Sports Obermeyer

Topics: 1992, Lead time, 1993 Pages: 13 (1311 words) Published: November 1, 2014
CASE REPORT 1

Sports Obermeyer
Supply Chain Management
MBAD 6208
Dr. Xiulie HE

Erhan TURKURER
Joanne ZHANG
Varun JOSHI
Yue CUI

FALL 2014

FALL 2014 [SPORTS OBERMEYER]

Table of Contents
1. What is the lead-time for production of skiwear? What are the factors that contribute to lead times being so long? What are the operational and competitive results of these long lead times?
2. Using the sample data given in Exhibit 10, make a recommendation for how many units of each style Wally Obermeyer should order during the initial phase of production. Assume that all ten styles in the sample problem are made in Hong Kong, and that Obermeyer's initial production commitment must be at least 10,000 units. (Ignore price differences among styles in your initial analysis.)

3. What operational changes would you recommend to Wally to improve performance? 4. How should Obermeyer management think (both short-term and long-term) about sourcing in Hong Kong versus China?

1

FALL 2014 [SPORTS OBERMEYER]

1. What is the lead time for production of skiwear? What are the factors that contribute to lead times being so long? What are the operational and competitive results of this long lead time?
1.1

Lead time

Lead time in Sport Obermeyer was pretty long. We will look into four different processes.








Design: The design process started as early as February 1992 for season 1993-1994. It normally would take three months to finalize the design concepts. The company started prototype production in August, six months after the design process started. Around

September, designs were finalized. Sample production would start in October. Design process took about 9 months.
Production: Prototype production was in August 1992. In October, the company started sample production. About four months after the sample production, company would start full scale production around January 1993. The full scale production would end in end of August 1993. The production process took about 10 months from sample production to full scale production.

Receiving Orders: The initial order received around November 1992. Second order was from March 1993—Las Vegas Trade Show. The company normally would receive 80% orders of its annual production volume.

Supply Orders: After receiving the first order in November 1992, production department would calculate fabric and component
requirements and place the first production orders of components, print and dye. Second order would happen after the trade show— receiving major orders from retailers around March 1993.

Above all, the lead time for Sport Obermeyer for season 1993-1994 was 9 months: from the company received its first order in November 1992 to 93-94 line delivered to retailers in August 1993.
1.2

Factors cause long leading time
 Poor forecasting method: using old ways, Buying Committee, to gather forecast information; also the discrepancies across different committee members’ forecasts were pretty big;
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FALL 2014 [SPORTS OBERMEYER]




1.3

Transportation distance: the two production facilities located in Hong Kong and China—long distance leads increased transportation costs and long delivery time; also it would be hard to quick react to “last minute” demand;

Multiple variables: seasonal demand and multiple production lines increased difficulties making production plan;

Long lead time’s problem
 Increase the difficulties of production plan: will increase costs for ordering up-stream supplies; sometimes might encounter shortage of supplies due to short time ordering;
 High demand of production capability: multiple production lines also require much more set-up time for each production and bigger production capability;
 Less competitive: hard to get the “real time” information to produce the right products for the market;
 Low profits: long lead time increase supply chain costs;  Low customer satisfaction: long delivery time to retailers...
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