COMPANY History:

Skiing is a celebration of life

Klaus Obermeyer
1947: 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 Aspen
Textile and
Accessories
Suppliers
Apparel
Manufactures
Obersport
Retailers
SUPPLY CHAIN Process:
Raw
Materials
Finished
goods
Design Process Las Vegas Concept Sketches sent Designs
begins Show Finalise to Obersport Finalised



Feb 92 Mar 92 May 92 Jul 92 Sep 92

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

Prototype, Sample Production

Full scale production
PLANNING & Production Cycle:
Fabric
Producer
Fabric
Dyer
Cut/Sew
Factory
Denver
Warehouse
Retailer
undyed greige
goods
Asia
Consumer
Components
Greige Shell Fabric
Finishing of Shell Fabric (Dying & Printing)
Finished Lining Fabric
Insulation
Zippers
Thread
Logo Patches, Drawcords, Hang Tags, etc.
Snaps (undyed)
Dyeing of Snaps
Procurement lead time
45 90 days
45 60 days
45 60 days
2 3 weeks
Standard (HK) 60 days, Custom (JP) 90+ days
30 days
15 30 days
1 2 months
15 30 days
6 wk
6 weeks
6 wk
PRODUCTION Process:
Factories in
Hong Kong
Seattle
warehouse
800 Ski
Retailers
Product
Sketches
Forecast
Committee
Forecasts
Order 20%
in Apr-Jun 93
Order 80%
in Mar 93
Retailers
order in
Apr-Jun 93
Denver
warehouse
6 weeks
ORDERING & SHIPMENT Process:
SALES & REPLENISHING Process:
Peak Sales
Aug 92 Sep 92 Oct 92 Nov 92 Dec 92 Feb 93

Sales
Re-Sales
Stock 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 China
Inventory
Total Cost
Operation Time
Quality (% 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) designs
-High inventory holding cost
-Unable to fully profit from hit products
Whats the result if demand
forecasting uncertainty?

Forecasts are always uncertain
Why does risk happens ?
Demand Average
Standard
deviation
Standard
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 reliability
Table 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 apparent
Risk 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&D
KEY 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 reduction
Fabric 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 overnight
Obermeyer can predict total annual sales and sales of basic colors,
but cant predict fashion colors
Fabric
Producer
Fabric
Dyer
Cut/Sew
Factory
Denver
Warehouse
Retailer
undyed greige
goods
Sport Obermeyer
Asia
Consumer
Solution:
Offer dyer one year commitment on greige goods
and capacity
Dye 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 Kong
Seattle
Original distribution process
Establish 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 Options
Hong Kong
Faster
More flexible
High / Reliable
Quality

Concern
Smaller lot sizes
Higher labor cost

China
(Guangdong, Lo Village)
Lower labor cost
Larger lot sizes


Concern
Quality & Reliability
Slower
Less flexible
Where is better?
Short term Long term
Hong Kong
China
Klaus Obermeyer
Thank you