Malik, Awais - Crocs Case

BULM 733
MS-SCM 2015
Awais Adil Malik
Case: Crocs (A): Revolutionizing an Industrys Supply Chain

Model for Competitive Advantage
Question 1: Describe the supply chain and fulfillment model

typically used in the shoe industry.
Answer: The shoe industry typically produces products a season before
demand for those respective products would appear in the market. As
such, the industry worked around the fall and spring seasons. The fall
orders that were received at the beginning of the year would be
planned for delivery in August, September, October, and November.
These scheduled shipments would drive the production plan.
The shoe industrys supply chain model does not incorporate flexible
production and relies on long lead times for delivery of shoes.
This
requires retail distributors to order shoes in bulk and then be subjected

to a double edged sword hoping that they have enough shoes to
cater to the unknown demand and secondly, that they dont have
shoes more than the market demand.
Question 2: What are the major advantages and disadvantages

of this model?
BULM 733
MS-SCM 2015
Awais Adil Malik
Answer: This model puts the producers at advantage as they are

afforded orders in bulk, produce and ship them off to the retailers to
deal with. The retailers then have to worry about underestimation or
overestimation based on market trends and product demand. If they
underestimated, they would have empty shelves and forego potential
sales. If they overestimated, they would be stuck with holding
clearance sales in order to get rid of this excess stock at discounted
prices. Furthermore, the fashion industrys trends are such that
historical data is not completely predictive as trends and likings
change over time.
Question 3: How did Crocs deviate from the model used in the
shoe industry and how did they do it?
Answer: Coming from an electronics background, the people in charge
at Crocs wanted to produce what the customer needed, when it was
needed, and have the capacity to respond to changes in demand
during the in-season. Previously, in season demand could not be
catered for because of the way shoe industry was set up, but with the
Crocs model, the principle of flexible production and the way a Croc
was produced allowed them to send out more shoes quickly after
evaluating market demand. Crocs provided a high level of support and
rapid shipment of product to its customers.
BULM 733
MS-SCM 2015
Awais Adil Malik
Question 4: What if any, are the main advantages of the Crocs

supply chain approach?
Answer: Under the Crocs model, retailers would not need to take a big
risk in January by placing large orders for their fall seasonthey could
place smaller pre-booked orders, and order more when they saw how
well the products sold. Traditionally, customers had to guess which
products would be hot, and could not get more of a product that was in
higher demand than they had guessed, rising losing potential sales.
Conversely, overestimating demand when placing pre- booked orders
would risk end-of-season sales to unload excess inventory at reduced
prices. Crocs wanted customers to be able to get more of a product
during the season in order to take advantage of unexpectedly high
demand. To do that, Crocs would have to be able to make the products
during the season, and ship them to customers quickly.
Question 5: How did the Crocs supply chain approach impact

their business?
Answer: The Croc supply chain allowed the retailers and producers (in
this case Crocs) to work a lot closely together. This positive relationship
that Crocs developed with its retailers resulted in additional benefits as
retailers could sell more without the fear of over or under committing.
As Crocs became important to big retailers, they approached Crocs to
suggest increasing the Crocs presence. The retailers suggestions also
BULM 733
MS-SCM 2015
Awais Adil Malik
gave Crocs an idea of what the customers are looking for in the
market.
As company CEO Ronald Snyder described one large retailer who said:
Bring us new products, bring us apparel, accessories, T-shirts, socks,
hats, Jibbitz and well give you a whole area that will be dedicated to
the current Crocs offerings and any new stuff you come out with. This
provided direct benefit to the company as its market visibility
increased tenfold with dedicated retail space all by just having a
closely-knit relationship with its retailers.
Question 6: Does the Crocs supply chain model make sense for
other shoe manufacturers? Why or why not.
Answer: Crocs distinguishing characteristic of producing shoes during
the demand season and responding to retailers demand quickly is
difficult to emulate for other shoe producers. The model entailing
flexibility obviously has its benefits, but other shoe manufacturers such
as Nike, Timberland and others cannot apply the same principle
because
of
the
diverse
shoe
designs
they
offer.
These
shoe
manufacturers need to incorporate cloth, leather, rubber and other

patented technologies in the creation of their shoes. In comparison,
Crocs also has a diverse shoe portfolio, they offer 31 basic footwear
models but the production of a Croc shoe is fundamentally different
BULM 733
MS-SCM 2015
Awais Adil Malik
and simpler than other shoes. For the production of crocs, ingredients
are put together for compounding and then the compounded pellets
are simply molded and assembled into the required design. Hence,
while it makes sense for others to follow Crocs supply chain model,
their shoe design limitations prevent them from doing so.
Secondly, over time, Crocs had developed production capabilities in

Canada, China, Mexico, Florida (USA) and Bosnia. With the addition of
compounding activities and warehousing capabilities to Canada, China
and Mexico facilities, Crocs became extremely flexible, essentially
expanding
and
redistributing
its
ability
to
produce
shoes
geographically. Furthermore, they acquired their entire supply chain

and brought it in-house; whereas other shoe manufacturers outsource
their shoe manufacturing to vendors and give up a lot of control over
their supply chain.

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BULM 733

Awais Adil Malik

Case: Crocs (A): Revolutionizing an Industrys Supply Chain

Question 1: Describe the supply chain and fulfillment model

requires retail distributors to order shoes in bulk and then be subjected

Question 2: What are the major advantages and disadvantages

Awais Adil Malik

Answer: This model puts the producers at advantage as they are

Awais Adil Malik

Question 4: What if any, are the main advantages of the Crocs

Question 5: How did the Crocs supply chain approach impact

Awais Adil Malik

manufacturers need to incorporate cloth, leather, rubber and other

Awais Adil Malik

Secondly, over time, Crocs had developed production capabilities in

geographically. Furthermore, they acquired their entire supply chain

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