Sport Obermeyer
Executive Summary
In order to address long lead times and a high inventory count with uncertain demand, 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 when using the limited information we 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. While this is a directional change from our annual forecasting method, we must act to improve this process in order to protect net revenue and market share.
Effective immediately I am recommending we increase inventory of raw materials for production in order to limit the lead time in this step of the supply chain. Our production team will work with our business partners at Obersport to procure excesses in long life raw materials. While there will be an incremental cost, we are likely to see per unit cost decrease based on the volumes purchased and cut down our total cycle time.
Lastly, I am recommending that we continue to sourcing production in both Hong Kong and China, to benefit from each location. China has low per unit costs, while Hong Kong has the ability to offer faster production times in smaller quantities. In order for us to have full cost advantage from sourcing in both locations, we must continue to reduce processing times at each stage of their planning and production cycle.
These operational changes will be discussed at the forecasting planning meeting next week.
Wally Obermeyer
Vice President
Sport Obermeyer
February 28, 2013
Immediate Issue:
Increases in product variety and intense industry
In order to address long lead times and a high inventory count with uncertain demand, 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 when using the limited information we 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. While this is a directional change from our annual forecasting method, we must act to improve this process in order to protect net revenue and market share.
Effective immediately I am recommending we increase inventory of raw materials for production in order to limit the lead time in this step of the supply chain. Our production team will work with our business partners at Obersport to procure excesses in long life raw materials. While there will be an incremental cost, we are likely to see per unit cost decrease based on the volumes purchased and cut down our total cycle time.
Lastly, I am recommending that we continue to sourcing production in both Hong Kong and China, to benefit from each location. China has low per unit costs, while Hong Kong has the ability to offer faster production times in smaller quantities. In order for us to have full cost advantage from sourcing in both locations, we must continue to reduce processing times at each stage of their planning and production cycle.
These operational changes will be discussed at the forecasting planning meeting next week.
Wally Obermeyer
Vice President
Sport Obermeyer
February 28, 2013
Immediate Issue:
Increases in product variety and intense industry