COMPANY History:
1947: Klaus Obermeyer, a German immigrant began teaching at the Aspen Ski School

“Skiing is a celebration of life”
Klaus Obermeyer

COMPANY History:
1985: Obersport; a joint venture in Hong Kong, the company began to increase productivity to meet their new demands.

a number of contractual ventures were added and a new complex in Lo Village Guangdong China .COMPANY Network: Recently.

PRODUCT & Segmentation: .

PRODUCT Variety: .

SUPPLY CHAIN Process: Textile and Raw Accessories Materials Suppliers Apparel Manufactures Obersport Finished Retailers goods The Obermeyer supply chain stretches from Asia to Aspen .

Sample Production Design Process begins Las Vegas Concept Show Finalise Sketches sent Designs to Obersport Finalised Nov 92 Full Mar 93 scale Apr 93 .Jul 93 production Additional orders received Dec 93-Feb 94 Place 1st Production Las Vegas Order with Obersport Show Replenishment orders received .PLANNING & Production Cycle: Feb 92 Mar 92 May 92 Jul 92 Sep 92 Prototype.

Drawcords. Custom (JP) 90+ days 30 days 15 – 30 days 1 – 2 months 15 – 30 days . etc. Hang Tags. Snaps (undyed) Dyeing of Snaps 6 weeks Consumer Procurement lead time 45 – 90 days 45 – 60 days 45 – 60 days 2 – 3 weeks Standard (HK) 60 days.PRODUCTION Process: Asia Fabric Producer Cut/Sew Factory 6 wk Fabric Dyer 6 wk Denver Warehouse Retailer undyed greige goods Components Greige Shell Fabric Finishing of Shell Fabric (Dying & Printing) Finished Lining Fabric Insulation Zippers Thread Logo Patches.

ORDERING & SHIPMENT Process: 6 weeks Factories in Hong Kong Order 20% in Apr-Jun 93 Seattle warehouse Order 80% in Mar 93 Denver warehouse Forecasts Product Sketches Forecast Committee Retailers order in Apr-Jun 93 800 Ski Retailers .

SALES & REPLENISHING Process: Aug 92 Sep 92 Oct 92 Nov 92 Dec 92 Sales Feb 93 Peak Sales Stock outs (+24 % of whole sale price) Re-Sales Market downs( -8% of wholesale price) .

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Ignore price differences among styles in your initial analysis? . Assume that all of 10 styles in the sample problem are made in Hong Kong and that Wally’s initial production commitment must be at least 10. Using the sample data given in Table 3-19 .000 units.1. make a recommend for how many units of each style Wally should make during the initial phase of production.

Repeat your methodology and assume now that all 10 styles are made in China. What is the difference (If any) between the two initial production commitments? .3.

& 3. Comparison units of each style when produced in HK and China .1.

Differences between production in HK and China • Inventory • Total Cost • Operation Time • Quality (% Repair) .

1. & 3. The differences between production in HK and China .

Can you come up a measure of risk associated with an your ordering policy? This measure should be quantifiable.2. .

What’s the result if demand forecasting uncertainty? -Stock outs (-24 % whole sale price) -Market downs( -8% of wholesale price) -(Old) designs -High inventory holding cost -Unable to fully profit from hit products .

Why does risk happens ? Forecasts are always uncertain Standard deviation Standard deviation Demand Average .

Based on historical data .Variability of demand .Past forecast error .How can we assessing forecast certainty? 1 .

Obermeyer’s Buying committee .2. Rather than producing one joint forecast .each member of the purchasing committee produces his/her own forecast .

The deviation in views is good estimator of forecast reliability Table of standard deviation vs Coefficient of variation .3.

Reserve later production Capacity (reactive capacity) for Daphne and Anita as demand become more apparent .Using Early production Capacity (Speculative capacity) for Assoult and Seduced .4. How is this information helpful ? “Risk –based production planning” .

4. What operational changes would you recommend to Wally to improve performance? .

KEY Problems: • 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 .

OPERATIONAL Changes: • 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.

Lead time reduction Asia Fabric Producer Cut/Sew Factory Denver Warehouse Fabric Dyer Retailer undyed greige goods Consumer Sport Obermeyer • 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 can’t predict fashion colors .

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 • Increasing bargaining power with suppliers by ordering via big supplier that can commit on timeline • To collect stock raw materials which is base on Ski cloth production .

OPERATIONAL Changes: •Increasing 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 .

Original distribution process Seattle Hong Kong Establish Distribution Center in Seattle without through Denver .

OPERATIONAL Changes: Information system • Collect the data backward and analyze the demand of the show in Vegas and compare with actual purchase. . • Expedition of data and information and utilize historical data / Committee forecasting / Research and Trend & Market Movement.

How should Wally think (both short term and long term) about sourcing in Hong Kong versus China? What kind of sourcing policy do you recommend? .5.

Production Options • Hong Kong – Faster – More flexible – High / Reliable Quality • China (Guangdong. Lo Village) – Lower labor cost – Larger lot sizes • Concern – Smaller lot sizes – Higher labor cost • Concern – Quality & Reliability – Slower – Less flexible .

Where is better? Short term Long term Hong Kong China .

Thank you Klaus Obermeyer .

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