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Callaway Golf Co. faces a number of challenges, as it labors to integrate demand signals into its monthly forecasts. Chief among them is "getting customers to understand the benefits of providing us with information," says Hillier. Many pros are "old-school," and "don't necessarily like you telling them how to run their business."
Callaway has had some success in partnering with key accounts. The effort has helped to ensure that the manufacturer delivers products when retailers ask for them, in the desired mix and quantity. Complicating matters is the company's need to service a wide variety of accounts, from big-box stores like Wal-Mart to local pro shops.
In a sense, that mission has grown more challenging in recent years. Customization accounts for between 15 and 20 percent of total sales, with equipment manufacturers pushing their ability to provide an individualized fit for each club and customer. For some products, as much as 40 percent of the demand consists of customized product. "That makes managing inventory very difficult," says Hillier.
At the same time, the golf business is consolidating, driving out of business a lot of smaller accounts that were unable to provide Callaway with the necessary demand information. And larger retailers are continuing to grow. Their relative sophistication bodes well for Callaway's efforts to improve collaboration with downstream partners.
Callaway is acutely aware of the unstable nature of its industry. "Golf is a luxury item that people can live without," notes Hillier. "We want to be able to able to offer options to customers, to make sure that the clubs they buy are built for them."
What the customer wants is constantly changing. Hillier recalls a time when all products had a minimum lifecycle of two years. Today, that figure is down to nine or even six months. New products now account for up to 85 percent of overall business, versus 50 percent a few years ago.
The change has put a tremendous strain on research-and-development departments, as they struggle keep up with ever-evolving tastes and trends. On top of that, the economic slowdown has had a severe impact on the market for sports equipment. "With the golf industry being relatively stagnant for the past several years, it's become more competitive," Hillier says.
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