Timbuk2 Case Study

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

Notice : See Exhibit 1 in the Attachment Part

Q .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

Ans . Market Wire (2010 ) explained that Timbuk2 has...