon, Cattani, and Netessine).

  QUESTION ONE

There are two categories of products that Timbuk2 makes and sells; high-quality custom bags and classic messenger bags. There are key competitive dimensions that are driving the sales for the custom messenger bag. These orders are locally manufactured in San Francisco and taken over by the Internet. The customers are given many configurations, sizes, color, pocket, and strap options. The bag is tailored to the exact specifications of the customer on the assembly line and sent by overnight delivery directly to the customer. The competitive priorities are different for the laptop bags sourced in China. 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, though the design was still built in San Francisco.  

    QUESTION TWO

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 (Cachon, etc ), Timbuk2 found it most effective to have work cells of 5 employees manufacture bags from start to finish as they filled customer’s orders. In each cell, each worker would have one bag, which allowed for 5 bags to be in process at the same time. All employees were trained on all tasks to produce a bag so that a “bump-back” process was used to balance the workload. When a worker assigned to the last position finished their bag, which was sending it off to the shipping area, this worker would “bump-back” to the next-to-last position and take over production, wherever the bag was in the process. The person in that position would “bump-back” to the previous person, and so on, until the person at the beginning of the process would go to the order backlog and begin producing the newly ordered bag from the next queue. Multiple channels of this process produced 200 bags a day. Asian women worked these cells and demonstrated speed, dexterity, and accuracy as cutters and sewers. The only differences noted from China and San Francisco’s assembly line was the hourly wage paid ($12.50 in S.F. versus $1.25 in China), direct labor content (35 minutes in S.F. versus 45 minutes in China), raw materials availability and costs were the same in both areas,  but amount of raw materials and inventory of finished goods was larger in China due to shipping of inventory of large quantity back to San Francisco versus individual shipments immediately upon completion to customers’ homes. Orders were processed monthly in China versus 1-2 days in San Francisco.

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     QUESTION THREE          

                  China’s Supply Chain                                     

        Trans

San Francisco’s Supply Chain

Besides manufacturing cost, Timbuk2 had other costs to consider when making the sourcing decision. Some of these include: low cost of labor, other manufacturing expenses such as insurance, equipment maintenance, and warranty, shipment of inventory to San Francisco and then to the customers, cost of materials, visits to China to visit suppliers, setting up a shop, as well as visits to maintain relationships and ensure high ...

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