Sport Obermeyer Case Report

Summary

Issue Identification

Customer ordering cycle time starts from march when 80% retailers’ initial orders placed, ends in August when first order received. However, supply cycle started from first production order placement is 4 months longer than customer ordering cycle time. This indicates a long lead time for production that could be a great concern to Obermeyer.

Inaccurate forecasts of retailer demand had become a growing problem at Obermeyer. 80% of retailers’ initial orders are placed after Las Vegas show, but the first production order will have to be placed 4 months prior to the show. Therefore, the initial forecasts have to depend on the judgment of buying committee. Their judgments are heavily influenced by experience, intuition and sheer speculation. Inaccurate forecasts has a great financial impact on Obermeyer, it can cause lost of sales result from insufficient supply unable to meet with the demand and loss of revenue result form price cut down for excess inventory.

In the long term, Obermeyer is also facing a challenge of allocating productions between China and Hong Kong manufactures. Each manufacture has its own issues and advantages. How to balance risks and benefits had complicated the decision making process for production allocation.

Furthermore, there are some issues regards to the company management. The “intuitive” management style relies heavily on experience and speculation instead of formal data-gathering and analytical techniques. All of the Sport Obermeyer’s sourcing and production depend on one person, Raymond Tse, and his two factories, this creates a potential risk for Sport Obermeyer if the joint venture collapse.

Environmental and Root Cause Analysis

Short term

In November 1992, the most urgent task for Wally Obermeyer is forecasting the production quantities for 1993-1994 line of fashion skiwear. The risk of procrastination includes delayed delivery to retailers and loss of sales. Therefore, the first...