Stephen A. DeLurgio wrote
• Sport Obermeyer:
o Based in Aspen, Colorado
o Manufactures skiwear and distributes it through 800 US retailers
o Since 95% of its products are new each year
? Faces demand uncertainty
o In 1991, the company's vice president, Walter Obermeyer, started a project to deal with those problems by using three strategies:
? Reducing, avoiding, and hedging against uncertainty
? To reduce uncertainty, Obermeyer requested orders early in the year from important customers
? These early orders helped them achieve a significantly improved forecast for the rest of the year
o Lead times were still a problem
? Concluded that each day cut off the lead time would save $25,000
? Because of air shipping products to plants in Asia
? Began searching for ways to reduce lead times
? Was able to avoid uncertainty on half of its products
o Still had uncertain demand for half the products
? Used the average of six forecasts
• If the forecasts were similar, the forecast was accurate
• If the forecasts were dissimilar, the forecast was inaccurate
• Using this data, they could hedge their risks
o System increased profits by 60%
o Made Obermeyer number one in the industry for service.
• Conclusion
o Companies like this are still the exception
o Managers should think about:
? Reducing uncertainty.
? Avoiding uncertainty.
? Hedging against uncertainty.
o These steps require energy and patience but the results are worth it.
Haryo Buwono
Summary (Seventh Ten Minutes)
Aligning Supply and Demand: Creating the Right Supply Chain
Obermeyer Case:
Obermeyer is a ski wear manufacturer with 25 retailers all over the nation. Obemeyer w ...