GMAA - Global Management Analysts Association

Timbuk 2

There is a job that few have the stamina or agility to do, especially in cities with a lot of hills like San Francisco.However, bicycle messengers perform an important service, hauling bulky loads swiftly from location to location. Their bags have to be tough, waterproof, light-weight, and functional-and it's nice if they look great, too! Rob Honeycutt knows well what bike knapsacks need to be-he was a messenger once himself. Today, his company, Timbuk2 Designs, manufactures bags that appeal to the “hip, young, wacky nuts on bikes.”

Honeycutt started the company in 1989 and its annual revenues are around $3.5 million. The company has grown in spurts-for instance, one year it was 10 percent and another year it was 70 percent. Such erratic growth has created definite management challenges for Honeycutt. But one thing that hasn't been a challenge is the company's commitment to making the best possible products.

Many bike messenger services claim that Timbuk2 bags are the best and most popular. The company offers what none of its competitors do: a three-panel construction design that allows customers to custom choose from 13 colors, giving them 2, 197 possible color combinations. And Timbuk2's bags cost no more than the mass-produced ones. Honeycutt wanted to do what Toyota Motor Corporation did with cars-mass customize or make cars to customer's orders. He thought it might work because manufacturing bags is much simpler than making cars. However, things didn't quite work out until workers began experimenting with something Honeycutt had seen at a trade show demonstration. That something was the Toyota Sewing System, which calls for each sewing operator to move down a row of task-specific sewing machines instead of performing a single task and passing parts to the next sewing operator. This approach cuts labor costs because no floor assistants are needed to carry partially completed inventory from one machine to the next. Also, Timbuk2 has been able to keep its inventory costs low because it buys only a week’s worth of materials and ships out completed bags daily. In addition, it has discovered that mass customization cuts waste because mistakes are caught along the way.

Work begins early-6:00 A.M.-at Timbuk2. A dozen women, most of them Chinese immigrants, sew colorful strips of canvas together and add snaps and shoulder straps. By the end of each workweek, the workers will have finished a total of 400 bags. The company pays its employees more than other apparel makers and offers full medical benefits. When the company needed financing, it turned to Silicon Valley Community Ventures (SVCV), a funding source with a unique twist. SVCV invested money in Timbuk2 with the understanding that it would pay a living wage of at least $11 an hour and develop a pay incentive program that rewarded employees for learning new skills. This investment in employees seems to be paying off.

Although there are many things the company is doing right, Timbuk2 continues to refine its system, relying heavily on employee suggestions and ideas, in 1993 it took 144 minutes (almost 2-1/2 hours) to make one bag. Today, using employees' suggestions and automated machines, it has reduced that time to 12 minutes. Labor costs are about 16 percent of total costs and the goal is whittling that down to 12 percent.

In early 2000, Honeycutt decided to create an online buying process. Timbuk2 hired 15 people to create a Web site and to add to production. The Web site turned out to be a good decision, especially as the economy took a downturn. It started generating sales in October 2000 and today brings in almost half of Timbuk2's revenues.

Questions

  1. Would principles of scientific management be useful to Timbuk2? Explain how.
  2. How might knowledge of organizational behavior help Rob in managing his workforce of manual laborers and knowledge workers?
  3. Using Exhibit 2-6, describe Timbuk2 as a system.
  4. What characteristics and management practices does this company exhibit that might be important for successful organizations in the twenty-first century?