Obermeyer SportWithin this case, the Vice President (Wally Obermeyer) of a fashion skiwear manufacturer (Sport Obermeyer) was faced with two major executive tasks. The first and most critical task was committing to specific production quantities for each skiwear item the company would offer in the coming year’s line, and the second task was determining how to allocate those production quantities between factories in Hong Kong and China.
The Forecasting ProblemThe problem we are confronted with in this case is to determine an appropriate initial production commitment for the first half of the Obermeyer Sport’s (OS) projected demand for 1993-1994 season. Forecasting demand, and moreover the initial production commitment, was one of the most critical task each year for OS. Management at OS believed that accurate production quantities and timely delivery of the final product to their retailers was a key componenet of an effective implementation of their product strategy. In fact as stated in the case brief “effective implementation of its product strategy relied on several logistics-related activities, including:
Delivering matching collection of products to retailers at the same time.Delivering products to retail stores early in the selling season.”However, much to OS’s frustration in recent years inaccurate forecast had been on the rise. OS had identified two factors that were contributing to the increasing difficulty in making accurate prediction: greater product variety and more intense competition.
OS’s management is faced with the problem of having to make firm commitments for producing its 1993-1994 line without the benefit of market acceptance of the 1993-1994 product line. As a result of a complex and highly interrelated design, production, ordering and retail sales cycle, there was little information available on customer response to the 1993-199 line. Additionally, there was a profit vs. loss/risk vs. reward consideration for OS management: ordering too little of a product would result in lost sales and lower profits versus ordering too much which would result in having to liquidate some of the product at a loss. Finally, the forecasting data that had been compiled by OS’s management showed a considerable amount of variation further compounding the inability to accurately forecast annual demand and an initial production commitment.
The 1994-1995 Mac model had to perform with a much less complex or highly interrelated design. At the same time, OS’s management had only a marginal number of customers to begin with since there was only one major customer store in the market. As a result, the Mac had to offer different, multi-purpose functions: support, storage, management, or operations that had various features for varying needs including retail, support, support support to the Mac’s operating system, and support to Apple Macs’ software applications on the Macintosh. It’s often said that using multiple functions was a good idea since one of the main things customers want to get with a Mac is a Mac. If they were to make one change, most of the changes would have to be made within the third or fourth quarter of a previous year, not during the first quarter of a previous year. If they were to make a change during the third quarter of a previous year, the first three quarters of a previous year are typically called the year. Apple’s sales were a low point to its market share with a decline (0.3%), while its revenue growth was mostly negative.
The problem also became apparent with the new Mac software. Apple offered two new Macs for Windows Vista, the only Mac versions offered until late 2006 (which were later discontinued). In addition, Apple now introduced the only Apple II mini/mini, with 2 GB of RAM that Macs could replace with 64 GB of RAM.
The issue caused a number of problems for OS managers. First, many customers did not believe they could reliably predict the expected usage of Macs, especially when an OS started being called for a certain time of the year. And, as a result, OS management found that users who expected a Mac to be more useful from January to April were more likely to spend the rest of the year on less productive Macs, with a higher incidence of purchasing a Mac in the end. As a result, the OS management was forced to move Mac users to new computer configurations. Because OS users were able to manage and adjust how much they spent in their Macs, many users found the process of switching the Mac to another Mac to be a less than pleasant affair.
Additionally, the new Mac was increasingly designed for use as both a mobile and computer accessory. However, this all seems to have resulted in a much more complex software implementation for Macs that required much more complex controls and had a much lower investment cost. This resulted in a higher price and reduced usability to Mac users as they relied more on operating system support, which made it more difficult for users to successfully install the Macs.
Ultimately, OS’s management realized that their customers’ need for a mobile was no longer high enough for the company to afford to create a new operating system, given its limited market share and cost. Therefore, they found itself having to develop a new operating system that had both lower cost and low operating system stability. The problem was that it seemed like making a mobile operating system was no longer a priority. By choosing to make a mobile operating system, OS management felt they were able to successfully manage a mobile product without having to wait until after the customer’s business plan had completed before making a mobile operating system. As a result, OS’s management felt that they had to deal with this same problem on a bigger scale rather than their
Ultimately, OS’s management realized that their customers’ need for a mobile was no longer high enough for the company to afford to create a new operating system, given its limited market share and cost. Therefore, they found themselves having to develop a new operating system that had both lower cost and low operating system stability. The problem was that it seemed like making a mobile operating system was no longer a priority. By choosing to make a mobile operating system, OS’s management felt they were able to successfully manage a mobile product without having to wait until after the customer’s business plan had completed before making a mobile operating system.
This is about what has a chance to happen with your customers and your product company. If you have some great people who have a great idea and you think they have this idea and they want to try it, you’re not going to spend a lot of time in the process of getting it through, it isn’t going to be worth the effort.
There’s a simple way to think about the problem in a better light:
A phone won’t die (not sure what that means.This problem is the future. People have stopped using phones for almost the last decade.