Sports Obermeyer Case Study

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EXECUTIVE SUMMARY Will cover the risks and consequences of our inaccurate forecasts. I will address the short-term and long-term implications of sourcing in Hong Kong verses China. Our goal is to deliver complete collections to our retail customers on time in the most efficient and cost effective method possible while at the same time reducing markdown issues and stockout sales losses. Sales - $32.8M 45% Market share Children’s 11% Market share Adult Key – deliver matching collections of products to the retailers at the same time. Deliver early in the selling season. Wally Obermeyer Vice President November 1992 ISSUE IDENTIFICATION IMMEDIATE ISSUES: The current problem is specifically related to the difficulty that the company is facing in balancing the order commitments we need to make against the risk associated with any inaccuracy in our demand forecasts. There has been greater difficulty in matching our supply with the consumer demand, this issue is aggravated by the fact that our cycle time from Product Design to Delivery to the customer (retailers) is about 1 ½ years. This exaggerated time line makes it very difficult to produce accurate sales forecasts, which are not available until after the Las Vegas trade show in March 1993. I have been given the task of figuring out the correct order quantities and manufacturing source for this upcoming selling season. I need to commit to the initial order production of 10,000 units by November 1992. The second production other of 10,000 units can be placed after the Las Vegas fashion show in March 1993. After the Las Vegas show, we will have received about 80% of our retailer’s orders. The immediate issues we are having are caused by a number of systematic issues as outlined below. ENVIRONMENTAL AND ROOT CAUSE ANALYSIS SYSTEMIC ISSUES: 1. Inaccurate Forecasting Production Quantities
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