Sport Obermeyer Case Report
Sport Obermeyer – Case Report
Module One, Session Six
Supply Chain Inventory Management
Darcy Shannon
October 27, 2010
Sport Obermeyer – Case Report
Executive Summary
In order to minimize the degree of stock outs, and markdowns, I have decided for the initial Hong Kong order to produce those products that have the smallest standard deviation when comparing the Buying Committee Forecasts. An attempt will also be made to purchase the lowest cost items within this group, as initial order size of 10,000 units allows. Combined, this will allow for the least amount of risk Obermeyer is exposed to when using the limited information they have for the initial order. The ideal products to order are those with enough forecast quantity that the minimum quantity order will be less than the forecast and also leave enough room for a reorder of the minimum quantity or more if required. Exhibit 1 shows the proposed initial order.
More importantly, I have also decided that Sport Obermeyer, as a company, needs to focus on two distinct issues going forward. 1. Change the purchasing strategy from a speculative system, (trying to “guess” what will sell) to a reactive system (knowing what is required and producing it). 2. Work with suppliers to reduce delivery times and minimum order quantities. This will include both raw material lead time and production capacity.
Hong Kong is a much more mature manufacturing environment. They have embraced better manufacturing practices that allow for a higher quality product with a shorter turnaround. Because of these practices, they are able to more rapidly tool up for new products. I have decided that Obermeyer needs to refocus on its Hong Kong based supply lines.
Sport Obermeyer – Case Report
Immediate Issue
To have the ability to purchase, and receive at the correct time, a level of product that is best suited to minimize stock outs and markdowns. Place an initial 10,000 piece order from the Hong Kong supplier using the limited amount
Module One, Session Six
Supply Chain Inventory Management
Darcy Shannon
October 27, 2010
Sport Obermeyer – Case Report
Executive Summary
In order to minimize the degree of stock outs, and markdowns, I have decided for the initial Hong Kong order to produce those products that have the smallest standard deviation when comparing the Buying Committee Forecasts. An attempt will also be made to purchase the lowest cost items within this group, as initial order size of 10,000 units allows. Combined, this will allow for the least amount of risk Obermeyer is exposed to when using the limited information they have for the initial order. The ideal products to order are those with enough forecast quantity that the minimum quantity order will be less than the forecast and also leave enough room for a reorder of the minimum quantity or more if required. Exhibit 1 shows the proposed initial order.
More importantly, I have also decided that Sport Obermeyer, as a company, needs to focus on two distinct issues going forward. 1. Change the purchasing strategy from a speculative system, (trying to “guess” what will sell) to a reactive system (knowing what is required and producing it). 2. Work with suppliers to reduce delivery times and minimum order quantities. This will include both raw material lead time and production capacity.
Hong Kong is a much more mature manufacturing environment. They have embraced better manufacturing practices that allow for a higher quality product with a shorter turnaround. Because of these practices, they are able to more rapidly tool up for new products. I have decided that Obermeyer needs to refocus on its Hong Kong based supply lines.
Sport Obermeyer – Case Report
Immediate Issue
To have the ability to purchase, and receive at the correct time, a level of product that is best suited to minimize stock outs and markdowns. Place an initial 10,000 piece order from the Hong Kong supplier using the limited amount