Sport Obermeyer, Ltd.

Case Study, Facts and Analysis

Group 3 and Group 6
Logistics & Supply Chain Management (LSCM-3)
XLRI Jamshedpur
Case Study Facts
 Sports Obermeyer was founded in 1947 by Klaus Obermeyer.
 It is a Fashion skiwear manufacturer. It offers wide variety of ski
apparels such as parka, vest, , ski suits, sweaters etc.
 The company estimated US $32.8 million sales for year 1992.
 It had 45% market share in children’s skiwear and 11% in adult
skiwear.
 Obersport is joint venture between Raymond Tse and Klaus
Obermeyer.
 Broad line of fashion ski apprael, parkas, vests, ski suits, shells, ski
pants, sweaters, turtlenecks and accessories.
 Major production sourcing - Hong Kong and China
Case Study Facts
 Company Structure
 Obersport Sports  Obermeyer Ski
Retail Stores  Direct Mall Retailers 
Departmental Stores
 Important Persons
 Klaus Obermeyer- Founder, Sport Obermeyer

 Wally Obermeyer- Vice President, Sport Obermeyer-HBS Graduate

 Raymond Tse - Owner and President, Alpine MD Obersport Ltd.

 Shiu Chuen Tse - Owner and President, Alpine MD Obersport Ltd.

Organizational Structure
Sports Obermyer

Obersport Ltd

Sub Con Operations -

Alpine HongKong
China/HK/Macau
Contractor

LaoVillage - China
Products Portfolio
 Men’s Collection
◦ Fred, Rex, Beige and Klausie
 Women’s Collection
 Boy’s Collection
 Girl’s Collection
 Preschooler’s Collection
Typical Supply Chain
• Textile and Accessories
1 • RM/Zippers

• Apparel Manufacturing
2 • Cut/Sew/Dying/Printing

• Obersport
3 • Supervise production, Manage Operations, Quality Checks

• Sports Obermayer
4 • Forecast Design and Ship to customers

• Retailers
5 • Customers and Market Feedback
Typical Supply Chain
Timestamps of events

Additional Orders Ship to Seattle

Design Feb 1992
– April – July 1993 June – July 1993

Prototype July
Las Vegas Show Full Delivery to
1992 – Design
March 1993 – 80% retailers Sept
Sent to
orders received 1993
Obersport

Design Finalized Production Nov Replenishment

Sept 1992/ Sample 1992/ 1st order to Order Dec 1993
Production Obsersport – Feb 1994

In US – most retail sale – Sept to Jan with peak in Dec and Jan
Typical 2 years cycle time  planning to final sale.
Typical Challenges
 Inaccurate forecast leading to excess production of non-popular products
 Inaccurate forecast of retailer demand
 Panels discussions/ consensus on demand forecasting
 Greater product variety and intense competition has made prediction difficult
 Shortage of popular products v/s excess inventory of non moving items
 Where to manufacture - Hong Kong or China?
 Raw material sourcing – long lead times
 Operational Challenges
 US -Quota Sanctions for importing garments from China to US
 Competition from competitors
 Quality and reliability of products produced in China v/s Hongkong
 Higher labor cost in Hong Kong but skill level of Hong Kong is much better than
China
 Raw materials procured from suppliers from different countries increases lead
time
Supply Chain Challenges and the
Impact
• Difficult to predict retailer • Variety of Parkas had changed
demands over time making it difficult to
• Demands were predicted predict the demand.
based on the different • Products offered in five
committee member’s forecasts different genders (men,
• Simple Average methods of women, boys, girls and
preschoolers).
forecasting

Greater
Inaccurate
Product
Forecasts
Variety

Inaccurate Intense
Predictions Competition
• Fashion Gamble • Columbia Sportwear a
• Prediction of market response lower-price, high-volume-per-
to different styles and colors style competitor had
was the Key increased its sales rapidyly
during the last 3 years and
captured about 23% of the
adult skijacket market..

 Where to produce? Hongkong or China?

 Raw Material sourcing – long leadtimes.
 US – Quota sanctions for importing garments to US.
 Quality and reliability of products producted in China.
Supply Chain Challenges and the
Impact

Scenario -1 Scenario – 2

Company was held with Company ran out of its

excess inventory of most popular items
styles and colors that which were more
retailers had not desirable.
purchased
Considerable income
Styles with worst selling was lost each year
records were sold at because of the
deep discounts often company’s inability to
well below their predict which products
manufactured cost would become best
sellers.
Where to produce ?
Where to produce ?
 Typical Forecasting Pattern
Individual Forecasts
Style Price Laura Carolyn Greg Wendy Tom Wally Average Std. Dev 2X Std Dev

Gail $ 110.00 900 1,000 900 1,300 800 1,200 1,017 194 388

Isis $ 99.00 800 700 1,000 1,600 950 1,200 1,042 323 646

Entice $ 80.00 1,200 1,600 1,500 1,550 950 1,350 1,358 248 496

Assault $ 90.00 2,500 1,900 2,700 2,450 2,800 2,800 2,525 340 680

Teri $ 123.00 800 900 1,000 1,100 950 1,850 1,100 381 762

Electra $ 173.00 2,500 1,900 1,900 2,800 1,800 2,000 2,150 404 807

Stephanie $ 133.00 600 900 1,000 1,100 950 2,125 1,113 524 1,048

Seduced $ 73.00 4,600 4,300 3,900 4,000 4,300 3,000 4,017 556 1,113

Anita $ 93.00 4,400 3,300 3,500 1,500 4,200 2,875 3,296 1047 2,094

Daphne $ 148.00 1,700 3,500 2,600 2,600 2,300 1,600 2,383 697 1,394
Total 20,000 20,000 20,000 20,000 20,000 20,000 20,000
Possible Solutions
 Obtain individual forecasts from managers, Use wtd agvg rather than simple avg.
 Estimate the risk associated with early production of each style
 Overcome minimum production quantity issue by having a production unit
 Examination of demand from previous years forecast
 Use historic data from previous years to better determine future trends
 Improve quality of labor by cross training labors in China
 Increase production capacity by increasing sub contractors
 Decrease lead time by obtaining raw materials from geographically closer locations
to ensure timely delivery
 Reduce the number of styles - lower complexity of planning –lower risk profiles
 Ensure production lead times decreased, as the preparation of raw materials takes
a long time.
 Dyers could be offered a long-term contract regarding Greige goods
Possible Solutions

 SRM with critical supplier – helps to meet tight times and requested demands
 Gather data using strategic marketing capability to better improve promotional
marketing strategies
 Operational efficiencies improvement e.g dye basic colors early in the year and
fashion colors later in the season
 US Distribution center on the West Coast (Seattle or LA). Further, introduce drop
shipping., increase distribution channels and service level requirements
 Where possible, obtain feedback from retailers prior to the Vegas show