Sport Obermeyer is a leader in fashion skiwear manufacturing. Skiwear manufacturing is a competitive field with distinct challenges. Skiwear market is just four months long but the design and production process takes over 16 months to complete. Accurate estimates of demand become available only after a year into design and production cycle. The Company also faces long lead times from textile and accessories suppliers. This forces the company to accurately predict the demand early accurately and place the production orders that meet the forecasted demand. This case discusses the challenges faced by Wally Obermeyer in committing to specific productions quantities Sport Obermeyer ...view middle of the document...
Sport Obermeyer’s broad line of styles, sizes and colors makes demand projection and production of the products much more challenging compared to their competitor. Logistics coordination for the various styles, colors and sizes of matching products had also been a challenge. Other challenges faced by this industry are long lead time for raw material suppliers, long design and production time and short window of sales. Due to these challenges being functionality oriented Sportswear; Obermeyer faced huge challenges in price-value position and maintaining brand value.
2. Forecasting Challenges. An accurate estimate for the demand for the different styles becomes available after the fashion show at Las Vegas in March. But the production for the skiwear should start 5 months prior to the fashion show in order to meet market demand. 80% of the major retailers’ initial orders are received only after 12 months into the production cycle. This forces Sport Obermeyer to forecast a demand from their prior experience. Sport Obermeyer uses their buying committee to forecast the demand for each styles of skiwear. Company’s profit depends on their ability to predict the demand for each style accurately. Excess merchandise at the end of the season incurs considerable loss to the company. Inability to accurately estimate the demand for wide variety of the styles, colors and sizes is the biggest challenge for Sport Obermeyer.
3. Production Challenges. The window of sales for the skiwear is 4 months. But the design and production process for skiwear takes 16 months to complete. This longer manufacturing time is due to long lead time for textile and accessories suppliers. Another production challenge faced by Sport Obermeyer is to effectively allocate their production between their China and Hong Kong manufacturing facilities. China offers significantly lower production cost compared to Hong Kong facility. But Hong Kong workers are cross trained in different areas of production compared to China. China manufacturing facility added some challenges to Sport Obermeyer because they require higher minimum order quantity and they offer lower throughput and less quality compared to Hong Kong facility. Manufacturing at China also poses the risk of exceeding the stringent quota restrictions by U.S Government.
Addendum 1 depicts the supply chain model for the Sports Obermeyer and here are some of Sport Obermeyer’s Competitive priorities that could affect the supply chain efficiency of the Sport Obermeyer.
1. Improving sales, profit and market share. Sport Obermeyer can increase their sales and market share by improving the accuracy of their demand forecast. One way of achieving this is by increasing their market share in adult skiwear market by reducing the number of styles and colors they offer to adult customers and gain market share from low-cost Columbia skiwear. But this comes in the way of Obermeyer trying to be a functionality oriented sportswear player and...