CASE STUDY 2 ANALYSIS: SPORTS OBERMEYER Gruruvignesh (Q566U762)
It was the year1947 when Sports Obermeyer was established. Its founder is Klaus Obermeyer, who migrated to united states from Germany. Wally Obermeyer, son of Klaus was an MBA graduate from Harvard university. He started working as a part time employee in the firm and later became the vice president of the company. Klaus relied on experience, intuition and trust in people while Wally believed that data gathering was most important for the success of the company. Obermeyer offered products for men’s women’s boys girls and preschoolers.
Due to bad forecast, coupled with longer lead times in Raw material sourcing and production, the company was losing money on discounts over the unsold products and by maintaining a large inventory to meet the fluctuating demands. To Mitigate the issues Wally Obermeyer is to decide on the styles that are to be manufactured in Hong Kong and styles that are to be manufactured in China taking demand, quality, production cost, and lead time in to consideration. With China the advantages are less lead time, lower cost and larger order quantities, while Hong Kong had better flexibility in production and higher quality
Columbia sportswear were fast growing capturing 23 percent of the adult ski-jacket market and was the main competitor for Sports Obermeyer. Low price high volume per style was their key strategy. And Obermeyer had to deal with the growing market share of Columbia Sportswear.
Implementing effective product strategy. Delivering products to retail stores early in selling season. Providing training to Chinese workers to enhance the quality of the products that are being shipped from china or sourcing some of the high products from South American countries to meet demand fluctuations more quickly and to avoid quota regulations.
Business model of the company
Sports Obermeyer management policy was trust in people and value to customers. Design team of the Obermeyer was responsible for the designs of the Obermeyer products. After the designs were finalized small quantities of samples were produced to be displayed in Las Vegas show for the retailers to look at the samples. The samples were made with actual fabric.
The Raw materials (Shell and Lining Fabrics) were sourced from Textile and accessory suppliers (United states, Japan, Austria, Korea, Taiwan, Germany and Switzerland). The fabrics were dyed and printed by subcontractors. And the fabrics were cut and sewed in manufacturing facilities in Hong Kong and China.
The manufactured products were shipped from Hong Kong and China to Obersport Limited. And from the Obersport limited the finished goods were shipped to Sports Obermeyer and from the distribution centers at Seattle, the finished products were shipped to retailer stores.
Supply chain of the company
Sports Obermeyer sourced their product from Obersport limited with manufacturing lines in China and Hong Kong. Raw materials were bought from textile and accessory suppliers. Cutting Sewing, Dying and Printing were done in China and Honk Kong and were shipped to Obersport limited and from the Obersport limited, the products were shipped to Sports Obermeyer. And from company it was shipped to the retailers and the customers bought the products from the retailers.
Case Study answers
Wally should order depending the highest demand in the forecast. Since Hong Kong has a short manufacturing line and the cost of production is more it is best to order less priced and products that was considered more in demand by the forecast committee
Seduced=3000, Anita=1600, Assault=1250, Daphne =1100, Electra=1000, Entice=750, Stephanie=500, Teri=500, Isis=500, Gail=500. Total= 10750
The measure of risk associated with the ordering policy based on the average forecast during the initial phase of production, the company could be saddled with excess merchandise on one hand by 500 to 1000 quantities and on the other the company may run out of its popular products by 500 to 1000 numbers.
On the off chance that similar requests are put in China, the differences are
Less Manufacturing cost and
Larger quantities were made in China compared to Hong Kong and
Relatively less quality of the products that are being manufactured in China.
The operational change I would prescribe are,
Enhancing quality of the products that are being shipped from China by providing training to Chinese workers
Reducing lead times in Raw material sourcing and production and
Sourcing some of the high products from South America to maintain less inventory and to avoid quota regulations.
5. Long term: Improving the quality of products coming out from china by improving the worker quality and by decreasing lead times China would be the best viable option for long term sourcing.
Short term: For short term sourcing from Hong Kong would be the best option since the delivery of products is faster due to less order quantities and is better in quality compared to China.