Sport Obermeyer: Economic Production Quantity

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Analysis

The Company
Sport Obermeyer (SO), Ltd. Is a high end fashion design and merchandizing company based in Aspen Colorado. It was, founded by Klaus Obermeyer, a German ski instructor. SO aims to provide U.S skiers with the samehigh quality ski wear that is protective and , stylish and comparable in standards to the clothing and equipment available in Germany. Over the years, the company developed grew into a dominant competitor force in the United States skiwear market with estimated sales of $32.8 million in 1992. The company held a commanding 45% market share of the children’s skiwear and 11% market share of the adult skiwear market. SO competesing with Columbia Sportswear which held 23% market share in this the adult skiwear segment. Obermeyer competed by offering an excellent price/value relationship, where value was defined as both functionality and style and targeted the middle to high end of the skiwear market. Although the company has a global supply network, most of its critical products are sourced through Hong Kong based company, Obersport. In 1985, Klaus Obermeyer teamed up with Raymond Tse to establish Obersport Ltd. This joint venture was used to coordinate production of Sport Obermeyer products in the Far East. Obersport manages supply and production operations in Hong Kong and China. Obersport was responsible for fabric and component sourcing for Sport Obermeyer’s production. Materials sourced were cut and sewn either in Raymond Tse’s own “Alpine” factories or in independent subcontractors located in Hong Kong, Macau, and China. Raymond was owner and president of Alpine Ltd., which included ran skiwear manufacturing plants in Hong Kong as well as a recently established facility in China. Sport Obermeyer’s orders represented about 80% of Alpine’s annual production volume. Management Approach

Management of the company was based on Klaus’s personal philosophy that the skiwear industry should be left to people who were comfortable with an uncertain bottom line. It emphasized trust in people and providing value to customers. Some of the decisions were guided by judgment, extensive industry experience and intuition. However, when In contrast, Klaus’s son son Wally Obermeyer, a recently joined joined the company as Vice President, his has a management style was quite different than his father’s. With an MBA degree from Harvard Business School under his belt, Wally that relied more heavily on formal data-gathering and analytical techniques for forecasting demand and optimizing the supply chain management, in contrast to his founder father Klaus who was heavily informed by his extensive industry experience.. Products offered

Obermeyer offers a broad line of fashion ski apparel, including parkas, vests, ski suits, shells, ski pants, sweaters, turtlenecks, and accessories. Parkas are considered the most critical design component of a collection; the other garments were fashioned to match the parkas’ style and color. To attract the vast majority of the skier population, their products were offered in five different genders: men’s, women’s, boys’, girls’, and preschoolers’. The company segments each “gender” market according to price, type of skier, and how “fashion-forward” the market was. Within each “gender”, numerous styles are offered, each in several colors and a range of sizes. Functionality was critical to the serious skier. and hence Obermeyer products offered warm, waterproof and stylisht gear, yet that was comfortable and did not compromisesing on the wearer’s movement.skier’s movement and comfort while wearing these. Order Cycle

Due to the seasonal nature of the demand, retail sales of skiwear occurred between September and January, with peak sales in December and January. Most retailers requested full delivery of their order prior to the start of the retail season. To meet this demand, the concept, design and manufacturing has to start two years ahead of time to complete manufacturing in time...
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