Summary O'Neill Case Study

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This is the summary of the book "O'Neill Case Study". The author(s) of the book is/are Rotterdam School of Management. This summary is written by students who study efficient with the Study Tool of Study Smart With Chris.

Summary - O'Neill Case Study

  • 1 Santa Cruz, California

  • Inaccurate forecasts of retail demand had become a growing concern at O'Nell; in recent years greater product variety and more intense competition had made accurate predictions increasingly difficulty. Income was lost because of the company's inability to predict which product would become best-sellers. 

  • 2 O'Neill Inc.

  • Bij 1980 Jack O'Nell surf shop had morphed [overgegaan] into a thriving [bloeiende] international company dominating the world's wetsuit market and one of the leaders in beach lifestyle sportswear in the U.S., Japan and Europe. In 1985 the CEO positions was taken by Cynthia, the first thing was to look for cheaper operations. 


    O'Neill competed by offering excellent price/value relationship, where value was defined as both functionality and style, and obtained 60% of the worldwide share. 


    Management believed that a continuous and growing company success could be guaranteed only through well planned and solid logistics-related activities. in particular, delivering matching collections of product to retailers at the same time (to allow consumers to view and purchase coordinated items at the same time) and delivering products to retail stores early in the selling season (to maximize the number of square footage days products were available at retail) were of paramount importance in O'Neill business strategy. John was well aware of the impact that his operational decisions could have on the success of the company during the 2009-2010 selling seasons. And he could feel the pressure on them! 

  • 3 The order cycle

  • O'Neill sells its product primarily through surf-retail stores. Most retailers requested full delivery of their orders prior to the start of the retail season, that is, before September; O'Neill attempted to deliver coordinated collections of its merchandise into retail stores by late August. Nearly two years of planning and production activity took place prior to the actual sale of product to consumers. 

  • 3.1 The design process

    • Feb'08 - The design process for the 2009-2010 line began in February. Current European styles are often a good indication of the future American fashions.
    • May'08 - The design concepts were finalized and sketches were sen to TEC group for prototype production. 
    • Sep'08 - O'Neill refined the designs based  on the prototypes and finalized them by September 2008.


  • 3.2 Sample production

    • Sept/Oct'08 - As soon as designs were finalized, TEC group began production of sample wetsuits - small quantities of each style-color combinations for the sales force to show to retailers. This also to be able to show the sample during the San Francisco show held in March'09. 
  • 3.3 Raw material sourcing and production

    • Oct'08 - Concurrent with sample production, TEC group determined the material and component requirements for O'Neill initial production order. It was important to place dyeing/printing instructions and components orders quickly because of a lead time of 90 days. 
    • Feb'09 - Cutting and sewing O'Neill first production order would begin in February 2009. 
  • 3.4 Retail ordering process

    • Mar'09 - During the SF show, most retailers placed their orders - 80% of its annual volume. With this information they could forecast its total demand with great accuracy. 
    • Apr/May'09 - After completing its forecast, O'Neill placed its second final order production. The remainder of retailers regular orders were received in April and May. 
  • 3.5 Shipment to O'Neill warehouse

    • Jun/Jul'09 - During June and July, O'Neill suites were transported by ship from TEC group to Seattle, from which they were trucked to the warehouse - this took approximately six weeks. 
    • Aug'09 - Most goods produces in August were air-shipped to SF to ensure timely delivery to retailers. 
  • 3.6 Shipment to retail; retail replenishment orders

    • Aug'09 - Toward the end of August, O'Neill shipped orders to retailers via small-pachakge carriers. 
    • Dec'09/Jan'10 - Retailers requested replenishment of those items that where expected to sell more than they currently had in stock. 
    • Mar'10 - By March O'Neill started to offer replenishment items to retailers at a discount. As the season progressed, retailers offered deeper discounts; items remaining at the end of the season were held over to the following year and sold at a loss. 
  • 4 The supply chain

  • O'Neill soured most of its surf products through TEC group. This to preposition (purchase prior to the seasons and hold in inventory) and propene as part of wider effort to cope with manufacturing long lead times. To pre-position the fabric and propane, O'Neill would contract with suppliers to manufacture a specified amount of them each month; the company would later specify how it wanted the fabric and propene to be dyed and/or printed. 


    One issue that they had to take possession of all fabrics it contracts for' whether or not it was actually needed. 

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