Sport Obermeyer

obermeyer sport |

Case 3 – Module 1 – Supply Chain Management |

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Teacher: John Bottomley |

Donna MacLean - 10040924 |

2/3/2012 |

Executive Summary

Supply and Demand, the key to a successful business is matching supply with demand. Sport Obermeyer is failing in this area.

Oberymeyer is faced with increased competition from other winter apparel makers, namely Columbia Sportswear. The company’s buying committee bases quantity ordering decisions on average sales forecasts generated by a number of internal parties. Techniques like this as well as using large amounts of greige material to delay product differentiation have helped Sport Obermeyer manage it long lead times. The nature of the apparel industry is such that high quality clothing manufacturers and sellers deal with long lead times. In Obermeyers case this is roughly 2 years. The effects of such long lead times include stock outs of popular items during peak selling periods and leftover stock of unpopular items which are ultimately sold at below cost rates. Ultimately a poor matching of supply with demand!

The low cost of manufacturing in China has helped but also hurt Obermeyer as is competitors also source from the Far East. Low cost labour is a bonus however political and quality issues are something that is becoming more prevalent every day. Quotas in the USA limit the quantity of parkas and other ski apparel that companies can import into the USA from the Mid East. This results in increased transport costs in trying to be first to market.

The recommendation to deal with the above issues is to proceed with the development of a more accurate forecasting system and use the Exhibit 2 methodology for the initial forecast of 10,000 units in Hong Kong. This will enable Sport Obermeyer to minimize stockouts and markdowns while at the same time maximize profits.

Issues

The immediate issue Sport Obermeyer is faced with is determining the number of units of each of...