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Crocs Case study

TPTM6260
by

Guangpeng Lan

on 12 September 2013

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Transcript of Crocs Case study

Blu
Sabrina
Bonnie
Ivy
Iris
Tracey
Frank
Strength & Weakness
Internal Environment Analysis-7S
7s
Crocs supply chain
Examples of our arguments
Lessons learnt
Footwear company
Proprietary closed cell-resin ( Croslite )
Sell world wide
Go public in February 2006

Croslite

Functional

Footwear industry mode

Duty-free

Tariffs

Crocs
External environment analysis
----PEST model

Background
7. Staff-Value the employees
Health and Safety
Entertainments

5. Skills-Characters:
passionate and ambitious
Expertise
High involvement in company affairs
1. Strategy-Innovative
Fun
Comfort
Simple
2. Structure: Internal-flat
External-collaborative

3. System:
IBM® Sterling Order Management
The replenishment system
4. Shared value: sustainability
6. Style:
Strong leadership
Hear staff’s voice
Executive lunch and learns
Crocs Leadership University


It does not have patent protection on its proprietary Croslite material
Crocs does not hedge its exposure to foreign exchange
There is anti-Crocs sentiment in the market


Challenges

Buy raw materials

Compound

Manufacture & Assemble

Warehouse and DC

Europe & USA

China, Italy, Mexico, Canada

China,
Mexico
,
Brazil
,
Canada
, Romania & Bosina, Florida

Denver Distribution Center

China,
Brazil
,
Mexico
, Romania

Inaccurate sales forecast
Excess manufacturing capacity beyond the actual manufacturing plan
Relies too heavily on key manufacturer (China)
limited number of sources for the primary materials

Key Supply Chain Issues

Strength
High brand awareness in the market.


Corporate with other famous brands.

Establish a good relationship with retailers

Sales channels are diverse

Weakness
Company financial performance is highly concentrated on footwear sales.

The threat of substitute products is high.

Rapid expansion of operations could generate negative impact on service and product quality.

Raw materials

➢ Additional suppliers
➢ Into long-term contracts
➢ New or innovative uses

Foam Creations (Owned by Crocs)

Compounding Company (Third party)

Manufacturing Company (Third party)

Warehouse (Third party & owned in China)

➢ Outsourcing or acquisition
➢ Special trade zones
Crocs – Nike (subsidiary)

Complex and expensive supply chain
Existing manufacturing and warehouse facilities


Unique product in the market
(color, material, style & size, feeling)


7 Principles of SC Management (2007 Journal of SCM Review)
1. Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably.
2. Customise the logistics network to the service requirements and profitability of customer segments.
3. Listen to market signals and align demand planning accordingly across the SC, ensuring consistent forecasts and optimal resource allocation.
4. Differentiate product closer to the customer and speed conversion across the supply chain
5. Manage sources of supply to reduce the total cost of owning materials and services
6. Develop a SC wide technology or system that supports multiple levels of decision making and provide a clear view of the products flow, service and information.
7. Adopt channel spanning performance measures to gauge collective success in reaching the end user effectively and efficiently.
 Current ‘Bullwhip Effect’
 Hybrid of Lean Replenishment Production & Agile Supply Chain
What about the long term?

Highly flexible supply chain

-Electronics contract manufacturing backgrounds
-React to market instead of predicting it
-Innovations of warehousing model
-Molds transferring between production locations
Global view

-Local production & highly efficient international contract manufacturers
-Moving critical process in-house

Thank you
Full transcript