The Background; Problem:
Wally Obermeyer got a large amount of forecasting data.
Sport Obermeyer – a fashion skiwear manufacturer
Most critical task – committing to specific production quantities; which the company would offer in coming year.
The task required; careful blending analysis, experience, intuition and sheer speculation.
Strengths of Obermeyer: strong designs
But ultimate success of the product line depends on how well the company was able to predict market response to different styles and colors.
Fashion gamble ; Every fall they start manufacturing well in advance of the selling season , knowing full well that market trends may change in mean–time. Win or lose depends on how accurately we predict each parkas salability
Inaccurate forecasts of retailer demand had become a growing problem
Product variety and increased competition made accurate forecast increasingly difficult
Considerable income was lost each year because of the company’s inability to predict which products become best-sellers.
Two problems - Stock out for popular items, and worst selling items sold at deep discounts, below manufacturing cost.
Second issue: how to allocate production between factories in HongKong and China.
Last year a 3rd has been made in China – all independent contractors. This year plan to make half
Labor cost in China – extremely low. New plant, workers in training.
The Sport Obermeyer case describes the forecasting, planning, and production processes of a global skiwear supply channel. Although the company has a global supply network, most of its critical outwear products are sourced through the Hong Kong-based company Obersport, a joint venture between Sport Obermeyer and a Hong Kong partner. Obersport, in turn, manages supply and production processes in Hong Kong and China. Sport Obermeyer was founded by Klaus Obermeyer. Klaus used an informal approach to demand forecasting and product strategy. Klaus' son...