COMPANY History:Skiing is a celebration of lifeKlaus Obermeyer1947: Klaus Obermeyer, a German immigrant began teaching at the Aspen Ski School

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

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

PRODUCT & Segmentation:

PRODUCT Variety:

The Obermeyer supply chain stretches from Asia to AspenSUPPLY CHAIN Process:Raw MaterialsFinished goods

Design Process Las Vegas Concept Sketches sent Designs begins Show Finalise to Obersport Finalised

Feb 92 Mar 92 May 92 Jul 92 Sep 92Nov 92 Mar 93 Apr 93 - Jul 93 Dec 93-Feb 94Place 1st Production Las Vegas Additional Replenishment Order with Obersport Show orders received orders received

Prototype, Sample ProductionFull scale productionPLANNING & Production Cycle:

Fabric ProducerFabric DyerCut/Sew FactoryDenver WarehouseRetailerundyed greige goodsAsiaConsumerComponentsGreige Shell FabricFinishing of Shell Fabric (Dying & Printing)Finished Lining FabricInsulationZippersThreadLogo Patches, Drawcords, Hang Tags, etc.Snaps (undyed)Dyeing of SnapsProcurement lead time45 90 days45 60 days45 60 days2 3 weeksStandard (HK) 60 days, Custom (JP) 90+ days30 days15 30 days1 2 months15 30 days6 wk6 weeks6 wkPRODUCTION Process:

Factories in Hong KongSeattle warehouse800 Ski RetailersProduct SketchesForecast CommitteeForecastsOrder 20% in Apr-Jun 93Order 80% in Mar 93Retailers order in Apr-Jun 93Denver warehouse6 weeksORDERING & SHIPMENT Process:

SALES & REPLENISHING Process:Peak SalesAug 92 Sep 92 Oct 92 Nov 92 Dec 92 Feb 93 SalesRe-SalesStock outs (+24 % of whole sale price)

Market downs( -8% of wholesale price)

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

3. 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?

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

Differences between production in HK and ChinaInventoryTotal CostOperation TimeQuality (% Repair)

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

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

Stock outs (-24 % whole sale price)Market downs( -8% of wholesale price)(Old) designsHigh inventory holding cost-Unable to fully profit from hit productsWhats the result if demand forecasting uncertainty?

Forecasts are always uncertainWhy does risk happens ?Demand AverageStandard deviationStandard deviation

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

2. Rather than producing one joint forecast ,each member of the purchasing committee produces his/her own forecast .

Obermeyers Buying committee

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

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

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

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&DKEY Problems:

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.OPERATIONAL Changes:

Lead time reductionFabric 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 overnightObermeyer can predict total annual sales and sales of basic colors, but cant predict fashion colors

Solution: Offer dyer one year commitment on greige goods and capacityDye basic colors early in year and fashion colors late in season on few days notice

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

OPERATIONAL Changes:

Hong KongSeattleOriginal distribution processEstablish Distribution Center in Seattle without through Denver

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.OPERATIONAL Changes:

5. 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?

Production OptionsHong KongFasterMore flexibleHigh / Reliable Quality

ConcernSmaller lot sizesHigher labor cost

China (Guangdong, Lo Village)Lower labor costLarger lot sizes

ConcernQuality & ReliabilitySlowerLess flexible

Where is better?Short termLong termHong KongChina

Klaus ObermeyerThank you

Womens Collection

Youngs Collection

Dharma Jacket - 51103

Competitors The Jacobs Corporation

founded by David L. Jacobs Biography

Competitors The North Face, Inc.

: subsidiary of VF Corporation

Competitors Burton Snowboards founded by Jake Burton Carpenter Innovative Burton outerwear performance meetsleading Motorola Bluetooth technology

Manufacturing Structure:

The Supply Chain

Obermeyers planning calendar

Product TransportationHong Kong WarehouseSeattleObermeyers Denver Warehousethen transported by trucksgoods produced in August were air-shippedRetailersorders were finally shipped via small-package carriers such as UPS at the end of August 1993Cost $5 per parkaproducts made in June and July were transported by ships

RetailersSpecialty Ski-Retail StoresDepartment StoresDirect Mail RetailersConsumersMost sales occur between September and JanuaryDelivering products by early SeptemberSport Obermeyer

SUPPLY CHAIN Management:JanDecJanDecAprJulOctAprJulOct19921993Committee forecastMunich show & Las Vegas show Design processProduction Process IOrdering process IOrdering process IIPeak SalesShipment processApprovedProduction Process IIReplenishingprocess II1994JanAprJulRe-SalesOriginal planning & production cycle

SUPPLY CHAIN Management:JanDecJanDecAprJulOctAprJulOct19921993Munich show & Las Vegas show Design processProduction Process IOrdering process IOrdering process IIPeak SalesShipment Process IApprovedProduction Process IIReplenishingprocess1994JanAprJulRe-SalesRecommended planning & production cycle Committee forecast Data Analysis & Research IS (Trend / Movement)

Forecasting IForecasting IIForecasting IIIShipment Process II

*Products* Scale of time line*** show solution* show solution* * premium skiwear suits Obermeyer brand Spyder Jacobs Corporation. David L. Jacobs Biography Jacobs Klaus Obermeyer Obermeyer * The North Face, Inc. VF Corporation brand Lee, Wrangler, JanSport, * brand : Burton Snowboards Jake Burton Carpenter snowboard product lines skiwear * show presentation slides*Script