Crocs Case Study

Topics: Supply chain management, Inventory, Supply chain Pages: 14 (2698 words) Published: February 26, 2014

The ability to fulfill orders based off of true and current demand is the staple of the Crocs supply chain. The flexibility in the Crocs supply chain has been in the company’s ability to provide additional products within the same season of release by not requiring their customers to order one time for the season and months in advance (Marks, Holloway, Lee, Hoyt, Silverman, 2011, para. 11). However, this design is not without dependency for a demand for the product. In its current structure, this supply chain is designed for continuous periods of demand. There is a lack of a strong contingency plan for periods of lower than anticipated demand or unforeseen disturbances, such as a recession (Suresh, 2013, para. 6). In order for Crocs to continue to grow and for the Crocs supply chain to remain successful during both periods of low and high demand, Crocs will need to centralize its facilities and continue to either own or run their partner’s operations with the assistance of a developed ERP system. Crocs began in 2002 selling out of a warehouse in Florida and turned into a multi-country, multi-building, multi-partner supply chain (Marks et al, 2011, para. 4). The first edition of the Crocs supply chain existed in two locations, U.S. and Canada, and two companies, Crocs and Finproject NA. Finproject manufactured the shoes and distribution of the shoes occurred through Crocs outsourcing over the U.S (Marks et al, 2011, para. 6, 10). The next edition of the supply chain is where Crocs took the first steps to vertically integrate their supply chain and developed two core competencies. In 2004, when Robert Snyder from Flextronics joined Crocs, Finproject became company owned, under the new name of “Foam Creations.” Now, Crocs owned the manufacturing of their product and the proprietary croslite resin that comprised their shoes (Marks et al, 2011, para. 5-6). As per the Crocs’ website, croslite is “a proprietary closed-cell resin that gives each pair of shoes its soft, comfortable, lightweight, non-marking and odor-resistant qualities” (http://company.crocs.com/fact-sheets/). At this point, raw materials were acquired in Europe and the United States but compounded in Italy and manufactured at Foam Creations in Canada (Marks et al, 2011, para. 25). To expand capacity limits beyond Foam Creations, Crocs began working with a manufacturer in China, and later in Florida, and Mexico. This later expansion was a result of Croc’s global strategy to enter the Asian and European markets (Marks et al, 2011, para. 27-28). Having the compounding activity occurring in Italy limited the amount of flexibility Crocs wanted in their supply chain. “Compounded material had to be sent from Italy to each production site, in the correct amounts and colors” (Marks et al, 2011, para. 35). Thus, manufacturers could only produce the colors they had received from Italy. In response, in 2006, Crocs took over this piece. As they already established ownership of the croslite resin, they created compounding facilities in Canada, China, and Mexico, where they could ship the raw materials and hold off on compounding until product demand was determined (Marks et al, 2011, para. 36). Although the manufacturers in Asia were willing to work with the unknown levels of production, manufacturers in most other markets were unwilling to do so. As a result, Crocs went from contract warehousing to company owned warehousing in those locations. They continued vertically integrating by owning manufacturers in Mexico and Italy with plans for a location in Brazil. “As Snyder noted, “We don’t lose interest in our own stuff” (Marks et al, 2011, para. 41). In Europe, they were able to locate a manufacturer in Bosnia that would meet the need for quick response to demand. Crocs would not own the company, but would instead own the equipment and molds and use Bosnian labor (Marks et al, 2011, para. 33).

By 2007, the Crocs supply chain was fully developed in a manner that would allow...

References: Crocs. (2013). Fact Sheets. Retrieved from http://company.crocs.com/fact-sheets/
La Motta, Lisa
2008/04/15/crocs-retail-closer-markets-equity-cx_lal_0415markets31.html
Mark, Michael, Holloway, Chuck, Lee, Hau, Hoyt, David, Silverman, Amanda, (2011)
html
Oloffson, Kristi (2010, May 11)
Crocs Acquisitions, 2004-2006
Acquisition Date Acquired/Purchase
Source: Crocs form 10k for the year ending December 31, 2006, pp. F-11, F-12, F-30
Source:
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