Sport Obermeyer Case

Obermeyer Sport A Strategic Direction in looking Introduction &038 Summary Klaus Obermeyer is an innovator in the high-end skiwear industry. The come with began with calibrate filled jackets and slowly began to diversify its product line with high-altitude suntan lotion, turtlenecks, nylon wind-shirts, reflect sunglasses and to a great extent. In 1961, the initiative Sport Obermeyer factory w atomic number 18house loose in Aspen, and the innovations continued with soft-shell jackets, double lens goggles, and the first waterproof-breathable fabrics to be go for in clothing.Sport Obermeyer is a high-end fashion skiwear design and merchandising come with with its headquarters located in Aspen, Colorado. The givenership specializes in selling its products in U. S. department stores and ski shops. Although the gild has a global provision net body of work, to the highest degree of its outerwear products are channeled through with(predicate) Obersport. 1 In the fashion skiwe ar industry withdraw is very dependent on several factors that are rocky to predict. The mismated nature of the economy, fashion trends and weather create a signifi tummyt scrap for a firm such as Sport Obermeyer.By actively applying a selection of appropriate forebode methods and continuing to adapt to this fast industry, Obersport would be able to remain emulous and retain or accession its 1992 high market share entering into the 1993/94 season. Analysis A joint venture was established between Klaus Obermeyer and Raymond Tse in 1985. This participation gained the cognomen of Obersport Ltd. This joint venture allowed Obermeyer to manage supplement and production operations in Hong Kong and mainland China. 2 Until the mid-1980s, Obermeyer followed a simple design-and-sales cycle The first stage was to design the product, accordingly fabricate and show side samples to sellers in March usually at fairs/shows ? The certify stage was to place production rates with suppl iers in March and April subsequently receiving retail arrays from the fairs/shows. ? The third stage was to receive goods at Sport Obermeyers statistical distribution center in September and October and ship product immediately to retail outlets. During the mid-1980s, several factors rendered this approach obsolete ? As sales volume grew, the company hit manufacturing ceilings during the peak ski wear-production period. Being unable to order adapted quantities during critical summer months reduced the supply for ongoing demanded volume, to be produced after it has received retail orders. Therefore, the company begins booking production the previous November, or nearly a course of instruction before goods would be change, based on speculation about what retailers would order. Processes and Strategies A ski jacket cosmos distributed in the U. S. could be asembled in China from fabrics and findings (zippers, snaps, buckles, and thread) sourced from Japan, South Korea, and Germ any.This global supply compass (Exhibit 1. 0) created more product variety and mendd production efficiency, but at the aforesaid(prenominal) date greatly increased choke times. Reaction to the perpetuation supply chains, limited supplier capacitor, and retailers demands for earlier give backy were all cock-a-hoop obstacles. Obersport began developing a variety of quick-response initiatives such as to shorten lead times to overcome them. stolon introduced were computerized systems to slash time in process orders and computing raw-material requirements.This technology would anticipate what raw materials it would require and pre-position them in warehouses in the utmost East because lead time for obtaining raw materials proved difficult to shorten. To shorten this time Obersport used air freight for delivery from the Far East to the Denver distribution centre as delivery collect dates quickly approached. In the 1990s, these changes had reduced delivery times by more than c ardinal month. 3 Along with these changes, the Sport Obermeyer applied some separatewise manoeuvre in the 1990s.Obermeyer persuaded some of its important retail customers to place their orders sooner, providing the company with important foreword information such as the favouriteity of certain styles. Invited were 25 of the companys largest retailer customers to Aspen distributively February offering them a preview of the unfermented annual line and solicit early orders. This was called an Early Write which accounted for about 20 percent of the total sales. About half of production requests depended exceedingly on demand forecasts still. An in-house buying committee approach was allocated to generate these forecasts. 4 gip life cycle Issues There are three topics in immediatelys business environment that are especially relevant to this case ? Production planning for short-life-cycle fashion products ? Operational changes that reduce the greet of couple supply and demand ? Coordination issues in a global supply chain. The Bullwhip payoff (or Whiplash Effect) is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand enlargement upstream a supply chain reminds someone of a gingersnap whip it became famous as the Bullwhip Effect.For seasonal worker goods such as pass sportswear, which has a short selling season and long lead times, a firm can do several things to break in match supply and demand Additional events can be held before large wad fairs in order to secure orders gain ground in advance. Supplier capacity can be reserved without specifying the exact product mix. This postponement of the net mix has benefits similar to those of postponing product customization until the distribution center. Common parts can be used in designs in order to pool some of the variation between individual demands. 5 Demand ForecastingThe different types of soothsaying include Economic forecasts address the business cycle. Ie inflation rate, specie supply, and housing simoleonss Technological forecasts predict the rate of technology progress and adjoin the development of raw products Demand Forecasts predicts sales of existing products and services. This is the type of forecasting relevant to the Obermeyer case. 6 The Importance of Forecasting pic Forecasts are based on statistics, and they are rarely perfectly accurate. Because forecast errors are a break offn, companies often have an inventory buffer called safety stock.Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater dealiness for safety stock. In periods of rising demand, down-stream participants increase orders. In periods of dusking demand, orders fall or stop to reduce inventory. The effect is that variations are amplified as one moves upstream in the supply chain (further from the customer). The causes can further be divided into behavioral and operational causes Behavioral causes to forecasting Misuse of base-stock policies Misperceptions of feedback and time delays Panic ordering reactions after unmet demand Perceived risk of other players bounded rationality Operational causes Dependent demand processing Forecast Errors Adjustment of inventory control parameters with each demand observation depart Time Variability (forecast error during replenishment lead time) Lot-sizing/order synchronising Consolidation of demands Transaction motive Quantity discount Trade procession and forward buying Anticipation of shortages allocation rule of suppliers shortage romp Lean and JIT style management of inventories and a chase production system The information above (Importance of Forecasting) was provided by Wikipedia http//en. wikipedia. org/wiki/Bullwhip_effect Objectives Despite current forecasting strategies being used at Sport Obermeyer to satisfy the constantly changing consumer de mands, goals and targets moldiness be set in order to improve weak areas allowing the company to remain competitive for the upcoming season.The following objectives are used to further develop the companys forecasting strategies for the 1993/94 season. 1. Find new ways to accurately estimate the bill of each style infallible in the sign phase of production. 2. Implement operational changes that will improve overall performance. 3. Properly align current supply chain sources qualified to supply channels in Hong Kong and great China. Recommendations The following recommendations have been created to reassure the company meets its required objectives. 1.Wally Obermeyer reflects the vector sums from the buying committee impact that is held in November, annually. This year Wally strayed away from the usual system of having six key managers make production payloads based on the groups consensus, to having each member give a personal forecast retailer demand for each of the produc ts sold at Sport Obermeyer. We recommend that he takes each managers forecasts and makes one forecast based on the other managers predictions. A good formula to use in order to extend to this is ? i-k? i= 10,000 units. (refer to exhibit 3. 0)This formula takes both the mean of all of the other managers forecasts and the distribution of everyones forecast into consideration. By up the internal forecasts by applying this forecasting model with the info used from retiring(a) sales instead of a simple average made by the buying committee. 7 2. The main operational changes that Wally should focus on in order to increase productivity is to initially focus on splitting the seasonal orders into two lots unfit Order The first lot should be an order of 10,000 units placed approximately 10 months before the selling season. This order will be made through China, considering that they are less high-ticket(prenominal) and need more time for production. This order will consist of the quantitie s produced from the data attained through a weighted average method as identified above. Reactive Order The plunk for lot should be legitimate closer to the selling season, approximately six months, and should also be 10,000 units.The quantities in this order should be decided based on which items are popular in the Las Vegas fashion show. The Vegas fashion show should offer a better prediction of popular trends in the season. This order should be produced by Hong Kong manufacturers considering that they are faster, more efficient and more flexible. Although, it would be much less costly to order through China, given the short time line for this second order it is essential to use Hong Kong. 8 3. Due to bring low be, but interminable lead times, Sport Obermeyer should make a majority of its speculative order to China.With strict quota restrictions limiting the number of units that can be imported from China into the United States, it is necessary to ensure the orders brought i nto the US before the quota has hit a maximum. Sport Obermeyer forecasts an annual demand for its product and as a result supply channel partners need to undergo change to develop and deliver new product lines annually. Therefore, Obermeyer retroactive order should be manufactured in Hong Kong to avoid the risk of declined imports (Exhibit 2. 0). The Hong Kong manufacturer also provides high feel and quicker production times, but at a higher price.Conclusion pic Obermeyer did employ all of the recommended strategies (to some degree) to satisfy the three outlined objectives entering into the 1993/94 season. Although Obermeyer did increase their quality control functions to position themselves as one of the highest quality brands in the market, they continued to use essentially the same supply chain. The company has since evolved from its operations in the early 1990s to investing highly in research and development as this is the only way to remain competitive as a premium brand sup plier in the twenty-first century.Sport Obermeyer now follows the following strategy Obermeyer Product Technology defines our commitment to the demand of function and performance. Today, more than ever, we are designing garments that are force the boundaries of outerwear technologies. Introducing new systems of integrated synergistic components which create exceptional, high-performance winter gear The Advanced Technology Series is way of the future. Despite their essential changes in corporate strategy, effective operations management remains a critical part of the ongoing success of Sport Obermeyer Ltd.Exhibits Exhibit 1. 0 Supply Chain pic Exhibit 2. 0 Comparative Analysis Hong Kong Greater China Advantages Disadvantages Advantages Disadvantages Workers 50% faster than Chinese Shorter hours worked, less Significantly lower wage/hour Workers not as efficient counterparts overtime border (US$0. 6/hr) Narrower range of tasks high weekly output/worker Higher labour costs Ample supply of manufacturing Long production lines deft in broader range of Shortage of younger workers human resources Much higher minimum order tasks Insufficient number of workers Lower landed cost quantity for same style Lower minimum order quantity forHigher landed costs Slow repair rate (10%) same style Fast repair rate (1-2%) Exhibit 3. 0 Speculative Production Quantities Assumptions ? All ten styles are made in Hong Kong, and Obermeyers initial production commitment is at least 10,000 units. Different unit costs of production are inapplicable Style Average Forecast () stock 2x Standard Deviation Product Quantity Deviation (? i) Isis 357. 24 tempt 832. 24 Assault 1804. 2 Teri 292. 28 Electra 1293. 52 Stephanie 2. 12 Seduced 2838. 28 Anita 1076. 36 Daphne 905. 36 Exhibit 4. 0- Product Life Cycle pic9 reckon Management Group Three Craig Brown, Evan Farquhar , Jay Maynard, Sarah-May Kilpatrick, Sean Vrooman The first step taken was to assign a Project Manager for our group. We decided to appoint Sean Vrooman due to his reach in Human Resources and having a strong understanding of Project Management. The first thing put into place was we created a plan for how we would structure this assignment. First we analyzed what the objectives were and how we could meet them over a timeline. We then devolved a work break-down schedule to split up certain tasks to individuals in the group.Our first meeting was Tuesday November 3rd, 2009. We decided to meet every Tuesday but with limited resources we decided to start meeting twice a week for the last three weeks to cooperate us move at a faster pace through the project. In total we met seven times with emails back and forth discussing and analyzing each others work. After implementing a schedule based on our working methods we had a very strong and competent order of who was doing what part of the paper and how we were going to present our material to the class. No methods were requ ired In genereal this group functioned very well together. Everyone contributed in a very lucifer and professional manor.We completed this project on time and did not need the assistance of any extra materials like Gannt charts or critical paths. &8212&8212&8212&8212&8212&8212&8212 1 Janice H. Hammond, Ananth Raman, Harvard contrast School, Sport Obermeyer, Ltd. 2 Janice H. Hammond, Ananth Raman, Harvard Business School, Sport Obermeyer, Ltd. 3 www. personal. umd. umich. edu/drossin/class/gommo4 4 courses. washington. edu/smartman/Ass3. htm 5 http//www. quickmba. com/ops/scm/ 6 Heizer_9_ch4 7 pic678GOP? E? - = O f o iU? tcRcRcRcAcAc hUhz?? B*OJQJaJphy hUhI? www2. isye. gatech. edu/jvandeva/Classes/6203/ /12Obermeyer. ppt 8 www. utdallas. edu/metin/Or6366/Folios/scnewproduct. ppt 9 Heizer_9_ch4