Professional Documents
Culture Documents
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Submitted to:
Andres Lara
Magdalia Ayarza
Submitted by:
Jean Daniels
Mohammed Sadeek
Queenie Ramchandani
SCM 5830
Instructor's Comments
Executive Summary
Crocs is a footwear manufacturing company specializing in shoes featuring its
proprietary Croslite material, a technology that allows each pair of shoes the soft, comfortable,
lightweight and odor-resistant features. Crocs prides itself on its highly flexible supply chain
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which consists of manufacturing facilities all around the world. The success of the company is
based on a unique business model which allows the company to control the supply chain of its
products. With this model, Crocs is able to revolutionize supply in footwear retail industry by
producing shoes throughout the season. In this paper, Crocs business model, strategies the
company could possibly adopt, production and inventory planning are all examined.
Background
Crocs Inc. is a world leader and casual footwear maker based in Colorado. It is
considered a shoe maker of a unique design that became popular in the early 2000s. The
company was established by three sailor friends: George B. Boedecker, Jr., Lyndon V. Hanson
III, and Scott Seamans. The croslite material that made them lightweight, comfortable, slipresistant, odor-resistant, and non-marking sole were highly favored by the market. A combination
of unique business strategy and growing popularity resulted in a phenomenal success of a period
of ten years.
Problem Statement
Crocs must tackle challenges of minimizing inefficiencies within the supply chain while
maintaining a business model of consistently meeting consumer demand
Core Competencies
Crocs had developed intense competencies which allowed for the companys rapid
growth. This included responsiveness to demand, flexibility and cost/price. These core elements
were a main factor in the companys business model. Adopting these competencies allowed for a
unique, new business model which was not typically practiced. Crocs initially did not want to
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develop their supply chain through vertical integration, involving ownership of upstream supplier
and downstream customers (Sanders, 2012, p. 76). They envisioned a competitive strategy which
aims to establish a profitable and sustainable position (Porter, 1998, p. 1).
Flexibility
Crocs has a highly flexible supply chain which can fill new orders within the season by
quick manufacturing and shipping of new products to retail stores. Therewith,the retail stores are
not limited to adjust their orders in accordance with the volatility of the demand in the selling
season. This is a competitive capability in the footwear industry which usually places bulk orders
for each seasons inventory several months ahead with little ability to adjust to changes during
the selling season and run risks of excess inventory or be out of stock.
Speed/Responsiveness
Crocs had in place fast manufacturing and shipping process(short lead time), fast
replenishment system and excess capacity and capability which enabled them to meet
unexpected increase in market demand at short notice. Positioning several manufacturing
operations around the world which cater certain markets created closeness to local customers and
allowed fast responsiveness to market trends.
Cost/Price
Crocs managed to keep costs of material low (proprietary closed-cell resin, croslite. They
had an efficient and standardized simple production process (injection molding) and no excess
inventory due to on-demand increase of production.
Through the competencies Crocs not only develops the presence, but gains capital to
acquire materials necessary to manufacture products. The popularity and sustainability attracted
consumers. The strategy in fulfilling demand with minimal what time developed strong
popularity among consumers. The company then produced variations of the product and
expanding into other products such as t-shirts and accessories to cater to the growing brand
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loyalty. The growth and demand in international markets also contributed to power to acquire
other companies such as Jibbitz and Bite Footwear.
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The foundation of Crocs is based on the company's ability to chase consumer demand and
respond quickly to market needs. Crocs assumes the practice of carrying excess capacity and
maintaining the ability to manufacture stock as and when demanded. However, this strategy only
functions if the market continues to grow. Due to the fact that demand is variable, with the
company's current model, Crocs may get into the bullwhip effect of excess capacity, stock as
well as poor forecast accuracy and poor customer service. This will be a direct result of demand
fluctuation. Forecasting miscalculations and continual changing inventory control structures
create differences in lead time and restocking products. This causes delays which can lead to
panic ordering due to unsatisfied consumer demand.
Crocs drastically reduced the dependency on outsourcing in manufacturing of the
products. Therefore the company is not readily liquid. Should the firm experience a decrease in
demand, the company will incur higher operational costs. One of the main goals which the
company should include in the business model is maintaining consumer loyalty and demand.
This is the key to sustaining the company's efficient and effective performance.
Possible Solutions
Crocs can concentrate on buying their materials from third party suppliers, and let their
logistics department deal with the deliveries as needed, thereby saving on management costs,
while focusing on producing the best footwear and invest in research and development and stay
away from product extensions.
Another option for Crocs in, to extend their product line by being a virtual company and
monitor the products qualities and concentrate on management of the extended products, while
still focusing on the Footwear segment of Industry.
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