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Sport Obermeyer Case Study Presented By: Gourav Anvekar Ranjan Melanta Jerrin Mathew Kunal Savlani
Agenda  Introduction and background  Supply Chain  Timelines  Challenges  Analysis  Recommendations  Summary 2
Introduction Sport Obermeyer  Origin traced to 1947  Founder: Klaus Obermeyer  Originally from Germany  Engineer by tr...
History Klaus Obermeyer Founder, Sport Obermeyer Wally Obermeyer Vice President, Sport Obermeyer Raymond Tse Owner and Pre...
Perspective Klaus Obermeyer Wally Obermeyer • Providing value to customers • Trust • Intuitive style • More importance to ...
Structure Sport Obermeyer Obersport Ltd. Alpine (Honk Kong) Lo Village (China) Subcontractors (Honk Kong, China, Macau) 6
Locations Important Landmarks US Market Shipment Location Suppliers Production center Distribution Center 7
Product Segmentation Segmentation based on Gender  Men’s Collection  Fred, Rex, Beige and Klausie  Women’s Collection ...
Apparels Bombshell JacketAlex Down Jacket Indy Insulated Jacket 9
Supply Chain Textile and accessory suppliers Apparel manufacturers Obersport Sport Obermeyer Retailers 10 • Raw materials ...
Timelines Design • February 1992 Prototypes • July 1992 • Designs sent to Obersports Design Finalized • September 1992 • S...
Timelines Las Vegas Show •March 1993 Additional Orders •April– July 1993 Ship to Seattle •June – July 1993 Full delivery t...
Challenges  Inaccurate forecast leading to  Excess production of non-popular products  Shortage of popular products  W...
Forecast Analysis Problems  Inaccurate forecast of retailer demand  Greater product variety and intense competition has ...
Forecast Analysis 15
Forecast Recommendations  Analyze historic data to determine future trends  Use weighted average of forecasts obtained f...
Production Analysis Problems  Quality and reliability of products produced in China  Larger minimum order and quota rest...
Production Analysis Hong Kong China Faster Production Slower Production Expensive Labor Cheaper Labor Smaller lot sizes La...
Production Analysis 19
Production Recommendations  Improve quality of labor by cross training labors in China  Decrease lead time by obtaining ...
Operational Recommendations  Promotional marketing strategies  Increase service level  Establish new distribution cente...
Competition Recommendations  Competitive pricing strategy  Target improvements in adult ski jacket market (Columbia hold...
Recommendation Summary  Obtain early feedback from retailers and use historic data to improve forecast  Improve quality ...
References  Harvard Business Review: Sport Obermeyer Case – Janice H. Hammond and Ananth Raman, August 2006  Obermeyer L...
Questions 25
Thank you 26
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Sport Obermeyer Case Study

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Challenges
Inaccurate forecasts of retailer demand has become a major issue at Obermeyer. The two major factors that made this task more difficult was the increase in product variety and intense competition in market. Second challenge the company had faced was to allocate production between Hong Kong and China. Although Obermeyer had 1/3 of Parka production in China for 1992, this year the organization insisted on increasing the sales to half. There was difference in quality and labor rate at China and Hong Kong which made allocation decision more difficult.
Another challenge the company faced was the larger lead time. The company had supplies of raw materials from various countries which resulted in delayed production time. Organization challenges along with competition from competitor companies were major challenges the company had faced.

Analysis
From the sales predictions that the six managers forecasted, a coefficient of variation (COV) was determined, which indicated the level of spread of the forecasted data. The COV values were broadly divided into two levels, the low risk group and the high risk group. Every value below 0.2 were considered to be among the lower risk items and all the items above COV value of 0.2 were considered to be of higher risks. Once the risk levels of each item were determined, the quantities of items to be produced in first and second production cycles could be calculated with least risk. 70% of the entire sales forecast for the lower risk items were ordered to be produced. Only 30% of higher risk items were ordered to be produced in the first production cycle. The quantities which amounted to 1200 were manufactured in China and that which were close to 600, were manufactured in Hong Kong in the first production cycle.
Once the 80% of the orders were received from the retailers from the Vegas show, a clear picture of the demand forecast could be obtained, according to which the rest of the items could be manufactured either in China or Hong Kong. Referring to exhibit 1, the four products to be produced in China in the first production cycle are: Assault, Seduced, Entice and Electra. These four products have COV less than 0.2. However Gail, Daphne, ISIS, Anita, Teri, Stephanie are produced in Hong Kong for the first production cycle as they have a high level of risk associated with it.

Conclusion
Short term operational changes
o Decrease lead time by obtaining raw materials from geographically closer locations to ensure timely delivery
Long term operational changes
o Cross scaling Chinese labors which would help the company produce quality and reliable goods at a cheaper price

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Sport Obermeyer Case Study

  1. 1. Sport Obermeyer Case Study Presented By: Gourav Anvekar Ranjan Melanta Jerrin Mathew Kunal Savlani
  2. 2. Agenda  Introduction and background  Supply Chain  Timelines  Challenges  Analysis  Recommendations  Summary 2
  3. 3. Introduction Sport Obermeyer  Origin traced to 1947  Founder: Klaus Obermeyer  Originally from Germany  Engineer by training  Headquartered in Aspen, Colorado  Introduced the first Goose-down vest 3
  4. 4. History Klaus Obermeyer Founder, Sport Obermeyer Wally Obermeyer Vice President, Sport Obermeyer Raymond Tse Owner and President, Alpine MD Obersport Ltd. Shiu Chuen Tse Operations Manager, Alpine 4
  5. 5. Perspective Klaus Obermeyer Wally Obermeyer • Providing value to customers • Trust • Intuitive style • More importance to his experience Relied heavily on formal data gathering and analytical techniques 5
  6. 6. Structure Sport Obermeyer Obersport Ltd. Alpine (Honk Kong) Lo Village (China) Subcontractors (Honk Kong, China, Macau) 6
  7. 7. Locations Important Landmarks US Market Shipment Location Suppliers Production center Distribution Center 7
  8. 8. Product Segmentation Segmentation based on Gender  Men’s Collection  Fred, Rex, Beige and Klausie  Women’s Collection  Boy’s Collection  Girl’s Collection  Preschooler’s Collection 8
  9. 9. Apparels Bombshell JacketAlex Down Jacket Indy Insulated Jacket 9
  10. 10. Supply Chain Textile and accessory suppliers Apparel manufacturers Obersport Sport Obermeyer Retailers 10 • Raw materials • Zipper, Fabric • Cut and Sew • Dying and printing • Supervises productions • Manage operations • Ensure quality • Forecast, design • Ship to retailers • Customers • Market Feedback
  11. 11. Timelines Design • February 1992 Prototypes • July 1992 • Designs sent to Obersports Design Finalized • September 1992 • Sample Production Production •November 1992 •1st production order to Obersports 11
  12. 12. Timelines Las Vegas Show •March 1993 Additional Orders •April– July 1993 Ship to Seattle •June – July 1993 Full delivery to retailers •Early September 1993 Replenishment Orders •December 1993 – February 1994 Quota Restrictions80% of orders 12
  13. 13. Challenges  Inaccurate forecast leading to  Excess production of non-popular products  Shortage of popular products  Where to manufacture  Hong Kong or China?  Raw material sourcing – long lead times  Operational Challenges  Competition from competitors 13
  14. 14. Forecast Analysis Problems  Inaccurate forecast of retailer demand  Greater product variety and intense competition has made prediction difficult Process  Obtain individual forecasts from managers  Estimate the risk associated with early production of each style  Examination of demand from previous years forecast 14
  15. 15. Forecast Analysis 15
  16. 16. Forecast Recommendations  Analyze historic data to determine future trends  Use weighted average of forecasts obtained from managers  Obtain early market demand forecast by getting feedback from retailers much before the Vegas show to achieve better forecast accuracy 16
  17. 17. Production Analysis Problems  Quality and reliability of products produced in China  Larger minimum order and quota restriction on products  Higher labor cost in Hong Kong  Skill level of Hong Kong is much better than China  Raw materials procured from suppliers from different countries increases lead time 17
  18. 18. Production Analysis Hong Kong China Faster Production Slower Production Expensive Labor Cheaper Labor Smaller lot sizes Larger lot sizes More flexible Less flexible 18
  19. 19. Production Analysis 19
  20. 20. Production Recommendations  Improve quality of labor by cross training labors in China  Decrease lead time by obtaining raw materials from geographically closer locations to ensure timely delivery  Increase production capacity by increasing sub contractors  Overcome minimum production quantity issue by having a production unit 20
  21. 21. Operational Recommendations  Promotional marketing strategies  Increase service level  Establish new distribution center in Seattle to reduce transportation cost and time  Introduce drop shipping of popular items to reduce delivery lead times and maximize profits by holding popular item’s market share  Expand South American Markets 21
  22. 22. Competition Recommendations  Competitive pricing strategy  Target improvements in adult ski jacket market (Columbia holds 23% of the market share)  Marketing Campaigns  Reducing lead times to gain maximum out of the quota restrictions  Improving product quality by cross scaling 22
  23. 23. Recommendation Summary  Obtain early feedback from retailers and use historic data to improve forecast  Improve quality of labor and decrease lead time to obtain raw materials  Introduce drop shipping and establish new distribution centers  Target improvements in new markets to gain market share to increase profits 23
  24. 24. References  Harvard Business Review: Sport Obermeyer Case – Janice H. Hammond and Ananth Raman, August 2006  Obermeyer Ltd: obermeyer.com  Supply Chain Economics – Jordan Avery, Michael Gilkenson, Alina Cornejo, Fabio Romero, Farida Jariwala, Sara Rogovin and Eric Timm Report 24
  25. 25. Questions 25
  26. 26. Thank you 26

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