Case Study: Sport Obermeyer

Navya Lalitha PGDMA1408

Rahul Dukale PGDMA1403

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 COMPANY

Uncertainty 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

PRODUCT CATEGORIES
MENS - WOMENS - BOYS - GIRLS PRESCHOOLERS

FRED - REX - BIEGE -KLAUSIE

GREY - BLACK - BLUE - WHITE

32 - 38 - 44 46

The Supply Chain

Textile and
Accessories
Suppliers

Produce, dye and print shell and lining fabrics, supply

insulation, zippers, thread, logo patches and snaps.

Apparel
Manufacturers

Subcontractors, receive production orders and

materials from Obersport. Cut, sew and final assembly.

Obersport

Sport
Obermeyer
Retailers

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.

Retailers
Delivering products by
early September

Sport
Obermeyer

Specialty SkiRetail Stores

Department
Stores

Direct Mail
Retailers

Most sales occur between

September and January

Consumers

Production Process:
Asia
Fabric
Producer

Fabric
Dyer

Un-dyed greige
goods

6
6
week
week
Cut/Sew s
Denver
s Retailer
Factory

Warehouse

6 weeks

Consumer

Components

Procurement lead time

Greige Shell Fabric

45 90 days

Finishing of Shell Fabric (Dying &

Printing)

45 60 days

Finished Lining Fabric

2 3 weeks

Insulation

Standard (HK) 60 days, Custom (JP) 90+ days

Zippers

30 days

Thread

15 30 days

Logo Patches, Drawcords, Hang Tags,

etc.

1 2 months

Snaps (undyed)
Dyeing of Snaps

45 60 days

15 30 days

HOW TO PRODUCE
Speed up data/information analysis and utilize historical data /
Committee forecasting / Research and Trend & Market
Movement
early 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.

WHERE TO PRODUCE

Hong Kong
Faster
More flexible
High / Reliable

Quality
Better for higher risk
designs

Concern
Smaller lot sizes
Higher labor cost

China
(Guangdong, Lo Village)

Lower labor cost

Larger lot sizes
Better for lower risk
designs

Concern
Quality & Reliability
Slower
Less flexible

Where is better?
Short term

Long term

Hong Kong

China

Recommendations to Wally
RECOMMENDATION #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,
accuracy.

with

the

weights

reflecting

past

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