Feeling the Timbuk2 Love . . .

In our Processes and Operations Management class, we study the mathematics that allows some businesses to operate, and causes others to fail (I use the words ‘allow’ and ‘cause’ carefully). Our most recent study was the company Timbuk2. Timbuk2 is the yellow-swirly branded maker of messenger bags founded and headquartered in the City and County of San Francisco. Not all of their bags are made in the city anymore, but a respectable number of them are, and certainly the highest margins are earned there on a per-bag basis.

Timbuk2 is justifiably special to me. I purchased (or rather, my father purchased for me) my first Timbuk2 bag in 1998, priced at $70. It took me through the end of high school and throughout my undergrad years commuting to class on rollerblade. The laptop-messenger pictured is the third bag I’ve owned. It has seen me through all weather conditions in more than ten developing and developed countries. The company continuously fixes design faults and adds appropriate features as the model matures.
(I think it’s notable that the original messenger bag remains offered today for precisely $70, considering all of the things that affect price change over time, including but not limited to manufacturing cost, inflation, consumer demand, and the company’s preference to maintain consumer’s psychological price anchors.)

Earlier after first arriving on campus for the MBA program, no one ever had reason to give my red-and-grey shoulder bag a second look other than that it appeared a bit odd – why not a leather satchel? Now people stop me in the hallway and ask, “Hey, is that a Timbuk2 bag? We just studied that company in our operations class.”

It is definitely a point of pride that we can (or that at least someone can) still make things in San Francisco. The trick is customization. Many companies manufacture uniform, low cost products in China and ship them over a long lead time over water to the US. Apple can contract to manufacture uniform high price, high margin products, and fly them to the US. Dell and other laptop manufacturers can, only after extreme capital equipment expenditures, contract to manufacture customized high price, high margin products to be flown to the US. If you’re a small concern operating locally, you’d better manufacture customized products and capture as much of a consumer’s willingness to pay for the customization as possible. That’s what Timbuk2 does for a significant segment of its products. The rest follows the first China (and Philippines, it turns out) outsourcing model of long lead manufacturing and sea freight.

The company was covered in our operations class for two reasons. First, for the customization (and associated value-add) capability from its website, and second, from a manufacturing process called “bump back” which for its novelty is something I’m still trying to nail down. And as I’m studying for finals, I have to become pretty familiar with this operation.