Case Study: Sports

Obermeyer
Ltd.
Group 3: Abdollah
Mohammadi
Candice Benson
Brandon Bell
Praful Rapariya
October 6, 2015

AGENDA

Background
About Sports Obermeyer
Obermeyer Supply Chain Management
Challenges in Supply Chain
Obermeyer Order cycle
Production planning
Lead time
Operational recommendation

BACKGROUND

Established in Aspen Colorado by Klaus Obermeyer in 1947.

Immigrated from Germany to be instructor at Aspen ski school.

Inspired by students to make better clothes for skiing

conditions.

Responsible for making the 1st goose down vest and ski brake

SPORTS OBERMEYER LTD.

They produce parkas, ski jackets, ski

pants, sweaters, turtlenecks and other
accessories.

Products offered in five different gender

men, women, boys, girls and preschoolers.

In 1992, Obermeyer held 45% of the

children skiwear market.

Sales in 1992 reached almost $33 million.

11% of the adult skiwear market.

Over 85% of product sold to customer to

use during skiing

Manufacturing Subsidiary Obersport, Ltd

OBERSPORT LTD.

Established in 1985 by joint venture Klaus Obermeyer and Raymond

Tse.

Coordinated Sport Obermeyer production in the far east.

Responsible for fabric and component sourcing.
Material sourced was produced in Alpine. Ltd owned by Raymond.
Manufacturing plants located in Hong Kong, Macau and China.

Obermeyer Supply Chain

Management
Supply Chain Process Flow
Source

Textiles and
Accessories
Suppliers

Make

Apparel
Manufacturers

Move

Obersport

Store

Sports
Obermeyer

Retailers

OBERMEYER CHALLENGES IN SUPPLY

CHAIN
Challenges

Long Lead Time

Inaccurate forecast of
retailers demand

Production allocation
difficulties in China
and Hong Kong

OBERMEYER ORDER CYCLE 1993-1994

LINE
Production
Planning
(Oct 92 Jan 93)

Design Activity
(Feb-Sep)- 92

Design process
begins
Las Vegas show
for 92-93 line
Concept finalized
Sketches send to
Obersport
Prototype
production
Design finalized

First production
order with
Obersport.
Calculate
requirement
Order
components
Print dye orders
Sample
production

New Line
Promotions
(Jan-Mar)-93

Las Vegas Show

for 93-94 line.
80% of retailers
order received.
Second
production order
with Obersport.
Full scale
production.

Shipping and
Handling
(June-Aug)-93

First orders
through ships
( June-July)
Addition orders
through air freight
(Aug)

Retail Activity
(Sep 93- April 94)

Orders received in
Aug

Peak selling
period Dec and
Jan.

Discount period
start March.

LEAD TIME

What is the production lead time of ski wear

10 months: February to August

What are the factors that contribute to lead times

being so long?

Chinese New Year

Assembly line production

LEAD TIME CONT.

What are the operational and competitive results of

these long lead times?

Loss of sales if dates are not met

Change of tastes

p://www.obermeyer.com/womens-ski-jackets

PRODUCTION PLANNING

10 style of women parka

At least 10,000 units of initial production
All made in Hong Kong
How many of each style should be
ordered?

Forecast Data
Style
Seduced

4,017

1,113

Assault

2,525

680

Electra

2,150

807

Entice

1,358

496

Anita

3,296

2,094

Daphne

2,383

1,394

Isis

1,042

646

Teri
Stephani
e
Gail

1,100

762

1,113

1,048

1,017

388

PRODUCTION PLANNING
(NO MIN. ORDER QUANTITY)

Normal Distribution of Demand Forecast Data

Production

?
=1.0
6

Style

Prod. Q.

Over. Pr.
50.00%
15.87%
2.28%

Seduced

4,017

1,113

4,017

2,904

1,791

Assault

2,525

680

2,525

1,845

1,165

Electra

2,150

807

2,150

1,343

536

Entice

1,358

496

1,358

862

366

Anita

3,296

2,094

3,296

1,202

Daphne

2,383

1,394

2,383

989

Isis

1,042

646

1,042

396

2,836
1,804
1,294
832
1,075
904
357
292

Teri
Stephani
e
Gail

1,100

762

1,100

338

1,113

1,048

1,113

65

1,017

388

1,017
20,00

629

241

605

PRODUCTION PLANNING
(WITH MIN. ORDER QUANTITY)

Reminder: All parkas made in Hong Kong

(m=600)

General Idea: to produce high demand or

low demand styles so that we are pretty sure
either there will be stock out or overstock.

Three risk categories and risk factor:

Category 1 (Safe):
Category 2

Category 2 (Pretty Safe):

Category 3 (Not Safe):

Category 3

Category 1

PRODUCTION PLANNING
(WITH MIN. ORDER QUANTITY)
Calculatin
g Risk
Parameter
s:

Forecast Data

Risk Parameters

Mean

Std. Dev.
()

Risk
Category

Safety Factor ()

Seduced

4,017

1,113

2.53

Assault

2,525

680

1.95

Electra

2,150

807

1.18

Entice

1,358

496

1.00

Anita

3,296

2,094

0.85

Daphne

2,383

1,394

0.32

Isis

1,042

646

0.00

Teri
Stephani
e

1,100

762

0.00

1,113

1,048

0.00

Style

PRODUCTION PLANNING
(WITH MIN. ORDER QUANTITY)

After sorting the styles based on in decreasing order we have the following assumptions:

n is the case of the first n styles of parka

= min in case n
is the standard deviation of the style i

Start

n=1
i=1

i=1

NO

i=n?
NO

YES

YES

end

PRODUCTION PLANNING
(WITH MIN. ORDER QUANTITY)

Results from running the heuristic for all the cases:

Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 Case 8 Case 9
1

600

2
3
4
5
6
7
8
9
10
Total:

600

Case
10

1,248

2,107

2,303

2,472

3,062

3,417

3,417

3,417

3,417

600

1,125

1,244

1,348

1,708

1,925

1,925

1,925

1,925

1,848

600

3,831

742
600

4,890

865
1,293 1,550
1,550
1,550
1,550
919
2,029 2,696
2,696
2,696
2,696
600
1,339 1,783
1,783
1,783
1,783

600
758
758
758
758

600
600
600
600

600
600
600

600
600

600
6,204 10,032 12,729 13,329 13,929 14,529

OPERATIONAL RECOMMENDATIONS

What operational changes would you recommend to Wally to improve

performance?

Cross Training

Switching which Jackets are Produced in which warehouse

Consider implementing the training policies you have in place in Hong Kong in China

Let the risk factor determine which jacket to produce in which location

Address your variability in your lead times for receiving materials

Make an ordering Schedule

STRATEGIC OPTIONS

How should Obermeyer management think (both shortterm and long-term) about sourcing in Hong Kong
versus China?

Short Term: Let your risk factor determine where certain

products should be produced

Long Term: (While working on your short term plan) Try to

implement a cross training regime for your Chinese production
center

References:
http://www.obermeyer.com/womens-ski-jackets

Thank You