Sport Obermeyer

Situation

Sport Obermeyer is a family-owned business in the fashion ski apparel industry. They specialize in ski apparel for the mid to high-end market, which consists of fully coordinated outfits with parkas as the centerpiece. They break their product market into 5 genders: men, women, boys, girls and preschoolers. Within each gender they further categorize according to customer preferences.

The company’s product strategy rests on offering fully-matching collections, and delivering to retailers early in the season to assure good product placement and ample floor space. Currently they can boast a 45% share of the market for the children’s section, and 11% for adults.

Sport Obermeyer is facing difficulties from its outdated supply chain. They suffer long lead times, due to supplier capacity constraints which places a heavy burden on forecasting. Forecasting in this ever-changing market is a significant challenge, which when is inaccurate costs the company in terms of below cost inventory disposal and lost sales revenues, which may also further reduce market share.

Due to the dynamics of the industry, having both uncertain supply and demand, usage of an “agile” supply chain is the recommended course of action. An agile supply chain means that Sport Obermeyer needs to build agilty, adaptability and alignment with suppliers within its system. Achieving this goal will reduce lead times, which will allow the company to react more quickly to market demands and reduce the need for strenuous forecasting almost a year ahead of delivery to retailers. The suggested improvements fall into three categories: operational & strategy improvements, forecasting improvements and supplier structure.

Operational & Strategy Improvements

First products need to be redesigned with input from the suppliers. Different parts may be standardized, which will reduce complexity and cost. For instance, standardizing small finishing items such as zippers can reduce lead-time up to 60 days. Additionally, using the same lining within all women’s parkas will have a similar effect. The manufacturing suppliers as they are intimate with the process, their capabilities and the raw goods suppliers will be able to offer cost & time saving suggestions.

Second in order to properly exploit the market, the “Make to Order” postponement model should be utilized, where fabrication does not start until the majority of orders have been received, which in Sport Obermeyer’s case is after the Las Vegas show. Once these orders have been made they have a good track record of forecasting the remaining quantities, which will reduce the need for long-term forecasting.

Third suppliers should be required to hold, small, inexpensive, standardized finishing items in stock so that they will have the ability to finish items quickly on demand. A perfect example of one of these sorts of items is zippers and buttons.

In order to achieve adaptability, different supply chains should be utilized for different product categories so that they can be streamlined. Additionally, staff in the Chinese plant should be trained so that each worker can do multiple functions, which will allow more flexibility.

To align the manufacturing suppliers with Sport Obermeyer, an IT system should be implemented so that they can share real-time information about forecasting and supplier orders. This should also speed up the process so that perhaps replenishment orders may also be made to order rather than filled out of excess stock. Also a bonus program based jointly off of on-time deliveries and process improvements will allow Sport Obermeyer