Logistics Management at Crocs Shoes Term Paper

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Crocs: Revolutionizing an Industry's Supply Chain Model For Competitive Advantage Case Analysis

Company Background

What are Croc's core competencies?

Identification and Analysis of Alternatives

How do they exploit these competencies in the future? Consider the following alternatives

Further vertical integration into materials.

Growth by acquisition

Growth by product extension

To what degree do the alternatives in Question 2 fit the company's core competencies, and to what degree do they defocus the company away from its core competencies?

How should Crocs plan its production and inventory? How do the company's gross margins affect this decision?

Crocs, Inc. is a shoe designer, manufacturer, and retailer, which is based in the United States of America. The organization initiated its business in the year 2002. The core business of the organization was to sell plastic clogs, which had straps and were available in a number of solid and bright colors. The initiation of the business, it products and its commendable supply chain made it a tremendous business success story.

This paper analyzes the core competencies of the organization. In addition to that, it also highlights the strategies that the organization might adapt for the further enhancement of its growth and the decisions that it might make in relation to its inventory and production.

Crocs: Revolutionizing an Industry's Supply Chain Model for Competitive Advantage Case Analysis

Company Background

Crocs, Inc. is a shoe designer, manufacturer, and retailer, which is based in the United States of America. The organization initiated its business in the year 2002. The core business of the organization was ti sell plastic clogs, which had straps and were available in a number of solid and bright colors. The initiation of the business, it products and its commendable supply chain made it a tremendous business success story. (Stanford Graduate School of Business, 1-20)

The tremendous and bold strategic move of the organization enabled it to come out of the conventional red ocean by achieving both low costs as well as differentiation. The organization, as a result, entered the blue ocean. (Stanford Graduate School of Business, 1-20)

The organization was able to generate 847 Million dollars in terms of revenues and 168 million dollars in terms of profits in the year 2007, only six years after the launch of its products. After the generation of such huge amount and attainment of great success, the organization, unfortunately, move away from the blue ocean strategy and avoided the very basic foundations that led the organization towards great success. (Stanford Graduate School of Business, 1-20)

The organization kept on attaining tremendous rates of growth on the basis of its wide array of products. The success of the organization primarily depends on the formula of Croslite. Croslite is a light, low cost and flexible material, which is being used in the products of the organization. Another important critical success factor of the organization is its highly flexible supply chain. (Stanford Graduate School of Business, 1-20)

The supply chain of the organization is vertically integrated. This vertical integration enables the organization to fulfill the needs of the consumers in a more effective and fast manner. In addition to that, the organization does not stop its product range on a single product, instead it kept on producing various products that can be used for a number of purposes, such medical or collegiate. (Stanford Graduate School of Business, 1-20)

Question 1: What are Croc's core competencies?

The organization has a number of core competencies. Some of these competencies are discussed below:

Highly Responsive and Flexible Supply Chain:

Such a supply chain enabled the organization to produce and supply more products during the seasons in which sales are high. In case of a traditional supply chain the organizations can achieve a growth of about only 25% above the pre-booked orders during the high sales season. It, therefore, is impossible for an organization with a traditional supply chain to experience an explosive growth that is similar to that of Crocs. (Stanford Graduate School of Business, 1-20)

In addition to that, the ability to produce extra products during the selling season enabled the organization to enhance its production capacity. The organization added an extra production capacity of 1 million per month. Furthermore, it also went for redundant operations such as compounding and molding. These operations, as a result, enabled the organization to shift production to the areas where the demand was high, in an immediate manner. (Stanford Graduate School of Business, 1-20)

Global Capabilities:

The organization had the ability to draw on the strengths of various nations in performing a number of functions in relation to the production of its goods.

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The organization outsourced its manufacturing functions to highly flexible and low cost units in China. The organization could produce locally in Canada to address the demands of the Canadian consumers. (Stanford Graduate School of Business, 1-20)

Furthermore, the organization can also go for production in nations like Israel that have a duty free relation with the Canadian region. In addition to that, the organization could also use its proximity with the region of Mexico to fulfill the supply needs of the region of the United States of America. The global and highly flexible supply chain of the organization was the one of the most important competencies of the organization. (Stanford Graduate School of Business, 1-20)

Ability to Service Small Retailers:

Small retailers played an important role in the enhancement of growth and productivity of the organization. They contributed significantly to the revenue of the organization. In addition to that, they also created a marketing buzz of the organization and played an influential role in establishing the brand. In addition to that, they also provided the organization with the feedback and test marketing for the new products. (Stanford Graduate School of Business, 1-20)

Can do Culture and Product Design:

The can do culture of the organization, which motivated the employees to work up to their maximum potential and contribute effectively and efficiently to the profitability of the organization also contributed effectively to the growth of the organization. (Stanford Graduate School of Business, 1-20)

In addition to that, the unique and comfortable design of the product and a wide range of product variety enabled the organization to enhance its customer base in an effective and consistent manner. This, as a result, enabled the organization to achieve high levels of growth. (Stanford Graduate School of Business, 1-20)

Identification and Analysis of Alternatives

Question 2: How do they exploit these competencies in the future? Consider the following alternatives:

Further vertical integration into materials.

Growth by acquisition

Growth by product extension

In order to further exploit its core competencies the organization can opt for any of the following approaches:

Further Vertical Integration

The further integration of the supply chain would enable the organization to have a more effective supply chain and distribution channels as well. As the organization has a flexible supply chain, which enables it to enhance the production capacity during the high sales season, the organization can enhance its control over the value chain and production distribution through the further vertical integration. (Burt, Starling and Dobler, 39-117)

In addition to that, vertical integration would enable the organization to invest in more specialized and advanced products. This, as result, would increase the efficiency of the organization and would provide it with a strong competitive edge over its competitors. (Burt, Starling and Dobler, 39-117)

Another way to increase the market share can be the downward vertical integration. This would enable the organization to access the distribution channels that it could not have accessed before. This would lead towards an enhancement of the manner in which the organization distributes its products. (Burt, Starling and Dobler, 39-117)

In addition to that, the downstream vertical integration enables the organization to gain an access to the scarce raw materials. This sole access to the raw materials provides the organization, again, with a strong competitive edge over the competitors and hence enhance the growth tremendously. (Burt, Starling and Dobler, 39-117)

Growth by Acquisition

Growth by acquisition will enable the organization to make innovations in the existing product line. In addition to that, the organization would also be able to extend its product line and explore new and productive areas for growth. In addition to that, acquisition would also provide the organization with an access to advanced and upgraded technological tools. (Burt, Starling and Dobler, 39-117)

This, as a result, would enable the organization to effectively meet the changing demands of the customers. Furthermore, acquisition will also provide the organization with an increased number of number or supply chains. This would lead towards an enhancement in the flexibility of the organization and would affect the production and distribution capabilities of the organization in a positive manner. (Burt, Starling and Dobler, 39-117)

In addition to that, the above mentioned approach would also enable the organization to get hold over a more efficient and skilled workforce. This as a result would increase the productivity of the employees of the organization and ultimately of the organization itself,….....

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