Obermeyer Case Study

Critical task of sport Obermeyer every year- committing to specific production quantities for each skiwear item the company would offer in the coming year’s line.

Which required carefully blending analysis, experience, intuition and sheer speculation.

Start to make firm commitments for producing 1993-94 line of fashion skiwear with scant info about how market will react to the line

Despite attraction of waiting for market info, further procrastination would delay delivery to the retailers and the late delivery would reduce the exposure consumers would have to obermeyer products.

Even though obermeyer offered strong design, the success depend on how well the company was able to predict market response to different style and colors

Have no feedback from retailers till the Las Vegas Trade show next March, long after the products had entered production.

They face a fashion gamble each year as every fall they start manufacturing well in advance of the selling season, knowing full well that the market trends may change in the mean time.

Inaccurate forecast of retailer demand had become a problem: greater product variety and intense competition had made accurate predictions increasingly difficult. Two scenarios:

-On the end of the season, company was saddled with excess merchandise that retailers had not purchased (worst selling styles were sold at deep discounts sometimes below their mfg cost)

-On the other hand, ran out of mist popular items, making them lose income.

Issue faced-

Asked the committee members- who previously collectively predicted the retailers demand for each item- this time were asked to make individual prediction- discrepancy across different forecasts- Now how to best to make best use of the results to make appropriate production commitment for the coming years line?

How to allocate production between factories in Hong kong and China. Previously entire production in China because of low cost- but now issues concerning quality and reliability also quantity (as China required larger MOQ and stringent quota by US gov than those in Hong kong). How to decide upon a where to source each product?

Raymond Tse – MD of Obersport

Obersport- joint venture to coordinate production of OM products in the far east- responsible for fabric and component sourcing. Material sourced were cut and sewn either in Raymond tse’s own Alpine factories or in independent contractors located in Hong Kong, Macau and China.

Raymond was owner of Alpine Ltd whose 80% production volume came from OM.

Was waiting for the orders for the 1993-94- translate them quickly-any delay would cause problems

Lo Village factory- New facility- new staffs- hoping they had planned appropriately for the orders coming in.

SPORTOBERMEYER

Founded- 1947

Estimated sales- $32.8 (in 1992)

Market Share- 45% (in children’s ski wear)

-11% in adult skiwear

Competitor- Columbia Sports (23% of adult ski wear)

Offered broad line of fashion ski apparel

Five different ‘genders’

Each gender market was further segmented according to price, type of skier and how fashion forward the market was.

Within each “gender” numerous styles were offered, each in several colors and sizes

Competed by offering excellent price-value relationship.

Management believed effective implementation of its product strategy relied on several logistics related activities.

Management approach

Klaus Obermeyer believed company should run “free of tension”

Management style- trust in people, providing value to customers.

Trusted Raymond and relied on production and investment decision to him

This is a family bound business

The founder, Klaus, and MBA son, Wally, had different management approaches

Wally- relied on data gathering and analytical techniques

Klaus- intuitive style depending on extensive industry experience.

THE ORDER CYCLE

Products sold primarily through- speciality ski retail stores, few large department stores, direct mail retailers

In US- most retail sales happened between Sep and Jan- peak sales- dec and Jan

Most retailers requested full delivery prior to the start of the retail season (early sept)

Nearly two years of planning and production activity took place prior to actual sale of products.

THE DESIGN PROCESS

For the 93-94 line, design team and senior mgmt. attended annual int. outdoorswear show in Germany- they believe European are more fashion forward and current European styles are good indicator of future American fashion- attended las vegas show in March- decided upon the concepts in May 92- sketch sent to obersport for prototype in July- refined design based on prototype by sept 92.

SAMPLE PROCESS

Obersport produce samples of final design- each style/color combination for the sales force to show to retailers- along with prototype actual fabric also used for final production. Sales rep show samples to retailers during las vegas show and throughout rest of the spring.

RAW MATERIAL SOURCING AND PRODUCTION

Obersport handled fabric and component requirements for the initial production order (typically half of the annual production)

Important that Obersport place dyeing/printing instruction and component orders quickly as some suppliers’ lead time was 90 days.

Cutting and sewing