Obersport

Session 3 - Case Study

Sport Obermeyer, Ltd

Matching Supply and Demand & Cycle Time Reduction

Statements of Issues

Sport Overseer is trying to make a critical decision about placing an initial order in a very uncertain environment. Last year Columbia Sportswear, a competitor of Sport Obermeyer, managed to capture 23% of the Adult Ski-Jacket market. This, along with the ever increasing varieties of products, as well as, no clear indication of what the end consumers reaction to the line will be, makes this a very careful blending of analysis, experience, intuition and sheer speculation when making this decision.

The Fashion Industry is extremely competitive, as well as trendy. Sport Obermeyer joined venture with Obersport to coordinate production in the Far East.

Last year Sport Obermeyer had one third of its' parkas production in Chinese factories. This year the company planed to produce one half of its' parkas in China. The labor costs in China are extremely low, yet there is still concerns about quality and reliability of Chinese operations. Also when Obermeyer places an order at the Chinese factories the minimum quantities are much higher then those in the Hong Kong factories. Another consideration of producing one half of their production in China is the stringent quote restriction put on by the U.S. government.

Currently the planning and forecasting for production looks like this. Nine months prior, February '92, to placing the initial order with Obersport, the design team begins new designs. In March of '92 - the Las Vegas show for the '92 - '93 product indicated how the market is responding to this year's line. By May '92 the design concepts are finalized. July '92 sketches of the designs are sent to Obersport for the production of a prototype. At this point Obersport places an order to secure the greige fabric for the annual production of Obermeyer products. September '92 the designs are finalized and by October '92 and sample products are manufactured so the sales force can show to Retailers.

Concurrent to the sample production, Obersport determines the fabric and component requirements for Sport Obermeyer initial production order. This is