Crocs: Revolutionizing an industrys supply chain model for competitive advantage Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Crocs: Revolutionizing an industry’s supply chain model for competitive advantage

Introduction:

Crocs Inc. is a producer, manufacturer and designer of funky footwear founded by Ronald Snyder. The company manufactures footwear for women, men and children. It was founded by Snyder in 2002 and held a substantial position in the market. The company has major supremacy in the footwear industry because of its innovative product. The raw material used in the manufacturing is Croslite that is very soft, light in weight, strongly gripped, comfortable, odor resistant and non-marking. Besides footwear, the company also manufactures other products like shirts, hats, caps, socks, kneepads and kneelers. The company has more than 14 distribution channels along with nine manufacturing plants worldwide. The supply chain of the company is derived by the demands of consumers.

How did the footwear industry's typical supply chain operate? How was Crocs supply chain going to be different? Would this give them a competitive advantage? (Support your position).

Typical supply chain in footwear industry:

Traditional supply chain process in the footwear industry is comprised of several steps and started with gathering of raw materials. After that, component manufacturing has been done in the production plants. Followed by component manufacturing, the next step in the supply chain is the assembling of footwear. After that, the final product has been packed and sent to the process of logistics. Then, the finished products have been delivered to retailers and then they are sent for recycling after usage. Further, the traditional supply chain process is based on push method where little emphasize has been given on visibility, and the response time is also slow. There is a lack of conversation and participation in traditional supply chain.

Crocs Supply Chain:

The Crocs supply chain is based on seven major steps that start from buying chemicals as raw materials pellets from various companies located in the United States and Europe. After the purchase of raw material, it has been shipped to Italy where compounding of raw materials takes place. The compounded pellets are then colorized with funky and neon colors. After that, the colorized and compounded pellets are then sent back to Canada to foam creations where the pallets are first molded and then assembled. After that, the final product is shipped to the distribution company in Denver. The basic task of the company in Denver is to ship, pack and send the product to customers.

Was Crocs supply chain strategy tied to its business strategy? Was the supply chain strategy supported by the top layers of management?

The business strategy of Crocs Inc. is based on making product that is simple, but comfortable, funky and innovative. In addition to that, the company wants to go global by expanding its business to as many countries as possible, which gives it a competitive advantage. Along with that, supply chain model adopted by the company is based on providing products even when the demand is high, and that is the time when most of the organizations give up as they don’t have enough safety stock to meet unexpected demands. The supply chain strategy was entirely supported by top layers of management that is evident from the continuous progress in 2007.

Give 3 examples of specific supply chain decisions that Crocs implemented to support their Supply Chain Strategy.

First decision that Crocs implemented to support its supply chain strategy was bringing global supply chain in-house. The CEO of the company has realized that manufacturers other than those that were located in Asia would not be able to implement the company’s supply chain model, therefore; he decided to develop Crocs in-house manufacturing operations in Italy and Mexico.

Second major step taken by Crocs was shifting its production to reduce duty payments. As mentioned, the footwear industry is exposed to several threats out of which the major one is tariff duties that range from 3% to more than 38%. The amount of percentage is dependent upon the components that have been used in the production of a specific product. To overcome that, the company has shifted its production to the countries tariffs for particular raw materials are lower.

Further, the company has implemented Blue Ocean Strategy because it has tapped into new markets where competition is less aggressive.

The case study on Crocs is done between 2003 and 2007 when the company was experiencing tremendous growth. Do some research to see what happened to Crocs when demand for their product went down? Should supply chain strategies and initiatives be regularly reviewed and adjusted as needed? Are there any specific examples of changes in strategy that Crocs implemented when demand fell?

As seen previously, Crocs Inc. reported ....................

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