1. How much does the forecasting process at Deckers correspond with the “typical forecasting process” described at the end of this chapter?
2. Based on what you see in the video, what kinds of information technology are used to make forecasts, maintain accurate inventory records, and project future inventory levels?
3. What factors make forecasting at Deckers particularly challenging? How can forecasts be made for seasonal, fashionable products for which there is no history file? What are the costs of overforecasting demand for such items? Under forecasting?
4. What are the benefits of leveling aggregate demand by having a portfolio of products that create a 365-day demand?
5. Deckers plans to expand internationally, thereby increasing the volume of shoes it must manage in the supply chain and the pattern of
material flows. What implications does this strategy have on forecasting, order quantities, logistics, and relationships with its suppliers and customers?

Deckers Outdoor Corporation’s footwear products are among some of the most well-known brands in the world. From UGG sheepskin boots and Teva sport sandals to Simple shoes, Deckers flip-flops, and Tsubo footwear, Deckers is committed to building niche footwear brands into global brands with market leadership positions. Net sales for fiscal year 2007 were close to $449 million. In addition to traditional retail store outlets for Deckers’s footwear styles, the company maintains an active and growing “direct to consumer” e-commerce business. Since most retail stores cannot carry every style in every color and size, the company offers the full line for each of its brands directly to consumers through the brands’ individual websites. Online sales at its virtual store are handled by its e-commerce group. Customers who want a pair of shoes not available at the retail store can always buy from the virtual store.
Founded in 1973, the company manufactured a single line of sandals in a small factory in southern California. The challenges of managing the raw materials and finished goods inventories were small compared to today’s global sourcing and sales challenges for the company’s various brands. Today, each brand has its own development team and brand managers who generate, develop, and test-market the seasonal styles that appear on the shelves of retailers such as Nordstrom, Lord & Taylor, REI, the Walking Company, and the company’s own UGG brand retail stores in the United States and Japan.
At Deckers, forecasting is the starting point for inventory management, sales and operations planning, resource planning, and scheduling—in short, managing its supply chain. It carries a considerable amount of seasonal stock. Shoes with seasonal demand that are left over at the end of their season must be sold at heavily discounted prices. Its products fall into three categories: (1) carryover items that were sold in prior years, (2) new items that look similar
to past models, and (3) completely new designs that are fashionable with no past history.
Twice a year, the brand development teams work on the fall and spring product lines. They come up with new designs about a year in advance of each season. Each brand (UGG, Teva, Simple, Tsubo, and Deckers) contains numerous products. The materials for new designs are selected and tested in prototypes. Approved designs are put into the seasonal lineup. Forecasts must be made at both the product and aggregate levels months before the season begins. “Bottoms-up” forecasts for each product begin by analyzing any available history files of past demand. Judgment forecasts are also important inputs, particularly for the second and third categories of shoes that are not carryovers. For example, Char Nicanor-Kimball is an expert in spotting trends in shoe sales and makes forecasts for the virtual store. For new designs, historical sales on similar items are used to make a best guess on demand for those items. This process is facilitated by a forecasting and inventory system on the company’s intranet. At the same time, the sales teams for each brand call on their retail accounts and secure customer orders of approved designs for the coming season. Then, the virtual store forecasts are merged with orders from the retail store orders to get the total seasonal demand forecasted by product. Next, the product forecasts are “rolled up” by category and “top down” forecasts are also made.