Question 1: One of Crocs core competencies is a highly responsive supply chain. How does this give Crocs the advantage over its competitors? And, describe the three phase supply chain development strategy that Crocs used to achieve their flexible supply chain. To satisfy its mission and comply with growing consumer demands, Crocs has built a strategic business concept around maintaining flexibility to offer retailers timely fulfillment while capitalizing on the efficiencies and cost advantages. Consequently Crocs operates a distribution model which is unparalleled in the retail footwear industry. The revolutionary supply chain allowed replenishment system which strengthens its relationships with customers by allowing the company to accurately track and rapidly respond to fluctuating consumer demands while the traditional industry practice was for retailers to place bulk orders for each season's inventory many months in advance without the ability to adjust 2 changes during the selling season. By ensuring the speed and flexibility Crocs supply chain excellence has been the driver to the business growth and created its market added value over its competitors. Crocs supply chain went through 3 phases to get its flexibility:
Phase 1: Taking over production
* The immediate purchase of the Canadian manufacturer in June 2oo4. * The acquisition of the proprietary resin croslite (odor resistance and comfort). Phase 2: Global production using contract manufacturers
* In early 2005, Crocs started production in China, using a large product manufacturer. * It began to enter Asian & European markets in spring 2005 in order to launch worldwide. * Snyder and his team expected the same contract manufacturing benefits in their new business (high responsiveness to consumer demands) but it wasn't the case in the manufacturing industry, because all of manufacturers outside of Asia couldn't work with their new flexible supply chain model. This lead them to the third phase. Phase 3: Bringing the global supply chain In-House
* Development of owned manufacturing operations in all of Mexico, Italy and Brazil. * Use of contract manufacturer in Romania to serve the European customers and the consideration of many options to replace the contractor. * Crocs also kept the Florida manufacturer for the made in USA label. * Continued to manufacture in Canada as well for duty considerations (there is no duty between Canada/Israel with crocs sales 1.2 million pairs in 2006 in Israel) * Continued the compounding in Italy but it resulted in supply chain inefficiencies in the phase of crocs development. * In 2006 Crocs controlled the compounding activities; by creating state of the art compounding facilities in Canada, China and Mexico (moving compounding in-house provided an IP protection for croslite compound). * Crocs changed its warehousing model: from contract warehousing in Colorado to company own warehousing - which were added to each of the factories- with direct shipment from manufacturer's premises to big clients.
Question 2: What are Crocs other core competencies? And explain how these also give Crocs a competitive advantage. Other than a responsive supply chain Crocs has many core competencies: * They thought huge: after the runaway success of their funny looking shoes, Crocs executives took the local company multinational. They purchased many manufacturers plants in Canada and Mexico as well as signing contract manufacturing in Italy Romania and China. * Their scale allowed them to set up just in time manufacturing in response to the demand. * Their huge manufacturing base allows them to produce a diversified product line. * Instead in focusing on fashion, they focused on their core strength: croslite. Waterproof, light weight and boasts anti-microbial properties, as they have believed that the quality of their unique material and not the look is what would be sustainable in the market place. In case of crocs it s not about a trend,...
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