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CHAPTER

5
Operations at Crumpler
Crumpler began in 1992 with a single
sewing machine, some heavy-duty cloth
Influences on
and a desire to create a tough messenger Crumpler operations
bag. There was an opportunity in the
market as existing bags did not satisfy
Globalisation
the quality expectations of customers, For Crumpler, globalisation has created
particularly bike couriers. By the mid-1990s opportunities to access to a global market
additional second-hand sewing machines to sell the outputs of its operations.
were purchased, the operations processes Crumpler Australias export sales are
improved and the business had moved into currently estimated at around $6 million,
a small factory in Melbourne. approximately 50% of sales overall.
Between 2007 and 2010 it has launched
retail stores in New York, Toronto, Manila
and Singapore, with stores also planned for

Role of operations San Francisco, Vancouver and Beijing.


The emergence of global consumers
management and their homogeneity of wants as a
driver of globalisation have created
The aim of Crumpler is to clearly
marketing opportunities for Crumpler in a
differentiate the businesss products from
number of developed countries. Crumpler
its competitors rather than using a cost
bags are universally popular among
leadership strategy. Differentiation through
young city males and females regardless
operations has been achieved through:
of which country they live in. Crumpler
s a better quality product
bags are available in Belgium, Germany,
s a vast variety of products in its range
Greece, Japan, Hong Kong, China,
to suit individual customers
the Netherlands, New Zealand, Spain,
s more features and versatile applications
Singapore, Taiwan and the UK. Crumpler
s incorporation of new technology
has also managed to work with Apple in
s clever design.
the USA. The company has just negotiated
Crumpler may be classified as a an agreement to stock the 150 Apple
manufacturer and retailer. However, stores throughout America. To support this
the majority of operations have been expansion Crumpler has recently opened
outsourced overseas with the business an American office and warehouse.
now concentrating on design. Globalisation has also meant that
In Marketing, research identifies the Crumpler can outsource its manufacturing
nature of goods consumers desire and and now has a global supply chain. Costs
marketing strategies encourage purchases. of operations have significantly fallen as
Operations must supply a product that has overseas manufacturers have access to
the features and quality consumers demand cheaper material and labour inputs.
as well as reliably distributing this product
to the market.

CHAPTER 5: OPERATIONS AT CRUMPLER 93


Economic Design and
There are several economic influences on
the business. These include the rising cost
manufacturing
of oil, general economic conditions across process
North America and Asia and the rising cost
All products are designed in-house in
of labour across Asia:
Melbourne, from concept through to
s Crumplers use of nylon across all its
prototype. Once Crumpler is happy with
products is considerable. The business
the product, patterns are made in the
purchases hundreds of thousands of
pattern room, and then the final prototype,
metres of nylon per year. As oil is a key
pattern and detailed technical pack are
factor in the production of nylon, rising
sent to the most suitable manufacturer. The
oil costs contribute significantly to the
manufacturer prepares a counter sample
rising cost of nylon.
and returns it with their detailed quote.
s The global economic slowdown had
Crumpler feels that finding
adversely affected sales across all
manufacturing partners who understand the
regions of Crumplers North American
brand is an important part of the business
market (although the Apple deal will
a mutual respect must be developed to
help).
create a good long-term relationship.
s The increasing cost of labour across
Crumpler purchases materials from a
Asia is placing considerable pressure
range of different sources leather from
on the costs of Crumplers imported
Melbourne, nylon from Taiwan and South
materials.
Korea, canvas from China, buckles and
clips from Japan, webbing from China and
Technology luggage handles from Taiwan.
Technological developments in the Crumpler believes that the first and
production of clothing and communication foremost criterion for their design team
have had the most significant effect is strength and practicality. They use the
on Crumpler. Originally all production strongest materials possible; for example,
was done by hand. As the business the webbing used for the shoulder straps
incorporated CAD and CAM into its is designed for use in crane cargo slings,
operations, technology became a capable of lifting the weight of a car.
crucial element of the business. B2B The buckles used are as big and strong
communication using email allows as possible. Zips are the largest size to
Crumpler headquarters to keep in touch be found, as in their opinion there is
with its manufacturing contacts in Korea nothing more annoying than the zip on a
and Taiwan, as well as its retailers. B2C backpack not working. As their previous
communication is through its website employment was in the courier business
portal www.crumpler.com. Three- they were acutely aware that their product
dimensional design software programs needed to be tough. Opening and closing
are used to virtually create new products. bags at least 100 times a day requires a
bag to be tough. Crumpler learnt from trial

94 CAMBRIDGE HSC BUSINESS STUDIES SECOND EDITION TOPIC 1: OPERATIONS


and error, gradually improving the gear, many companies also competing directly
thanks to feedback from couriers. These with Crumpler in the messenger bag
days they very rarely see a bag come back category. Crumpler does not attempt to
for repairs. compete with premium brands such as
Prada and Louis Vuitton.
Quality expectations
From personal experience of the owners Social and environmental
and through researching competitors sustainability
products, Crumpler realised that existing Crumpler acts in a socially responsible
messenger bags did not satisfy the manner by ensuring the durability of its
expectations of customers. Quality, products. Many competitors products have
versatility and durability were key features a built-in obsolescence without any repair
desired by consumers to protect fragile value. This makes it necessary to purchase
electronic devices such as laptops and additional bags, which consumes more
cameras. Consequently, Crumpler bags resources. It is possible to recycle nylon.
are water-resistant as they are made Crumpler is an ethical business,
from a tough, rip-resistant nylon shell. however a possible problem with factories
In addition, the bags have an inner in Vietnam is that Crumpler does not run
protective lining and padding. Although them directly. They sub-contract their
more expensive than other similar bags, production to factories that may potentially
customers equate price with quality and have substandard labour practices.
are obviously satisfied with the product Crumpler acknowledges a responsibility
as sales have increased each year the to be aware of the conditions and enforce
business has been in operation. The a code of conduct to improve them. One
Crumpler brand is now associated with option could be to set up an independent
tough, versatile bags that last for years, monitor to ensure the code of conduct is
making them a good investment. followed.
Eco bags are a new entrant into the
Competition market and a potential competitor for
Crumpler. These are often made using
Many of Crumplers competitors cannot
recycled plastics coloured with natural
match the quality of its bags and focus
vegetable dyes.
on threatening Crumplers market share
with lower cost options. These generic
products are typically made using lesser Operations process
quality nylon and only have basic features.
Most commonly these are made in China, The operations process at Crumpler involves
Vietnam and Cambodia. physical altering of the inputs into the
Crumplers closest competition in the finished bags. It is also concerned with the
camera bag segment comes from Lowepro transportation of the finished bags, such as
and Tamrac, both brands focus on quality having them delivered to a more convenient
and durability. The North Face is one of location for access by consumers.

CHAPTER 5: OPERATIONS AT CRUMPLER 95


Nylon, thread, Customers
Designing can purchase
Velcro, zippers,
and testing a high-quality,
buckles
versatile bag

Figure 5.1 Flowchart showing how value is added at Crumpler.

Inputs Information
Initially the owners had to learn how to
Materials make a durable product. Information from a
Originally the company used canvas, parachute manufacturer enabled the business
however, the key material inputs are to incorporate a new stitching method
heavy-duty ripstop nylon and thread to into the operations process that added
construct the bags. The thread came from considerable strength to the final product.
the wetsuit industry. Crumplers bags have Extensive data for the design specifications
a water-resistant 900 denier shell. The for every model of bag ever produced by
lining of Crumpler bags is most often in Crumpler is kept in readily accessible files.
either a 300D (density) or 600D ripstop When designing a new camera bag, for
nylon, which is super strong, lightweight, example, the specifications from similar
durable and resistant to fraying, tearing and models can be recalled and used as a basis
ripping. All the straps are nylon webbing, for the new design. This saves considerable
while other inputs are plastic zips, buckles time and significantly reduces mistakes
and Velcro. during the development of new prototypes.

Customers
Crumpler encourages feedback from its
customers. Ultimately, the business aims
to meet the specific requirements of its
customers. By monitoring blogs and
message boards Crumpler can also see a
demand for potential new products and
how to improve existing ones.

Human resources
The creative talents of the design team are
the key human resource input. Principally
this comprises Dave Roper, Will Miller
and Stuart Crumpler. In the near future
Figure 5.2 Spring Peeper. No monogrammed pretension ad infinitum.
No near extinct Amazon amphibian crotch skin trim. No risk of being the business aims to bring in some highly
overcharged for ordinary-ness or underwhelmed by useless-ness. skilled international designers for further
No sir. No way. Not with this here medium Spring Peeper duffle Crumpler. international expansion.

96 CAMBRIDGE HSC BUSINESS STUDIES SECOND EDITION TOPIC 1: OPERATIONS


Facilities and life cycle of the business, although
the volume of output is steadily growing
Crumpler began in a suburban shed before
all the time. In the early years of the
moving out into a small warehouse in
business the owners quickly realised that
Flinders Lane, Melbourne. Its first sewing
its Australian-based operations would
machine was purchased for $20 from a
not keep up with demand, nor could it
market. Now the design studio of the
achieve the economies of scale needed
business is located in Ballarat and the major
to reduce operations costs and hence
warehouse is located in Melbourne.
maximise profits. Even though output
is still not large using its competitors as
Transformation a benchmark, operations must have the
ability to switch between different styles
processes of bags.
Crumpler is no different to other businesses Therefore, of the 4Vs, variety is the
in that its operations is strongly influenced most significant influence. Crumpler
by the 4Vs. Customers only see the needs to be able to produce a variety of
finished product so customer contact with styles and models for its product. Each
operations does not occur, making visibility model of bag will need to be produced
negligible. Although, in retail outlets a in different sizes and a range of colour
sample bag that has been bisected is options. Crumpler uses a batch-type
usually on display so that customers can production method. Only a few hundred
appreciate the quality, durability and effort of each specific bag is produced but
put into production of each bag. batch production enables the business
Being a small company Crumpler to produce a variety of styles and sizes.
aims to produce nearly a million bags The operations process can be interrupted
per year. There is a low variation in and adjustments made to add a different
demand so the business over the year variety of bag to the production line.

Job Batch Flow using


production production assembley lines

Volume Low volume High volume

Variety High variety Low variety

Variation High variation Low variation


in demand

Visibility High visibility Low visibility


(customer contact)

Figure 5.3 The 4Vs.

CHAPTER 5: OPERATIONS AT CRUMPLER 97


In addition, if a particular bag exceeds
demand forecasts then its a relatively
Outputs
easy process for management to email Crumpler began with a simple messenger
the supplier who will simply enter the bag and now offers an extensive range of
specifications of the desired bag into the bags. Each model has a variety of styles
production system to produce a new and sizes. There is over a dozen variations
batch of 1000 new bags. of the bags to accommodate laptops and
Operations are now mainly concerned cameras, as well as backpacks for regular
with producing prototypes of new products. gear such as folders. Its most recent
product is a specific iPad bag. There is a
Sequencing and service component as well to Crumplers
output such that there is a 70:30 mix of
scheduling
goods and services, whereas customers
Crumpler aims to have its new design put
who purchase competitors products must
into production as quickly as possible. Clear
do so without any assistance or service
sequencing and clever scheduling ensures
advice.
that Crumpler can have its new products
available for customers to purchase. Task
analysis is particularly important for each Customer service
individual product to determine the most Crumpler also differentiates itself from
efficient way to make each. its competitors by providing a high level
of customer service at the point of sale
and with any customer questions or issue
after the sale. While other bags are sold
in department and sports stores, Crumpler
bags are distributed through its branded
retailers. Store managers are well informed
of all Crumplers range and can translate
customer wants into finding the most
suitable Crumpler product. In addition,
Crumpler offers extensive after-sales service
through its outlets and website. It has a
no-questions-asked policy when dealing
with repairs or replacements, although a
customer may be asked to pay for repairs
caused by abnormal use.

Warranties
Crumpler stands by its quality claims. In
addition to any statutory warranty, which
protects consumers from defective materials
or workmanship, Crumpler provides a
Figure 5.4 Stencil of the Crumpler logo. lifetime warranty on zippers, buckles,

98 CAMBRIDGE HSC BUSINESS STUDIES SECOND EDITION TOPIC 1: OPERATIONS


fabrics, bindings and workmanship on their is a clever design feature that was one of
bags. The business calls this its Til Death the unique attractions of the product that
Do Us Part Warranty. competitors were not able to offer.
Crumplers manufacturers require more
flexibility of operations than traditional
Operations strategy process assembly lines. They will need
to switch to a new model or variation of
Performance objectives
a good to meet a change in the market
Of all the performance objectives
or changes in customer wants. There
quality, speed, dependability, flexibility,
is also flexibility in volume, which is
customisation and cost it is quality
how quickly operations can change
that is the most important to Crumpler.
from producing few products as a low-
This feature was the original point of
volume producer to becoming a high-
differentiation for the business and gives
volume producer increasing output to
it a sustainable competitive advantage.
meet increasing demand. Crumpler needs
Owing to the nature of manufacturing,
manufacturers who have excess capacity
speed is an objective of Crumplers
or the ability to increase the volume of
manufacturers and will impact on the
output as it continues to experience rapid
wholesale costs of the bags for Crumpler.
global growth in the demand for its bags.
Speed of operations can be increased
There is a risk that demand will outstrip
with technology such as CAD, CAM,
supply and Crumpler will experience a
robotics and JIT inventory management.
stock-out in its stores for some models
Speed of delivery is important for
and variations.
Crumpler to get bags from the warehouse
to retailers.
Dependability is the reliability of the New product design
product or service. Crumplers products
are designed and made to the quality
and development
standard expected by customers. Crumpler Crumpler is constantly improving its
has a strong reputation for dependability existing products and developing new bags
because their products always deliver for electronic appliances. The release of
what its marketing promises. There is the Apple iPad lead to the creation of The
also dependability in delivery or supply. Herbus and The Fug bags. The business
Through effective communication with its seeks to improve its comfort design and
website Crumpler always manages to fill include clever compartments.
orders and distribute to its retailers on time Crumpler is keen to make
and as soon as web orders are made. improvements to its existing products.
Crumpler does not need to customise A little part making a big difference to the
its products because they are so versatile. business was the Vislon zipper. Further
A customer has the option to change improvements involved using zippers
the internal configuration of their bag by coated with water repellant. Customer
moving, adding or removing dividers where feedback indicated that Velcro made an
they are merely attached with Velcro. This annoying sound when bags were opened

CHAPTER 5: OPERATIONS AT CRUMPLER 99


Figure 5.5 Not big on nostalgia? Neither is the Seedy One, a not-too-large-not-too-small reduced scale
redux of the oh-riginal Crumpler CD3 from the early nineties Crumpler.

so a silent closure option was developed. not have to change, unlike other fashion
A new unique feature was developed so businesses that release new products each
that a bag can be securely closed using season. Crumpler does not want to get into
two clasp closures and the cover can be fashion, but make very basic, well-made,
untucked and placed over the Velcro. This hard-wearing things like jackets and jeans.
meant that the bag could be opened and
closed without the rip and tear commotion Supply chain management
caused by the large Velcro fasteners.
Supply chain management and logistics
Crumpler is also branching out into
has not been one of the businesss
other sectors of the bag market. The
strengths, however a recent affiliation
business is now focusing on designing
with two German partners has brought
a range of handbags and luggage. This
a lot of expertise in this area to the
will involve a new material input of
business. Much of this function has been
leather, which will require changes to the
outsourced while the owners concentrated
equipment and technology used in the
on design. Unfortunately, costs tend to rise
business. As Crumpler has no seasonally
when there is a lack of control over the
influenced products, its manufacturing will
supply chain. Crumpler has to ensure that

100 CAMBRIDGE HSC BUSINESS STUDIES SECOND EDITION TOPIC 1: OPERATIONS


products are available in its shops to avoid patented in the 1930s, Velcro a few years
disappointing customers. The company is later and the plastic buckles not until
developing strategies to improve its supply 1977. Therefore, Crumplers technology is
chain management in the areas of: tried and proven rather than cutting edge.
s setting accurate production targets for its However, the design team heavily rely on
suppliers CAD to develop new products. Computer
s speeding up the delivery of products programs that are used to produce cutting
from warehouse to retailers patterns similar to the clothing industry
s storage of inputs at the Melbourne site such as CUTPLAN is used to identify all
s planning current inventory levels with the material inputs, their size, shape,
forecasts in demand from customers configuration and even colour. Precise
s managing damaged goods and goods specifications can be emailed to the
returned by customers and distributors. production factory. These specifications
With more global operations and less are entered to software programs that drive
direct control over manufacturing and precision cutting robots that will cut each
delivery to overseas-based warehouses piece of fabric and padding exactly as
and retailers Crumpler is considering required and with minimal waste. Crumpler
outsourcing this function to a specialist bags are made using one-piece construction
supply chain solutions firm. and, therefore, CAM is very important in the
factories that produce Crumpler products.

Outsourcing
Crumpler bags were originally made in
Inventory
Melbourne using their fabric suppliers in management system
Korea and Taiwan. Owing to a need to
Owing to the extensive product range and
increase capacity and grow, the company
continuous new product releases by the
sourced manufacturers in Korea and
business, inventory management is a real
Vietnam, where the majority of the bags are
challenge. To keep track of what stock is
now made, although a small number are
kept at the warehouse, what is available
still manufactured in Melbourne. Although
in retail outlets, and what stock is due
Vietnam has at times a reputation for
for delivery requires accuracy through
breaching international labour standards,
using IT. Each product is given a unique
Crumpler stresses that it will not use
identifying barcode, which is scanned
suppliers that exploit labour, particularly
each time the product reaches a specific
children. Vietnam was chosen for quality
location. This information is stored in a
and reliable supply rather than cost-cutting.
computer database so that any retailer
can find out the exact availability and
Technology location of a particular model of bag. This
is exceptionally useful and adds to the
The technology that Crumpler uses is not service that Crumpler offers because a
new. The core material inputs such as specific bag can be located if a customer
the heavy-duty nylon and zippers were is unable to find it at the store.

CHAPTER 5: OPERATIONS AT CRUMPLER 101


First in, first out (FIFO) is the inventory
management system used at Crumpler.
Global factors
There is the assumption that the first stock Global sourcing
that has been purchased and is the oldest Crumper obtains its inputs from the
will be sold first. This prevents old stock following areas:
building up and potentially becoming s Zippers and Quick-Flick buckles from
obsolete. However, owing to longevity YKK manufactured in Vietnam, also
of Crumplers products (not seasonal or Taiwan, Korea and Shenzhen (China).
perishable) it is more important that stock s Ripstop Nylon and thread from various
is available as it is promoted. manufacturers located in Jiangsu
province, China. Originally sourced from
Quality management Australia importers in the early years of
the business.
Crumpler has a performance objective of s Neoprene sheets imported by Australian
the highest quality and, therefore, quality companies from Taiwan and China.
control and improvement are essential.
Bags are randomly inspected to ensure that Economies of scale
they are free from manufacturing defects
Crumpler makes close to a million units a
as a form of quality control. However,
year and by increasing its capacity through
Crumpler relies heavily on the quality
global expansion, significant economies of
control and quality assurance systems used
scale have been achieved. The Vietnamese
by the factories it outsources to. These
manufacturers often produce bags for
factories must be certificated with ISO
similar businesses under the same roof,
9002, which indicates quality assurance
making operations much larger than
in manufacturing. Crumpler aims for zero
just for a single customer like Crumpler.
defects in the products it offers for sale.
Manufacturers will drive down costs as
much as they can to offer low production
Change at Crumpler costs to clients. Crumpler has come a
long way since producing by hand a few
Change at Crumpler was concerned with hundred bags a year.
the decision to outsource manufacturing.
The business is principally a design
and marketing company today. There
Scanning and learning
were significant financial costs in paying Crumpler scans and monitors the activities
contracts to overseas suppliers and of its competitors and developments in
redundancy payments for local workers the industry by attending travel goods
in its factory. There have been significant trade shows in Europe and the USA.
costs in updating design technology, Unfortunately, Crumplers competitors can
however a driving force for Crumpler is to do the same and the business has witnessed
be debt-free. a number of copies of its products.

102 CAMBRIDGE HSC BUSINESS STUDIES SECOND EDITION TOPIC 1: OPERATIONS


CHAPTER 5: OPERATIONS AT CRUMPLER 103