1- What makes supply chain management at Sport Obermeyer so challenging?
The biggest challenge Sport Obermeyer is facing is uncertainty. The demand for each of the styles is completely un-deterministic and is very hard to predict. At the same time, Obermeyer production cycle is very long which is making it nearly impossible to adapt to the market. On one hand, if the produced items do not sell, Obermeyer incurs the loss of manufacturing cost. On the other hand, if we do not produce enough of the product to meet all of the demand for it, we lose the unattained revenue and lost demand that will shift to another product. Thus in both cases, the uncertain demand is costing Obermeyer a lot. Coupling this with their inflexibility to meet unexpected or unplanned demand puts a big challenge to Obermeyer. The large batch sizes required by manufacturers for Obermeyer further highly restricts Obermeyer ability to respond to uncertain demand.
Not only how many to produce from each item is the big decision for Obermeyer, but also when to produce each as not all style can be made for the beginning of the season. Thus such timing of when to introduce each product further complicates the supply chain management for Obermeyer.
Further, another big complexity which I see in Obermeyer is how their products are positioned in the market versus their operating model. Obermeyer is positioned in the market as targeting the middle to higher class. However, in their operating model, they are always trying to go the cheapest options with no other considerations given to any other factor. Such contradiction between the market positioning and their operating model is putting great complexities on their supply chain management.
2- Describe the factors that you would use in determining which and how much of...