Obermeyer Solution 1

Transcript

COMPANY History History:: 1947: Klaus Obermeyer, a German immigrant began teaching at the Aspen Ski School ³Skiing is a celebration of life´ Klaus Obermeyer  COMPANY History History:: 1947: Klaus Obermeyer, a German immigrant began teaching at the Aspen Ski School ³Skiing is a celebration of life´ Klaus Obermeyer  COMPANY History: 1985: Obe 1985: Obers rspo port rt;; a joi joint nt ven ventu ture re in Hong Hong Kon Kong, g, the the com compa pany ny  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: Segmentation: PRODUCT Variety: SUPPLY CHAIN Process: Textile Raw and  Accessories Materials Suppliers  Apparel Manufactures Obersport Finished Retailers goods The Obermeyer supply chain stretches from Asia to Aspen PLANNING & Production Cycle: Cycle : Feb 92 Mar 92 May 92 Jul 92 Sep 92 Prototype, Sample Production Design Process begins Nov 92 Las Vegas Concept Show Finalise Mar 93 Full scale Place 1st Production Las Vegas Order with Obersport Show Sketches sent Designs to Obersport Finalised Apr 93 - Jul 93 Dec 93-Feb 94 production Additional orders received Replenishment orders received PRODUCTION Process: Asia Fabric Producer  6 wk Fabric Dyer  undyed greige goods Cut/Sew Factory 6 wk Denver  Warehouse Retailer  6 weeks Components Procurement lead time Greige Shell Fabric 45 ± 90 days Finishing of Shell Fabric (Dying & Printing) 45 ± 60 days Finished Lining Fabric 45 ± 60 days Insulation 2 ± 3 weeks Zippers Standard (HK) 60 days, Custom (JP) 90+ days Thread 30 days Logo Patches, Drawcords, Hang Tags, etc. 15 ± 30 days Snaps (undyed) 1 ± 2 months Dyeing of Snaps 15 ± 30 days Consumer  ORDERING & SHIPMENT Process: 6 Factories in Hong Kong weeks Denver warehouse Seattle warehouse Order 80% in Mar 93 Order 20% in Apr-Jun 93 Forecasts Product  Sketches Forecast  Committee Retailers order in  Apr-Jun 93 800 Ski Retailers SALES & REPLENISHING Process: Aug 92 Sep 92 Oct 92 Nov 92 Dec 92 Feb 93 Sales Peak Sales Stock Re--Sales Re outs (+ (+24 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  of 10 styles in the sample problem are made in Hong Kong and that Wally¶s initial production commitment must be at least 10 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. What¶s the result if demand forecasting uncertainty? -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 Why does risk happens ? Forecasts are always uncertain Standard Standard deviation deviation Demand Average 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 . Obermeyer¶s 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 ? ³Risk ±based production planning´ - Using Early production Capacity ((Speculative Speculative capacity) for Assoult and Seduced - Reserve later production Capacity (reactive capacity) for  Daphne and Anita as demand become more apparent 4. What operational changes would you recommend to Wally to improve  performance? KEY Problems:  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 OPERATIONAL Changes:  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. Lead time reduction Asia Fabric Producer  Fabric Dyer  undyed greige goods    Cut/Sew Factory Denver  Warehouse Retailer  Consumer  Sport Obermeyer  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 cant predict fashion colors 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 OPERATIONAL Changes: 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  Original distribution process Seattle Hong Establish Distribution Center in Seattle without through Denver  Kong OPERATIONAL Changes: 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. 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?  Hong Production Options Kong  China  ±  Faster  ±  More flexible  ±  High / Reliable Quality  Concern  ±  Smaller lot sizes  ±  Higher labor cost (Guangdong, Lo Village)  ±  Lower labor cost  ±  Larger lot sizes  Concern  ±  Quality & Reliability  ±  Slower  ±  Less flexible Where is better? Short term Hong Kong Long term China Thank  Klaus Obermeyer  you Women¶s Collection  Young¶s harma Jacket - 51103 Collection Competitors The Jacobs Corporation f ounded by David L. Jacobs Biography Competitors The North Face, Inc. : subsidiary of  VF Corporation Competitors Burton f ounded Snowboards by Jake Burton Carpenter Innovative Burton outerwear perf ormance meets leading Motorola Bluetooth ®  technology  Manufacturing Structure: Sport Obermeyer Ltd. Obersport Ltd. Alpine Ltd  Hong Kong  Macau China  Lo Village Other subcontractors The Supply Chain Textile and Accessories Suppliers Produce, dye and print shell and lining fabrics, supply insulation, zippers, thread, logo patches and snaps. Apparel Manufacturers Subcontractors, receive production orders and materials from Obersport. Cut, sew and final assembly. Obersport Sport Responsible for material and production sourcing in the Far East. It also acts as a distribution centre for  materials and finished goods. Product design, production planning and sales. Obermeyer Retailers Purchase from Sport Obermeyer and sell products to consumers. Obermeyer¶s planning calendar  Prod uct T ra   nspor tati on Hong products made in June and July were transported by ships Seattle Kong Warehouse goods produced in  August were air-shipped then transported by trucks Obermeyer¶s Denver  Warehouse Cost $5 per parka orders were finally shipped via small-package carriers such as UPS at the end of August 1993 Retailers Retailer s Delivering products by early September  Sport Obermeyer  Specialty SkiRetail Stores Department Stores Direct Mail Retailers Most sales occur between September and January Consumers SUPPLY CHAIN Management: 1992 Munich show & 1993 Las Vegas show Jan Apr Jul Oct Dec Jan Apr Jul Oct Dec Peak Sales Committee forecast Design process Production Shipment Production Process I  process Process II Approved Ordering  process I Ordering  process II Replenishing  process II 1994 Jan Apr Jul Re--Sales Re Original planning & production cycle