Obermeyer has grown into the business of designing and selling winter wears not without any challenges. For this case, the main issue can be summed up in managing a global supply chain of short life cycle products with a high demand uncertainty.
We can breakdown the main issues into: geographic challenges, information’s timing and flow and creating a responsive supply chain to able to balance inventory and demand uncertainty. First is the information timing and flow, 80% of the initial retailers order was Taken at the Las Vegas show. This numbers are critical because this will drive the selling and left over inventory for Obermeyer. This is driven by the fact that they are selling short life cycles products with very uncertain demands.
Second is the geographic challenges, Obermeyer has business partner, Raymond Tse who oversee production in the Far East. The Hongkong facility has already been established to be a reliable supplier in terms of quality and delivery timing. The new facility is in Guandong, although it is bigger in capacity and cheaper. Its’ worker skill level ad productivity levels is still not stable. Although given that Obermeyer sourced from china and this is giving the company competitive edge in terms of pricing and profitability based on the based cost. It is still limited since the US government has a ruling on how much on company can import from China. Obermeyer has to optimize supply allocation from Hongkong, China and US manufactured garment.
Having a global supply chain network has its pro’s and con’s. Obermeyer has facilities in the Far East enabling him to have lower production cost but at the same time it requires a long lead time and having a long distance.
Figure A. Cumulative lead time from design to selling
It turns out the total cumulative lead-time from design to selling is 27 months and the initial 13 months Obermeyer is more speculating what would sell in the next selling season. And...