Sport Obermeyer Harvard Case Solution & Analysis

Sport Obermeyer Case Study Analysis

First, the workers in Honk Kong are paid higher wages and they are more skilled than the Chinese workers. Their efficiency in production methods is also much higher as compared to the workers in China. The wage rates in China is minimal, which could affect their morale. This is the reason why the order quantities in Hong Kong are much lower than in China. Apart from this, based on the risk based production sequence; Sport Obermeyer should focus on producing the products that have lower volatility, in its initial phase. After the first phase is over; the company should analyze the retailers’ response after whichthey should proceed to the preparation of the new forecast in phase 2, in order to accommodate to the retailers ‘reactive production capacity. (See Exhibit 2)8

Recommendations

Sourcing: China versus Hong Kong

There are two options for Wally to distribute its total production. The first option is to source in Hong Kong. The quality of the products is higher, the workers in Hong Kong are highly flexible to respond to the customers’ changing demands and higher demands could be easily accommodated in Hong Kong, since the production processes are very fast. In addition, if there are certain designs of Parkas that involve higher production risk, then such units should be allocated to the highly skilled workers in Hong Kong.

The second option for Wally is  source production in China. The wage cost would be lower in China but so would be the labor skills, which is whyit would be suitable for the company to produce less risky designs of the Parkas. Moreover, the order quantities are higher in China,therefore, the short-term production of the products should be assigned to Hong Kong and the long term should be assigned to China. The complexity and the risks involved in product designing should also be considered to determine which designs should be produced in China and which designs should be produced in Hong Kong, since the costs of repairing would be higher in China due to less skilled workers.

Wally is recommended to adopt the aforementioned sourcing policy. The company is recommended to opt for design specific training and learning programs provision to its workers in China, as although it would increase the company’s cost in the short term but the benefits received by the company in the end would be much higher than the increased cost, in the form of speedy delivery, high quality and customer satisfaction. The company could also adopt a policy of producing the first phase products in Hong Kong and the second phase products in China. This would minimize the lead time and the total costs of transporting raw materials.......................................

 

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