Sport Obermeyer Case Study

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Recommendations

It is imperative to reduce inventory. Initiatives to be taken: (1) implement a computer system that consolidates the inventory tracking system with the manufacturing and operations system. (2) Conduct an ABC analysis to classify on-hand inventory, this will help SG focus on inventory policies for high priority products. (3) Improve inventory by implementing a perpetual inventory system as well as cycle counting (Heizer, J. & Render, B., 2014, p. 477-480). The above changes will aid management in enforcing their proposed policy changes: sufficient inventory to meet 99% target service level, daily and weekly reports on inventory activity, and periodic audits. (4) Expand in Europe only in 2010, as sales are booming in the European market, and wait to expand into Latin America and Asia Pacific until 2011. (5) Centralize warehousing and maximize capacity in Waltham. Analysis of bi-weekly demand (see Index #2) revealed benefits including accurate order forecasting and inventory planning, and decreased customer response times by minimizing lag times and back-up orders. (6) Planning for recentralization to Waltham should begin in 2010 with completion date by end of 2011. (7) To meet forecasted growth SG should proceed with $10 million dollar investment on new equipment; a meeting with the CFO and COO is in order to analyze the best way to raise capital.

Conclusion

SG primary focus should be on inventory and warehousing and then preparing for 2010 growth by investing in new equipment; expansion plans will need to be secondary. To maintain true to their “twin goals” SG will need to keep their current customers happy and prevent them from fleeing to the competition. Greater international expansion will most certainly follow suit when the company is running at optimal levels. Right now, a competitive edge in inventory management will be the key to SG’s growth and obtaining their target 99% service level.

References

Heizer, J. & Render, B., (2014). Operations Management, Sustainability and Supply Chain Management (11th ed.). Upper Saddle River, NJ: Pearson Education Inc.

Wheelwright, S., Schmidt, W., (2011). Scientific Glass, Inc.: Inventory Management.

Boston, MA: Harvard Business Publishing.

Index

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