MGT 375 – Paul Vanderspek
Group Assignment – Sport Obermeyer
October 9, 2012
Jake Joslyn
Emese Kardhordo
Jordan Rand
Craig Richardson
Trevor Schulze
Problem
Before releasing the 1993-1994 line, Sport Obermeyer used a committee that consisted of
six key managers for forecasting to make the production commitments based on their decisions.
However, Wally Obermeyer, the VP of the Sport Obermeyer, changed the system this year. He
asked the same six managers to forecast demand on their own for each of the Obermeyer
products and used their individual forecasts as a basis of generating final commitments for
suppliers. Both the previous and the current forecasting methods used by Sport Obermeyer are
generated without external feedback or contribution. The result of this internal analysis is
inaccurate and inefficient forecasting results.
Analysis
The current forecasting method is inefficient because a strictly intuitive design or
analytical process is being used. Also, they do not involve their suppliers or retailers in the
forecasting process. Furthermore, they are not efficiently planning the start date of their design
process in accordance with the Munich and Las Vegas tradeshows.
Klaus Obermeyer, founder of Sport Obermeyer, had historically used a more intuitive
style that was based on his extensive industry experience. On the other hand, Wally relied
heavily on the use of analytical methods. Although both techniques have their pros and cons they
would be more efficient if they were combined.
The involvement of suppliers and retailers in developing forecasts has been non-existent
in the past. This has led to production difficulties and a lack of clarity between companies
throughout the supply chain.
Obermeyer attends the Munich and Las Vegas tradeshows, which provide them with 80%
of their future demand before design is finished. Current planning is inefficient because they are
in the middle of the design process at the shows. Sport Obermeyer could utilize these shows
better if their design process was complete.
Addressing these three key issues is important because it will improve the accuracy of the
forecasts generated by Sport Obermeyer. Fixing these issues will help to avoid income lost each
year and help the company’s ability to predict “future best-sellers”.
In addition, a solution to these problems is important because it will allow Sport
Obermeyer to be more profitable by avoiding excess merchandise and shortages of popular
items. The company currently has a short window, from October to February, in which they are
able to sell their products at a premium. Even during this short time period, shortages occur that
lead to lost sales and increased transportation costs. Starting in February, they sell products to
retailers at a discount and they hold excess supply until next year to be sold at a loss. Due to their
poor forecasting they are unable to accurately predict how the product lines will sell in order to
meet customer demand most efficiently.
Recommendations
We support gathering diverse inputs from the managers so that there is not an imitation of
ideas. It is redundant when a group has a collective decision because their ideas are based on
“crowd-thoughts”. Although Wally’s forecasting analytical technique is more structured, his
father’s intuitive experience has proven its effectiveness in the past. Therefore we suggest that
their techniques need to be combined. For example, if the managers continue to do their own
forecasting, guidelines need to be in place to regulate their forecasting and purchasing decisions.
They should blend both styles for maximum effectiveness; each manager should have to
document what style of forecasting he or she chooses to do and list the assumptions they used in
preparation.
They need to communicate with their suppliers and especially retailers to make more
accurate forecasts. Retailers most likely use vigorous forecasting to push the product out the door
and Obermeyer should want to do the same thing. If they increase communication, they can use
this information to their advantage and in turn, pass it along to their suppliers. This would allow
everybody to have the information they need as soon as possible, production to begin earlier and
the bullwhip effect to be greatly reduced. If better communication is established earlier than the
competition’s, Obermeyer will have shorter lead-times, less defective product, and cheaper
shipping costs. There is a quota to meet and if Obermeyer can maximize their output for
specialty products, with high quality, functionality and style, they can create a niche market and
increase market share.
It will be easier to forecast to a particular niche market when the product style is custom
for a particular trend or activity. They need to adjust their design time-frame so that most, if not
all of it is done immediately after they observe the European trends in Munich, shortening the
design process to one month. If they had finished prototypes at the Vegas show, they would only
need to make slight changes to products after the show. This would allow more time for
production and shipping.
If implemented, these changes would drastically impact the supply chain and improve the
overall quality and cost of the Obermeyer product line.