Crocs Shoes Itself in Global Supply Chain

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By: Hanan Alzayied

KMBS student-Kuwait-July2012

Crocs Shoes itself in Global Supply Chain

Abstract:

Crocs, Inc. is a U.S. based shoe designer, manufacturer, and retailer that launched its business in 2002 selling Crocs™ brand casual plastic clogs with straps in a variety of solid, bright colors, Crocs™ introduced an innovative shoe made of a revolutionary material called Croslite™ technology which held unique characteristics that allowed it to perform on both land and in water. The company created its own fashion phenomenon and was given the name Crocs™ after the multi-environment, amphibious nature of Crocodiles in which they add fun by designing a crocodile face logo to build a light-hearted.

This paper analysis and discusses the supply chain process of Crocs Inc. in a competitive and dynamic footwear industry. I used AHP model (Analytical Hierarchy Process) to illustrate my decision in choosing Crocs among other global brands in foot industry.

The assignment evaluates the existing supply chain of the company against its current performance and explains reasons behind high level of the inventory management.

By: Hanan Alzayied

KMBS student-Kuwait-July2012

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Introduction

Celebrating its 10th anniversary in 2012, Crocs, Inc. is a world leader in innovative casual footwear for men, women and children. Crocs offer several distinct shoe collections with more than 300 four-season footwear styles. All Crocs™ shoes feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of shoes the soft, comfortable, lightweight, non-marking and odor-resistant qualities that Crocs fans know and love with the perfect balance of functional and emotional appeal. Since its inception in 2002, Crocs has sold more than 200 million pairs of shoes in more than 125countries around the world. The brand celebrated reaching $1 billion in annual sales in 2011. The phenomenal success of Crocs in a short span of less than 10 years has been discussed widely, and one of the main reasons behind this growth and popularity of the shoes has been the company’s efficient and highly flexible supply chain management. Until 2006, Crocs, Inc. had the highest gross profit margin in the footwear industry at 56.5 % as compared to 43.7 % and 47.3 % by the giants of footwear, Nike and Timberland respectively, and the sales revenues of the company are very likely to cross the US $ 0.5 Billion (Hoyt, D. and Silverman, A., Exhibit 2, p.16).

Their efficient supply chain was an outcome of their CEO, Ronald Snyder’s vision of meeting customers’ demands by creating a hyper-efficient production and supply chain process that would enable the company to produce and supply at short notices and thereby create a market leading advantage in the industry.

Crocs, Inc. experienced astonishing growth within a short period of time and managed its highly flexible supply chain in ways which enabled Crocs to build additional product within the selling season which made Crocs take advantage of strong customer demand. But on the other hand Crocs, Inc. has a problem with high excess capacity and inventory levels which could be a threat to the company because so much money is tied up in assets. Crocs should try not to make everything in house but also outsource non-core manufacturing processes to other companies in order to cut costs and have capacity for core products.

The paper describes my views on how Crocs, Inc. can better their position in the footwear industry and become a more stable competitor to its major challenges in the environment. I have used AHP (Analytical Hierarchy Process) model to evaluate three alternatives of giant firms in foot industry, also brief use of Fisher model to demonstrate how the company needs to revise its foundation in developing a strategically supply chain process that have been uniquely combined to create different perception of the supply chain...
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