Advance SCM
Navya Lalitha PGDMA1408Rahul Dukale PGDMA1403
Case Study: Sport Obermeyer
Company History:
1947: Klaus Obermeyer, a teacher at the Aspen (U.S.) Ski School,
founded Obermeyer.
1985: Obersport; a joint venture in Hong Kong, the company began
to increase productivity to meet their new demands. 1992:
Preemminent competitor, 45% market share in children's wear, 11% in
adult skiwear.
ISSUES IN THE COMPANYUncertainty in forecasting demand.
How to allocate production between the factories in Hong Kong
and China Long lead times
Little or no feedback from market
Inventory management: deep discounts, lost sales 33PRODUCT
CATEGORIES
MENS - WOMENS - BOYS - GIRLS - PRESCHOOLERSFRED - REX - BIEGE
-KLAUSIEGREY - BLACK - BLUE - WHITE 32 - 38 - 44 - 46The Supply
ChainTextile and Accessories SuppliersApparel ManufacturersSport
ObermeyerRetailersObersportProduce, dye and print shell and lining
fabrics, supply insulation, zippers, thread, logo patches and
snaps.Subcontractors, receive production orders and materials from
Obersport. Cut, sew and final assembly.Responsible for material and
production sourcing in the Far East. It also acts as a distribution
centre for materials and finished goods.Product design, production
planning and sales.Purchase from Sport Obermeyer and sell products
to consumers.RetailersSpecialty Ski-Retail StoresDepartment
StoresDirect Mail RetailersConsumersMost sales occur between
September and JanuaryDelivering products by early SeptemberSport
ObermeyerComponentsGreige Shell FabricFinishing of Shell Fabric
(Dying & Printing)Finished Lining
FabricInsulationZippersThreadLogo Patches, Drawcords, Hang Tags,
etc.Snaps (undyed)Dyeing of SnapsProcurement lead time45 90 days45
60 days45 60 days2 3 weeksStandard (HK) 60 days, Custom (JP) 90+
days30 days15 30 days1 2 months15 30 daysAsia6 weeks
Fabric ProducerFabric DyerCut/Sew FactoryDenver
WarehouseRetailerUn-dyed greige goodsConsumer6 weeks6
weeksProduction Process:Speed up data/information analysis and
utilize historical data / Committee forecasting / Research and
Trend & Market Movementearly placement of orders at a discount,
for better forecasting and clear production plans.To reduce lead
time of production especially for procuring raw materials.decrease
the minimum order quantities by providing incentives to its
suppliers to have more flexible production lines.Establish some
local production capacity for last minute production.
HOW TO PRODUCEWHERE TO PRODUCEHong KongFasterMore flexibleHigh /
Reliable QualityBetter for higher risk designs
ConcernSmaller lot sizesHigher labor cost
China (Guangdong, Lo Village)Lower labor costLarger lot
sizesBetter for lower risk designs
ConcernQuality & ReliabilitySlowerLess flexibleWhere is
better?Short termLong termHong KongChina10 Recommendations to
WallyRECOMMENDATION #1. Improve the demand forecasts made
internally by the Buying Committee in November (1992) just before
Speculative Production.Instead of using just a simple average of
the individual forecasts made by Laura, Carolyn, Greg, Wendy, Tom
and Wally use a weighted average, with the weights reflecting past
accuracy.Recommendations to Wally(continued)RECOMMENDATION.
Decrease minimum order quantities, thereby improving the ability to
fine tune during Reactive Production.Minimum order quantities occur
because there are long set-up times when switching from the
production of one style of parka to another, thereby making it
uneconomical to have short runs.Thank You
