CBS FTMBA 2008-09 OPERATIONS MANAGEMENT TERM PAPER 3/16/2009
This paper analyses and discusses the supply chain process of Crocs Inc. in a competitive and dynamic footwear
industry. The paper critically evaluates the existing supply chain of the company against its current performance and
changing market conditions and explains reasons for loss of competitive advantage of the company. The paper ends with
recommendations for a change of supply chain strategy by supporting the arguments with relevant theories and models and how Crocs Inc. can regain its competitive advantage.
INTRODUCTION Crocs, Inc. was established in 2002 in Colorado, USA and is today amongst the fastest growing brands and companies in the world. The company started designing and
manufacturing footwear for all age groups under the Crocs brand, which are now sold in over 100 countries around the world. The Crocs brand shoes feature the proprietary closedcell resin, Croslite, a special kind of plastic that softens up due to the body heat of the wearer resulting in a perfect fit and a high degree of comfort. The innovative, „trade secreted‟ material has been considered as significantly original in the footwear industry and the shoes‟ unique looks and range of brightly coloured designs have made Crocs highly favoured by people who are looking for comfortable, lightweight, slip-resistant, and odour-free footwear. The phenomenal success of Crocs in a short span of less than 10 years has been discussed widely, and besides the skyrocketing popularity of the shoes, one of the main reasons behind this mindboggling growth has been the company‟s efficient 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). The case study (Hoyt, D. and Silverman, A.) has discussed the astounding growth of Crocs, Inc. and provides information on its highly flexible supply chain. Crocs showed that by being more agile and by digressing from the traditional industry norms they could be more successful and profitable than any other competitor (Hoyt, D. and Silverman, A., Exhibit 4, p.18). 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. The text also mentions how the firm moved from contract manufacturing to developing a more vertically integrated organisation and expansion through building infrastructure and become a truly global company. It
seemed that through vertical integration (Harrigan, K. R.) Crocs had developed a perfect strategy to achieve cost leadership and differentiation (Porter, M. E., 1998) and at the same time gain a high degree of control over their entire value chain. Not only this, but with unimaginable growth Crocs was able to create different market segments and also take a chance to foray into more traditional materials in footwear and increasing their competitiveness in the industry. Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management Page | 1
However, I would like to mention that there is always scope for improvement and no strategy is sacrosanct with the situation being faced in today‟s dynamic market conditions. The Crocs supply chain has indeed been revolutionary in the footwear industry but it needs to evolve in terms of the changes in the industry environment worldwide. The traditional and idealistic thinking organisations have a lesser chance of survival in the long run....