...Sport Obermeyer, Ltd. Business Case Report Sport Obermeyer, Ltd. Business Case Report Table of Contents Executive Summary 1 Issue Identification 2 Environmental and Root Cause Analysis 3 Alternatives & Options 4 Recommendations 5 Implementation 6 Monitor and Control 7 Sport Obermeyer, Ltd. Business Case Report Executive Summary Each year we are challenged with matching supply and demand. With a cycle time of a year and a half we have been challenged to make accurate production forecasts. This has caused us to compromise service levels, run higher inventories, raising costs and declining sales. We need to address the processes to deal with irregular demand and also how to work with our suppliers and manufacturers to address inefficiencies in the supply chain to reduce lead times. In this report, some recommendations of operational improvement such as decrease lead times with Textile and Accessory Suppliers, increase apparel manufacturers production by increased use of subcontractors, decrease minimum order quantities (Obersport) are discussed. I have also reviewed the pros and cons of sourcing products in Hong Kong and China in my analysis. The outcome of my review is a recommendation that we work with our manufacturers to decrease minimum quantities. This will allow us to respond to our customers requests with improved agility. ...
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...Case Summary Sport Obermeyer was founded by Klaus Obermeyer as a ski wear manufacturer. Klaus was a teacher at aspen ski school and while teaching he realized that the ski wear available to his student were impractical, as they were less protective and less stylish. He believed more functional ski apparel could be produced and then took the initiative to design more durable, high performance clothing equipment. Klaus’ design of the ski break was the innovation that led to the company becoming a major player in the ski wear market. Sport Obermeyer provides a broad line of fashion ski apparel including parkas, vests, ski suits, shells, ski pants, sweaters, turtlenecks and accessories. They categorized their target market into five different groups namely men, women, boys, girls and preschoolers. The company holds a commanding 45% share of the children ski wear and an 11% share of the adult ski wear market. The first production facility was based in China Lo village and through growth Sport Obermeyer opened another production plant in Hong Kong. Klaus Obermeyer and Raymond Tse established Obersport LTD which coordinates the production that currently takes place in Hong Kong and China which is then transported by ship to warehouses in Seattle and then moved by truck to Denver, furthermore, air transport is also used to supplement the transport of goods in order to meet deadlines. The current challenges that are being faced by Sport Obermeyer are firstly, as a result of inaccurate...
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...[Sport Obermeyer Case Analysis] | How to plan and forecast in an environment with variable demand and long lead time via the use of speculative vs. reactive capacity | Table of Contents Executive Summary Page Part 1 Executive Summary 3 Issue Identification Part 2 Immediate Issues 4 Part 3 Systemic Issues 4 Environmental & Root Cause Analysis Part 4 Qualitative Analysis 8 Part 5 Quantitative Analysis 9 Alternatives &/or Options Part 6 Alternatives 10 Recommendations Part 7 Recommendation 15 Implementation Part 8 Recommendation Implementation Plan 17 Monitor & Control Part 9 Monitor and Control 19 Conclusion Part 10 Conclusion 20 Part 1: Executive Summary Sport Obermeyer was founded by Klaus Obermeyer, with the intentions to provide the U.S skier market with the same stylish clothing found in Germany. Sport Obermeyer eventually developed into one of the major competitors in the U.S skiwear market. The production process for Sport Obermeyer’s product lines began a full year and a half before the product actually hits the retail stores. They are using a multi-phase production process. First, production process is received by Obersport in February; the second production phase begins in April/May and continues until August. Sport Obermeyer is starting its initial task for the 1993-1994 skiwear line. They must make a decision on where to source...
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...Introduction Sport Obermeyer is a leader in fashion skiwear manufacturing. Skiwear manufacturing is a competitive field with distinct challenges. Skiwear market is just four months long but the design and production process takes over 16 months to complete. Accurate estimates of demand become available only after a year into design and production cycle. The Company also faces long lead times from textile and accessories suppliers. This forces the company to accurately predict the demand early accurately and place the production orders that meet the forecasted demand. This case discusses the challenges faced by Wally Obermeyer in committing to specific productions quantities Sport Obermeyer will offer in 1993-1994 ski season. Wally has collected the demand forecast of each style from the members of the buying committee. Wally’s challenge is to make appropriate production commitments for the coming year based on this demand forecast. Accurate forecasts of expected demand will help the company handle the high variability in customer demand and long lead times in getting the products to the market. Increases in competition and product variety have made accurate demand prediction very difficult. The Greater product variety and more intense competition have made accurate prediction very difficult. A second challenge for Wally is to decide how to allocate production between factories in Hong Kong and China. Obermeyer Operational Challenges and Competitive Priorities 1. Product related...
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...Executive summary: Sport Obermeyer starts it humble beginning during the last 1940’s. Klaus a German immigrant was teaching at an Aspen Ski School, when he noticed that his student was cold and miserable because of impractical clothes. At first he would begin to travel Germany during the summer and buy clothes and bring back to the US for his students. Being an engineer himself, he started designing skiwear and ski equipment. Over the years, Sport Obermeyer developed into a prominent competitor in the U.S. skiwear market: estimated sales in 1992 were $32.8 million. The company held a commanding 45% share of the children’s skiwear market and 11% share of the adult skiwear market. In 1985, Klaus Obermeyer teamed up with Raymond Tse to establish Obersport Ltd. This joint venture was used to coordinate production of Sport Obermeyer products in the Far East. Obersport was responsible for fabric and component sourcing for Sport Obermeyer’s production. Materials sourced were cut and sewn either in Raymond Tse’s own “Alpine” factories or in independent subcontractors located in Hong Kong, Macau, and China. Raymond was owner and president of Alpine Ltd., which included skiwear manufacturing plants in Hong Kong as well as a recently established facility in China. Obermeyer would cover 80% of Raymond Tse business. For this case, we will focusing on the skiwear part of the Obermeyer business. It has a current cycle time of 27 months. Considering that what we are selling is short life...
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...SPORTS OBERMEYER Introduction Sports Obermeyer Ltd. is a successful ski apparel company that needs to address logistics related decisions. The company was founded in 1947, by Klaus Obermeyer and it has continued to excel through latest trend spotting resulting in continuous product innovation. Currently the demand forecasting for the products is done by considering the average sales forecasts given by internal members. Postponement techniques were being used (by keeping large amount of greige material) so as to make the supply chain more responsive. In the apparel industry it is becomes necessary that clothing makers and sellers maintain long lead times. In case of Sports Obermeyer, the lead time is approximately 2 years. Such long lead times result in stock-outs of popular items during peak selling periods and leftover stock of not so popular products which eventually are sold at below cost rates. To handle the problem of overstocking of less preferable, Sports Obermeyer can go for promotional campaigns and stimulate the market. But this might also lead to the aggravation of the stock out issues of the popular products. Sports Obermeyer has a limited geographic diversity and a huge product line. Currently Sports Obermeyer is operating in only Canada, U.S.A. and Great Britain. Moreover the regulations from the U.S. government limit the number of apparels that can be imported into the country. SWOT Analysis Strengths: History of product innovation. Buying committee...
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...Sport Obermeyer – Case Report Module One, Session Six Supply Chain Inventory Management Darcy Shannon October 27, 2010 Sport Obermeyer – Case Report Executive Summary In order to minimize the degree of stock outs, and markdowns, I have decided for the initial Hong Kong order to produce those products that have the smallest standard deviation when comparing the Buying Committee Forecasts. An attempt will also be made to purchase the lowest cost items within this group, as initial order size of 10,000 units allows. Combined, this will allow for the least amount of risk Obermeyer is exposed to when using the limited information they have for the initial order. The ideal products to order are those with enough forecast quantity that the minimum quantity order will be less than the forecast and also leave enough room for a reorder of the minimum quantity or more if required. Exhibit 1 shows the proposed initial order. More importantly, I have also decided that Sport Obermeyer, as a company, needs to focus on two distinct issues going forward. 1. Change the purchasing strategy from a speculative system, (trying to “guess” what will sell) to a reactive system (knowing what is required and producing it). 2. Work with suppliers to reduce delivery times and minimum order quantities. This will include both raw material lead time and production capacity. Hong Kong is a much more mature manufacturing environment. They have embraced better manufacturing practices that...
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...Sport Obermeyer Case Report Table of Contents Executive summary 3 Introduction 5 Issues Identification and Root Cause Analysis 8 Alternatives and Options 9 Recommendations 10 Implementation 11 Monitor and Control 12 Conclusion and Management Issues 13 Exhibits 14 Executive Summary Sport Obermeyer is currently having great difficulty with matching supply with demand. We have to predict far in advance what styles are going to be popular and how they are going to be produced. Difficulty is more acute with seasonal demand and short life cycles and prediction which is speculative must be almost two...
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...Case study analysis on ‘Sport Obermeyer’ Sport Obermeyer is a US based manufacturer of fashion ski apparel industry, Parkas were their centrepiece. ANALYSIS 1. Inaccurate forecast of retailer’s demand Due to incorrect forecast the company is held with unsold merchandise which even the retailers wouldn’t purchase, and later the company sold those products at deep discounts which were often below their manufacturing cost, this caused bull whip effect. This resulted loss of sales revenue and further decline in market share. On the other hand, the company ran out of shortage of popular products. The company suffers from long lead time which magnifies bull whip effect, because of the supplier’s capacity constraints which makes it difficult to forecast. The company doesn’t include suppliers and retailers in their future forecasting process. 2. Difficulty in allocation of production between Hong Kong and China. Wally, observed quality and reliability in the operations of China, and lower labour cost. The labours in China weren’t highly skilled as that of Hong Kong which leads to longer production line in China .The plants in China required larger minimum quantities and there were quota restrictions on products by the U.S Government. Highly skilled labours of Hong Kong produce products much faster when compared to China. 3. Raw materials acquired from different countries increased the lead time. This should be avoided in order to implement efficiency in ordering process...
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...Introduction Sport Obermeyer, Ltd is an American sportswear manufacturer based in Aspen, Colorado. Founded by a creative German emigrant, it is a successful provider of various skiing apparels for all ages. Being successful for over 40 years, Obermeyer had thorough experience in providing high quality clothing in the middle-higher price range. In order to keep its competitive strengths, outsourcing to the Far East started around the early nineties to lower production costs. The product portfolio was differentiated into several self-made customer categories, keeping excellent price/value ratio and functionality well in focus. As competition kept rising rapidly, Obermeyer put even more emphasis on its costing strategy, which on the other hand brought tradeoffs. Production in Hong Kong and recently also in China required significant minimum orders, which at the end of the season could have resulted in excess, unsold products. On the other hand, underestimating demand was similarly painful: not being able to fulfill customer requests resulted in lost profits. All of Obermeyer’s production were coordinated by Obersport Ltd, a joint venture between Obermeyer and his Chinese business partner. This company organized subcontractors from mainland China and Hong Kong to produce Obermeyer clothing. Recently, a new plant was built in China to utilize its significantly lower production costs compared to Hong Kong. The tradeoff, however was that minimum order quantities were higher in China...
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...GARABEDIAN, Jean-Marc 13208 Case analysis: Obermeyer Sport Obermeyer is a high-end fashion skiwear designer and merchandising company. Some of their merchandise include parkas, vests, sweater, ski suits etc… however their parkas remain their most profitable design. The product is offered in five different genders: men, women, boys, girls, preschoolers and the company segmented each gender market according to price, type of skier and fashion forwardness. The Us Skiwear sales for Obermeyer was estimated at 32.8 million dollars, which includes 45% market share for children and 11% market share for adults. However the company is facing several issues, mainly because of their lack of an efficient demand forecasting system, affecting their production. The fact that inventory is also quite high over the years also reduces the company’s profits. The excess merchandise is then sold at deep discounts, and in many instances, the most popular items get sold out faster than expected, with no time for replenishment due to high lead times. Another important question we will try to answer is whether Obermeyer is choosing the right path to increase its production in Mainland China rather than in Hong Kong. We will discuss why Obermeyer is facing these issues and give our recommendations in order for the company to become more profitable and competitive. The first major issue with Obermeyer is their high lead times. The company sources most of its products through Obersport from China...
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...SPORT OBREMEYER Sport Obermeyer designs and sells high-end skiwear from Colorado. Their products are sold in US departmental stores and specialty ski shops. Most of its production is carried out in honk Kong and china by its partner, Obersport. Annual production capacity is approximately 200,000 units. The minimum production quantity in Hong Kong is 600 units and 1200 units in china. They earn a 24% profit on whole sale price on every product and losses 8% on discounted sales. There are many challenges strangling this company as they serve fashion wear which are highly unpredictable. They have long lead times due to uncertain forecasts and geographical distance. The life cycle of their products are short leaving no time for comfortable manufacturing process. They have a seasonal demand with most of their sales happening during one quarter of the year. In case of stock outs they lose their 24% margin and make 8% losses on over stocked goods or marked down prices. This results in high holding costs. This highly volatile demand requires them to produce in two phases. One batch of production is to be carried out based on initial forecast and the other batch after the las vegas event requiring highly flexible supply and manufacturing process. The following exhibit shows the demand forecasts for 20000 units. STYLE | LAURA | CAROLYN | GREG | WENDY | TOM | WALLY | PRICE | Gail | 900 | 1000 | 900 | 1300 | 800 | 1200 | 110 | Isis | 800 | 700 | 1000 | 1600 | 950 | 1200 | 99 | ...
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...Class: 1 Type: Lecture Introduction Nobody will dispute the fact that operations are becoming increasingly international or even global in nature. Less clear, though, is what this actually means for operations. Drivers of globalization include increased competitiveness through offshore manufacturing and increased sales by expanding into new markets, but the associated opportunities and challenges are totally different and highly industry-dependent. Clearly, the issues facing a hi-tech firm are different than those facing a global consulting firm, software is a different ballgame than textile, etc. "Global operations" can refer to, among others, global sourcing, to having manufacturing or service or R&D facilities world-wide, or to supplying global markets, each of which have very different ramifications: Global sourcing Global manufacturing Global distribution . dealing with foreign . facility location . local content regulations suppliers . coordinating networks . managing global . managing international of plants distribution logistics . coordinating networks . managing risk . managing risk of R&D facilities . operations in other countries Page intentionally left blank. Class: 2a Type: Lecture Supply Chain Management & Service The goal in this part is to introduce the two main sections of the course, international...
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...The impact of buyer-supplier relationship and purchasing process on the supply chain performance: a conceptual framework Melody J. Hsiao University of Sydney Sharon Purchase University of Western Australia Shams Rahman University of Sydney ABSTRACT Supply chain performance is a rapidly developing area of research. Many companies are trying to find tools for enhancing performance measures in response to turbulent business markets and for efficiently controlling their business activities. Little empirical research has been conducted on the performance of retail supply chain in Taiwan and other Asian countries. Two factors affecting current retail supply chains, buyer-supplier relationships and purchasing processes, and their antecedents that are relevant to this unique cultural environment will be investigated. The objectives of this research are: (1) to identify the determinants affecting the performance of the supply chain at the retail level; (2) to define the antecedents related to each determinant; and (3) to present the conceptual model for this particular context. This research will contribute by presenting a conceptual model for supply chain performance that is relevant to small and mediumsized businesses that predominate Taiwan. INTRODUCTION Supply chain management (SCM) is “a key strategic factor for increasing organizational effectiveness and for better realization of organizational goals such as enhanced competitiveness, better customer care and increased profitability”...
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...Journal of Operations Management 21 (2004) 613–627 From supply chain to demand chain: the role of lead time reduction in improving demand chain performance Suzanne de Treville a,∗ , Roy D. Shapiro b,1 , Ari-Pekka Hameri a,2 a Ecole des Hautes Etudes Commerciales, University of Lausanne, 1015 Dorigny, Switzerland b Harvard Business School, Boston, MA 02163, USA Received 1 December 2002; received in revised form 1 October 2003; accepted 1 October 2003 Abstract To improve demand chain performance, is it better for parties in a supply chain to focus first on lead time reduction, or instead concentrate on improving the transfer of demand information upstream in the chain? Even though the theory of supply and demand chain management suggests that lead time reduction is an antecedent to the use of market mediation (i.e., adjusting production to fit actual customer demand as it materializes) [Harvard Business Rev. 75 (2) (1997) 105] to reduce transaction uncertainty in the chain, which can be conceptualized as the primary goal of supply chain management [J. Operat. Manage. 11 (3) (1993) 289], demand chain parties often are observed in practice to begin with information transfer improvement, ignoring the problem of long lead times. In this paper, we propose a framework for prioritizing lead time reduction in a demand chain improvement project, using a typology of demand chains to identify and recommend trajectories to achieve desirable levels of market mediation performance...
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