This document presents information about Obermeyer and its supply chain operations. It discusses Obermeyer's history and market position in 1992. It then describes Obermeyer's order cycle, production planning process, and manufacturing structure. It presents three problems: 1) determining initial production quantities, 2) recommended operational changes, and 3) sourcing strategies for Hong Kong vs. China in the short- and long-term. For problem 1, it recommends initial production quantities for 10 styles based on forecast data. For problem 2, it suggests changes like reducing lead times and increasing flexibility. For problem 3, it analyzes factors for each location and recommends Hong Kong for short-term and China for long-term sourcing.
This document presents information about Obermeyer and its supply chain operations. It discusses Obermeyer's history and market position in 1992. It then describes Obermeyer's order cycle, production planning process, and manufacturing structure. It presents three problems: 1) determining initial production quantities, 2) recommended operational changes, and 3) sourcing strategies for Hong Kong vs. China in the short- and long-term. For problem 1, it recommends initial production quantities for 10 styles based on forecast data. For problem 2, it suggests changes like reducing lead times and increasing flexibility. For problem 3, it analyzes factors for each location and recommends Hong Kong for short-term and China for long-term sourcing.
This document presents information about Obermeyer and its supply chain operations. It discusses Obermeyer's history and market position in 1992. It then describes Obermeyer's order cycle, production planning process, and manufacturing structure. It presents three problems: 1) determining initial production quantities, 2) recommended operational changes, and 3) sourcing strategies for Hong Kong vs. China in the short- and long-term. For problem 1, it recommends initial production quantities for 10 styles based on forecast data. For problem 2, it suggests changes like reducing lead times and increasing flexibility. For problem 3, it analyzes factors for each location and recommends Hong Kong for short-term and China for long-term sourcing.
This document presents information about Obermeyer and its supply chain operations. It discusses Obermeyer's history and market position in 1992. It then describes Obermeyer's order cycle, production planning process, and manufacturing structure. It presents three problems: 1) determining initial production quantities, 2) recommended operational changes, and 3) sourcing strategies for Hong Kong vs. China in the short- and long-term. For problem 1, it recommends initial production quantities for 10 styles based on forecast data. For problem 2, it suggests changes like reducing lead times and increasing flexibility. For problem 3, it analyzes factors for each location and recommends Hong Kong for short-term and China for long-term sourcing.
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The key takeaways are that Obermeyer is a prominent skiwear brand in the US market. It sources materials and produces its products through a network of manufacturers in Hong Kong and China. However, it faces challenges in accurately forecasting demand leading to inventory issues.
Obermeyer has a decentralized manufacturing structure. It sources materials and production through Sport Obermeyer Ltd in Hong Kong which works with various apparel manufacturers like Obersport Ltd and Alpine Ltd located in Hong Kong, Macau and China.
The supply chain of Obermeyer involves textile and accessories suppliers who provide raw materials. The apparel manufacturers cut, sew and assemble the final products which are then distributed by Sport Obermeyer to retailers.
Presented By: GROUP 6
Abhijeet Kumar 13PGP001
Akshay Sharma 13PGP008 Kaiwalya Misra 13PGP025 Hemant Nagalkar 13PGP033 Sharad Kumar 13PGP052 CONTENTS 1 Introduction to Obermeyer 2 Case Facts 3 Order Cycle 4 The Supply Chain 5 Production Planning 6 Question 1: Order placement Dilemma 7 Question 2: Recommended Operational Changes 8 Question 3: Short Term and Long Term Sourcing 9 Conclusion Origins traced to 1947. Over years, Prominent competitor in US skiwear market. 1992: 45% share in Children skiwear and 11% share in adult skiwear market. 1992: estimated sales $32.8 Million. Product Line: Parkas, vests, ski suits, shells, ski pants, sweaters, turtle necks, and accessories. Mens, Womens, Boys, Girls and Preschoolers.
INTRODUCTION Excellent Price/Value relationship. Value is defined as both functionality and style. Target Market: Middle to High End of skiwear market. BRAND HIGHLIGHT MANUFACTURING STRUCTURE SPORT OBERMEYER LTD. OBERSPORT LTD. ALPINE LTD. OTHER SUBCONTRACTOR Hong Kong Macau China Lo Village, China Hong Kong THE SUPPLY CHAIN Textiles & accessories suppliers Apparel Manufacturers Obersport Sport Obermeyer Retailers Produce, dye and print shell and lining fabrics, supply insulation, zippers, thread, logo patches and snaps. Subcontractors, receive production orders and materials from Obersport. Cut, sew and final assembly. Responsible for material and production sourcing in the Far East. It also acts as a distribution centre for materials and finished goods. Product design, production planning and sales. Purchase from Sport Obermeyer and sell products to consumers. ORDER CYCLE The Design Process Sample Production Raw material sourcing & production Retail ordering process Shipment to Obermeyer warehouse Shipment to Retail PLANNING & PRODUCTION CYCLE FEBRUARY 92 MAY 92 JULY 92 SEPTEMBER 92 DEC- FEB 94 APRIL-JULY 93 MARCH 93 NOVEMBER 92 Design Process Concept Finalization Sketches sent to Obersport Designs Finalized Place 1 st
production Order LAS VEGAS SHOW Additional Orders placed Replenishment Order received Inaccurate Forecast Mechanism: In Nov 1992 the company has to place 1 st order with suppliers for 93-94 sales. Based on intuition, experience and sheer speculation. Las Vegas trade show is scheduled in March93.
After Effects: Excess merchandise and had to be sold at deep discounts. Inability to provide the most popular items during the season resulting for loss of sales.
Production Location Dilemma : China or Hong Kong
PROBLEMS 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). PROBLEM STATEMENT 1 EXHIBIT 10 INDIVIDUAL FORECAST Style Laura Carolyn Greg Wendy Tom Wally Gail 900 1,000 900 1,300 800 1,200 Isis 800 700 1,000 1,600 950 1,200 Entice 1,200 1,600 1,500 1,550 950 1,350 Assault 2,500 1,900 2,700 2,450 2,800 2,800 Teri 800 900 1,000 1,100 950 1,850 Electra 2,500 1,900 1,900 2,800 1,800 2,000 Stephanie 600 900 1,000 1,100 950 2,125 Seduced 4,600 4,300 3,900 4,000 4,300 3,000 Anita 4,400 3,300 3,500 1,500 4,200 2,875 Daphne 1,700 3,500 2,600 2,600 2,300 1,600 Totals 20,000 20,000 20,000 20,000 20,000 20,000 Style Average Forecast Standard deviation 2 x Standard Deviation Gail 1,017 194 388 Isis 1,042 323 646 Entice 1,358 248 496 Assault 2,525 340 680 Teri 1,100 381 762 Electra 2,150 404 807 Stephanie 1,113 524 1,048 Seduced 4,017 556 1,113 Anita 3,296 1,047 2,094 Daphne 2,383 697 1,349 Totals 20,000
DETERMINING SPECULATIVE QUANTITY Style Average Forecast () Standard Deviation() Production Quantity (-k) Gail 1,017 388 629 Isis 1,042 646 396 Entice 1,358 496 862 Assault 2,525 680 1,845 Teri 1,100 762 338 Electra 2,150 807 1,343 Stephanie 1,113 1,048 65 Seduced 4,017 1,113 2,904 Anita 3,296 2,094 1,202 Daphne 2,383 1,349 1,034 Totals 20,000 10,618 Using k=1 Style Average Forecast () Standard Deviation() Production Quantity (-k) Gail 1,017 388 241 Isis 1,042 646 0 Entice 1,358 496 366 Assault 2,525 680 1,165 Teri 1,100 762 0 Electra 2,150 807 536 Stephanie 1,113 1,048 0 Seduced 4,017 1,113 1,791 Anita 3,296 2,094 0 Daphne 2,383 1,349 0 Totals 20,000 4,099 DETERMINING SPECULATIVE QUANTITY Using k=2 Since using K=1 gives an estimation of final quantity of 10,618 which is close to our requirements of at least 10,000 we will use this data for placing the production orders.
CONCLUSION Gail Isis Entice Assault Teri Electra Stephanie Seduced Anita Daphne 629 396 862 1,845 338 1,343 65 2,904 1,202 1,034 What Operational changes would you recommend to Wally to improve performance? PROBLEM STATEMENT 2 Company operations: Majorly Innovative Products 95%New products yearly 200 demand error High market mediation Need speed & flexibility
Company Operations:
Key Challenges: Ski Clothes is fashionable product, Its life cycle is short Long time of planning and production activities Uncertain forecasting due to customer demand Fashion taker >> No R&D Reducing number of styles handled and to predict customer demand for individual style.
To create promotion strategy to persuade retailers to order.
OPERATIONAL Changes: PRODUCTION SYSTEM
Increasing production Quality of China to be closed to Hong Kong.
To reduce lead time of production especially the preparation of raw materials.
OPERATIONAL Changes: Lead time reduction Fabric dyer lead time of several months. Dyer has long lead time on greige goods and needed to keep their capacity utilized year round but can change colors overnight. Obermeyer can predict total annual sales and sales of basic colors, but cant predict fashion colors. Fabric Producer Fabric Dyer Cut/Sew Factory Denver Warehouse Retailer undyed greige goods Sport Obermeyer Asia Consumer Solution: Offer dyer one year commitment on greige goods and capacity Dye basic colors early in year and fashion colors late in season on few days notice
OPERATIONAL Changes: SUPPLY CHAIN SYSTEM Increase bargaining power with suppliers by ordering via big supplier that can commit on timeline
Collect stock raw materials which is base on Ski cloth production
Increase distribution channel to a country that have different period of product usage
Increase services level requirements
Establish DC in Seattle to reduce lead time and cost from inland transportation from Seattle to Denver. OPERATIONAL Changes: Hong Kong Seattle Original distribution process: Establish Distribution Center in Seattle without through Denver INFORMATION SYSTEM
Collect the data backward and analyze the demand of the show in Vegas and compare with actual purchase.
Speedup data/information analysis and utilize historical data /Committee forecasting / Research and Trend & Market Movement. OPERATIONAL Changes: How should Obermeyer management think (both short-term and long-term) about sourcing in Honk Kong versus China? PROBLEM STATEMENT 3 TOPIC HONG KONG CHINA Hourly wage HK$30
[ HK$7.8 = US$1 ] RMB 0.91
[RMB 5.7 = US$1 ] Hourly wage Comparison (In US $) 30/7.8= US$ 3.84
~ 25 times more than the Chinese rate 0.91/5.7 = US$ 0.15 Working hours 8 hours/day, 6 days/week
Total : 48 hrs/week 9 hours/day, 6.5 days/week
Total = 58.5 hrs/week Weekly (output/worker) 19 parkas 12 parkas Labor cost / Garment HK$ 75.6 = 75.6/7.8 = US$ 3.69
~ 5 times more than the Chinese rate RMB 4.45
= 4.45/5.7 = US$ 0.78 TOPIC HONG KONG CHINA Line configuration 10-12 people/line
12 x 3.84 = US$ 46
~ 7.5 times more than the Chinese rate 40 people/line
40 X 0.15 = US$ 6 Training Cross-trained Trained for single operation only Min order quantity 600 units in same style 1200 units in same style Repair rate 1-2% ~10% Challenges 1. Wage Rate (very high) 2. Workforce
[ Less quality and cleanliness conscious, Training requirement ] Hong Kong Benefits Faster production More flexible High Quality Less repair rate (1-2%) Better for higher risk designs
Concerns Smaller lot sizes Higher labor cost
CHINA (guangdong) Benefits Lower labor cost Larger lot sizes Better for lower risk designs
Concerns Quality High repair rate / Reliability issue Slower production rate Less flexible
Smaller minimum quantities in Hong Kong yield higher returns even though the unit cost is higher
In China , minimum order quantity is higher, extra need to paid even if small quantity is required.
Extra Products less likely to be sold.
China should be targeted only if the quantity is higher.
It may consume the import quota if produced more and then imported more.