Sherwood Hockey Sticks

SHER-WOOD HOCKEY STICKS: GLOBAL SOURCING

A Case memo

Questions

1. In 2006, Sher-Wood made lots of sales on both their wooden and composite sticks and also predicted high growth in its composite sticks in terms if volume and profitability. To meet the expected demand and also lower its cost, in 2007 they outsourced their lower end wooden hockey stick to Ukraine so as to lower their cost of production. Its high end wooden stick hockey model(PMP 5030) was outsourced to a local manufacturer in Quebec. They basically outsourced to reduce cost and increase profitability and market share in the face of stiff competition. In 2010, there was a decline in sales for sticks produced in Sherbrooke and the return on invested of their Canadian fixed income was low. Sherwood outsourced most of its composite material hockey sticks to a Chinese supplier and produced its high end one piece composite stick and goalie foam sticks.

In 2006, Sher-Wood had decided to outsource its lower end wooden hockey stick to Ukraine for cheaper labor and material cost and the high end stick was outsourced to an onshore manufacturer. With the drop in sales in 2010, the company’s executives wanted to gain market share and increase sales by lowering retail prices and affording the retailers a higher margin than their competitors. They then lowered cost by outsourcing. They considered back shoring from China but decided against it as it offered lower labor and was cost effective.

2. With offshoring, research and development was more improved, and production turnaround time was improved thereby enabling them to produce more in little time. Between 2007 and 2011 hockey became widely known in China, the existing long term relationship between the company and the supplier has led the supplier to develop an extensive knowledge and feel for hockey.

3. Sher-Wood should move their remaining...