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Executive Summary
Crocs is a shoes producing business established in 2002 by Michael Hagos, Lyndon Hanson, and George Boedecker, Jr. The company specializes in shoes featuring its exclusive Croslite ™ product, an advanced technology that provides each set of shoes the soft, comfortable, light-weight and odor-resistant qualities. Crocs pride itself in its highly versatile supply chain which include manufacturing facilities all around the world. With this model, Crocs is able to reinvent supply in footwear retail industry by producing shoes throughout the season.
In this paper, we would take a look at Croc's service model, strategies the business could adopt and look at its production and inventory preparation.
Crocs core competencies
Crocs core competencies lies in several factors. Frist, Crocs adopted a radical retail design that varies from the industry. Present practices in the market requires buyers to book orders for the season which results in overstocking or inescapable sales if demand is estimated wrongly. Crocs had a manufacturing benefit due to the simpleness in their original shoes.
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This permitted them to produce shoes and deliver them out in a relatively brief time. By taking ownership of part of their production process and having an international presence, Crocs has the ability to move makers/ molds to adapt to need of various models at numerous locations around the globe. The existing model offers Crocs the capability to deliver a fruit and vegetables a new shoe in 2 weeks and this is type in decreasing their danger of inescapable sales by being able to build more shoes throughout the season to respond to modifications in need.
Second, Croc's located itself with a distinct product that is comfortable, slip resistant and odor resistant.
The business able to coordinate a global launch reasonably quickly and that helped lessened the threat of competitors and permitted them to develop strong branding around the world.
Lastly, Crocs maintains good relationship with both small and large retailers. This allows them to establish their branding, market their product and test out new lines of footwear across a wide range of retail options. Due of the flexibility of ordering more footwear during the season, Crocs is able to solve a problem faced by small retailers and this is critical to Crocs in developing a strong relationship with them.
Further vertical integration into materials.
Crocs’s proprietary resin called Croslite™ is a primary raw material used in most of their products and accessories. Croslite™ stands out as a good choice of material as it is slip-resistant, non-marking and extremely lightweight (Crocs, 2009). Currently, Croslite™ is produced by compounding elastomer resins purchased from major chemical manufacturers. In 2009, Crocs has two suppliers that produce the particular elastomer resins used in Croslite™ and multiple suppliers that can supply the rest of the raw materials (Crocs, 2009). Aside from the specific elastomer resin, Crocs has little incentive to integrate the rest of their raw materials into their supply chain as the risk of shortage is low due to the availability of suppliers and the cost savings would likely be minimal. As for the elastomer resins, Crocs could either source of alternative materials or suppliers to mitigate the risk of stock outs or acquire these suppliers to achieve a greater stability of supply.
Growth by acquisition
Crocs made a couple of acquisition from 2004 to 2007. Crocs’s first acquisition, Finproject , gave them ownership of the resin Croslite™ which was key to Crocs products. In 2006, companies competing in comfort footwear and protective gear Fury and EXO Italia was acquired to solidify Crocs position as a provider of comfort products. The Jibbitz and Ocean Minded acquisitions allowed Crocs to extend their product by making them more customizable and also enter into a new market segment that they were previously not in. Crocs could increase its competency by acquisitions into product lines that fit into Crocs image and could be placed in their current retail locations. In addition, Crocs would be susceptible to fashion changes and could diversify their risk by acquiring footwear companies that follow fashion trends. In general, Crocs should actively look out for acquisitions that allows them to reduce cost and increase flexibility in their supply chain, prevents future competition and diversifies its business risk away.
Growth by product extension
Crocs should look into extending their products into markets that complements their goal of providing comfortable foot or body wear. By having products that fit into the company’s values and image, Crocs can easily integrate them in their current retail channels. At the time of the case, Crocs is has extended its products in beach ware, working professionals, diabetic patients and protective ware and they should continue doing so. Crocs could look into markets like sports, boating, outdoors etc which all have potential use for Croslite™. Due to its flexible supply chain, Crocs would have an advantage in markets with highly volatile demand. This would give them an advantage over traditional footwear makers and allow them to be profitable in such cases. With a close relationship with their retailers, Crocs is able to gain information on potential new products and would have no issue getting their extended product lines out on shelves.
Production and inventory planning
In its production and inventory planning, Crocs should consider stock out cost, overage cost and inventory holding. Having a high profit margin of 18.2%, stock outs are critical to Crocs. Crocs should keep a healthy level to inventory to reduce stock outs. Crocs recognized this and keeps a manufacturing capacity at 1 million parts per month beyond the actual production plan.
Crocs: Revolutionizing An Industry’s Supply Chain Model. (2016, Mar 17). Retrieved from https://studymoose.com/crocs-revolutionizing-an-industrys-supply-chain-model-essay
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