The volume or rate of production is used in operations management to denote the number of units produced in a given period of time or the duration of time needed to produce a particular item. The volume of production is dependent on a wide range of factors that include global competition, quality standards, skills required, cost challenges, technology, and cost of production resources. In the case of Timbuk2, the volume of production in the assembly line in China may be slowed by the very fact that it must rely on instructions and design specifications sent from the San Francisco plant.
The quality control of the laptop bags sourced from China is dependent on personnel from the US. What’s more, production in the Chinese assembly line may be affected by delays associated with taking the raw materials to the assembly line. The above factors have the capacity to increase both cycle and station times, ultimately affecting the volume or rate of production of the assembly line located in China. However, this may not be the case for the assembly line in San Francisco.
Regarding the required skills of workers, it is indeed true that both assembly lines require highly specialized and hardworking employees to maintain the quality standards required by customers. According to Barnes, organizations must first decide on their sources of human labor, the costs involved, and the level of skills needed for production before deciding on where to locate the assembly line. According to the case study, it makes business sense to operate an assembly line for laptop bags in China since the country enjoys a highly qualified and specialized labor force that comes at a cheaper cost compared to the costs of labor in the US.
Barnes also reveals that the cost of labor has a direct correlation to the cost of production and the pricing of various commodities. As such, the Timbuk2 assembly line in China will give the company a competitive advantage in terms of reasonably pricing their high-quality products. The case study clearly reveals that the labor costs for the production of the new laptop bags at its San Francisco assembly line will push retail prices upwards. This is not healthy for competition.
The production of different products in an assembly line requires different levels of automation. From the case study, it will be beneficial for the company to retain its assembly line in China due to the level of automation required to produce the laptop bags. According to Barnes, automating the assembly line is one of the strategies used in operations management to address the mix of capital and human labor needs. The new laptop bags are much more complex to make and require an assortment of very expensive machines and equipment to produce.
According to the case study, these machines are not available at the assembly line located in San Francisco. The assembly line in China will offer Timbuk2 both the level of automation required to produce the laptop bags and a reduction in costs related to purchasing and shipping new machinery. Such an arrangement adds to the competitive advantage of Timbuk2 as it will increase production margins without reducing value and quality.
Experts in the field of operations management agree that there are numerous costs related to carrying too much inventory. Tracking raw materials and finished products as they move between suppliers, storage facilities, manufacturing areas, and the consumers of the finished products can be both challenging and costly for the organization. As such, additional raw materials inventory needed to run the assembly line located in China may prove expensive to Timbuk2 in terms of extra costs and overhead. This is due to the fact that many of the processes associated with raw materials and finished products cannot be classified as value-added services.
In the Chinese assembly line, raw materials and completed products inventory will be definitely increased by processes such as storage of raw materials, counting, and hauling charges. The inventory will also be increased by the costs of dispatching the finished products to end customers. At the San Francisco assembly line, finished products are dispatched straight to the customer via overnight delivery, considerably reducing the costs associated with finished products inventory. Unlike the dispatch system utilized by the assembly line in China, San Francisco’s dispatch system shortens the steps involved in getting the product to the end customer. As such, it becomes a more effective and cost-effective system.