Operations Management-crocs Shoes Case Study

CROCS: REVOLUTIONIZING AN INDUSTRY’S SUPPLY CHAIN FOR COMPETITIVE ADVANTAGE

Case Study 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

BHOOSHAN PARIKH

reasons for loss of competitive advantage of the company.

The paper ends with

CBS FTMBA 2008-09

recommendations for a change of supply

OPERATIONS MANAGEMENT

chain strategy by supporting the arguments

TERM PAPER

Crocs Inc. can regain its competitive

3/16/2009

with relevant theories and models and how

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

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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. Changes in technology, production and delivery processes, consumer demands, and even government policies require that organisations focus on their core competencies rather than having a finger in every pie. This paper has been structured to critically evaluate the footwear industry in generally and the supply chain of Crocs Inc. (Appendix A) in particular and provides insights into possible drawbacks and improvement areas in the strategy adopted by the organisation in the years leading up to its present position. In the latter half, the paper describes my views on how Crocs, Inc. can better their position in the footwear industry and become a more stable competitor to its major challenges in the environment. I have used a number of theories and models, both in analysing the system prevalent at Crocs, Inc. and in providing insights into how they can build up on their successes and create a more stable and extended future for the company. Of course, it cannot be claimed that this paper will provide a foolproof solution to the issues of today‟s footwear industry and Crocs Inc in particular, but it does portray a different perspective especially by providing arguments against vertical integration as a means to achieve competitive advantage. This paper contradicts the theoretically sound and widely accepted principle of vertical integration to achieve competitive advantage. The paper highlights the probable drawbacks and bottlenecks plaguing the supply chain of Crocs Inc. The paper begins with a brief overview the footwear industry based on Porter‟s Five Forces model (Porter, M.E., 1980) and introduces the Crocs‟ supply chain process. It explains how Crocs suffers from the Forrester Effect (Forrester, J.W.) and using the 3PL (Christopher, M.) description the paper conducts a critical analysis of the highly agile and vertically integrated supply chain environment of Crocs. Using the Fisher and Kraljic models, I have demonstrated how the company can needs to revise its foundation in developing a strategically sound supply chain process. Furthermore, the Japanese philosophy of Kaizen (Imai, M.) and Kanban have been uniquely combined and later superimposed on the Kraljic model to create an interestingly different perception of the supply chain integration.

The paper ends with recommendations

adequately supported by the above theories/models and indicates the existence of the Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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possibility that vertical integration may not be the best approach towards achieving competitive advantage in a highly dynamic industry. INDUSTRY ANALYSIS Using the concept of Product Life Cycle (PLC) (Wasson, C.R.) (Appendix C), it could be said that the footwear industry as a whole is at the „saturation/maturity‟ stage and is likely to continue at this stage. Of course, it is unlikely that the demand for footwear will fall considerably; there are chances that with the development of more durable and cheaper products, the profitability of the industry will decline over the years. I have used the Five Forces Model (Porter, M. E., 1980) to conduct an analysis of the global footwear market (Appendix B). Entry Barriers: The footwear industry seems to provide relatively easy entry for new players. The cost advantages are low with a large number of players globally as well as locally. However, the manufacturers have reasonably easy access to raw materials and have been able to achieve economies of scale through outsourcing of production. Capital requirements are not too demanding and so are the general governmental policies. Companies have been able to achieve propriety over designs and styles and are in a position to consolidate their gains from the industry. Supplier Power: Most shoes are made from similar material with Crocs being the exception of having propriety on the Croslite material with which its shoes are made. Due to wide availability of raw material and a large number of suppliers, larger producers have been able to get better prices as compared to smaller players. At the same time, switching costs for the firms are low and as a result, the supplier power is not considerable. Threat of Substitutes: Since entry barriers are low and switching cost are low substitutes are a constant threat in the footwear industry. Moreover, the intense competition leads to lower prices, which affects consumer choice. Companies have to continuously bare a trade-off between price and performance. However, large players are in a position to achieve a higher MES (Minimum Economic Scale), which might act as a barrier for substitutes. Buyer Power: Customers are the most powerful in this highly competitive industry. Success is dependent on the extent of penetration in to the market and achieving a balance between price and quality. Moreover, footwear would be termed as innovative products and are subject to frequent changes in trends and therefore, demands of the consumers. Once again, Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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large players are the ones to benefit due to availability of capital and resources to respond to market conditions. Since buyers are likely to develop brand identity and loyalty, differentiation is very important. Rivalry: With easy entry and exit from the industry, a large number of players in the footwear industry are intensely competing against each other to gain maximum market share and increase their returns. However, industry growth is low and there is constant pressure on the firms to lower prices. Differentiation is hard to achieve and low switching costs mean that the consumer power is high and substitutes and knock-offs might eat into market share. The most important aspect is of efficiency in supply chain and the delivery of products to the right place at the right time. Most large companies have been successful due to superior supply chain processes. The above five forces reflect that competition in the footwear industry is not related only to the larger players. They jointly determine the industry competition and profitability and with many commonalities amongst the players, there are very few crucial aspects that govern the strategy formulation of these companies. Creating and developing an efficient and responsive supply chain aimed at reducing costs seems to be one of the most vital components in the industry. Comparing the PLC Curve of Crocs with the industry curve, it would be wise to put Crocs at the stage of „competitive turbulence‟ as suggested by Wasson (Appendix C). The uniqueness of the Crocs clogs and the overwhelming popularity of the products indicate that there is quite some time for Crocs to reach the maturity stage, even when the industry in general is not performing so well. Crocs Inc.‟s main focus has always been better supply chain coordination and to garner opportunities to differentiate its products from those already available in the market. Crocs seemed to have adopted a global logistics strategy (Christopher, M.) in that it had focused factories manufacturing shoes to cater for certain markets; its inventories were centralised and it followed a system of localisation, generic levels of semi-finished inventories and small orders from suppliers/distributors. In order to supplement this system, Crocs had in place capacity and capability to meet changing market demands at short notice. In general, Crocs had a very agile supply chain process in place and that the firm understood the customers‟ needs and changes in the market trends. Crocs clearly understood the dynamic nature of the footwear industry where a product might no longer be in fashion the following year, and developed the ability to produce additional Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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stocks in the same season, thereby creating a competitive advantage through a more agile and market responsive supply chain (Fisher, M., 1997).

The company had maintained

cordial working relations with its retailers and distributors and they worked with stores and retailers for promotion of their products at trades shows and public events. Ronald Snyder, the President and CEO had aimed to achieve a simultaneous global launch of all its products right from the beginning and had structured the organisation of the company to be sustainable in such conditions and be able to thwart the competition before they got a chance to react. In view of this expansion and with the aim of meeting the customers‟ needs, Crocs decided to move away from contract manufacturing (3PL) to a more vertically integrated organisation where they had better control over their activities. DISCUSSION At this point it would be interesting to explain the situation faced by Crocs using the Forrester (Bullwhip) Effect (Appendix D).

Crocs has historically chased demand since its

inception and hence felt the need for excess capacity to react quickly to market demands. They obviously considered its supply chain to be highly effective and in fact they did prove themselves to be correct for a few years.

Theoretically Crocs could have continued to

achieve success at this had they been able to meet all customer orders in every season. What they failed to realise was that customer

Outcome of the Forrester Effect

demand is rarely perfectly stable and it becomes essential for every business to come up with accurate demand forecasts.

As

mentioned earlier in the industry analysis, the “customer power” is very strong and it was necessary for Crocs to stretch its perception of customer demand as far as possible.

Usually,

companies

resort

to

holding reserve stocks due to overcome forecasting errors but that is not the case

Source: www.shjconsulting.co.uk/challenges.htm

with Crocs. They believe in holding excess capacity and their ability to produce the required stock as and when required. In my opinion they were not entirely correct! Misperceptions of the stakeholders‟ risk and time delays caused panic ordering by suppliers due to unfulfilled

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market demand. Forecasting errors and constantly changing inventory control strictures created variations in lead time and replenishment of stocks. It seems that there was a misalignment in the corporate strategy and the supply chain strategy adopted by Crocs. In 2002, when the company was established it was obvious that it had centralised operations since its market was limited. As it began to grow the firm expanded globally and chose to enter contract manufacturing and be able to make the products available faster and economically. However, the company found that the 3PL system was not effective and so it began to consolidate its assets and create a closely integrated organisation. In doing so Crocs got too involved in managing the external resources and process and lost focus on its key areas of operation and as a result this affected its competitive advantage. At this rate Crocs is well on its way to moving into the „Stuck in the Middle‟ position (see diagram on this page) with reduced profitability and limited alternatives for growth and survival in a highly competitive industry. Mentioned below are some of the points that explain how Crocs‟ competitive advantage was affected and why it makes more sense for Crocs to implement a 3PL system rather than focus only on a vertically integrated firm.

Porter’s Competitive Advantage Matrix

Adopting a 3PL system: The

3PL

is

ideal

for

companies like Crocs that have wide and complex distribution networks. It would be agreed that the distribution network and the supply chain network of

Crocs,

Stuck in the middle

although

revolutionary in its own sense, was considerably complex and stretched a

Source: www.valuebasedmanagement.net

bit too much. Their Denver facility, for example, was highly underutilised as it catered to only the smaller retailers in the Americas and shoes were sent there from manufacturing plants that were in Italy and China. Until recently, their compounding activities were concentrated in Italy and that again was a highly centralised and uneconomical.

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Free up resources: Crocs had a large sum of money tied up in its assets. The high ROA of the company in 2007 at 34 % (Hoyt, D. and Silverman, A., Exhibit 4, p.18) will most likely see a dip as the company acquires more assets in its quest to centralise its operations. Moreover, relative to the amazing figures shown by the growth in revenue, the returns on assets are modest. In order to meet demand at short notice, Crocs had created excess capacity of one million pairs of shoes and that would have held up valuable financial resources of firm. Shifting of moulds and equipment from one factory location to another was also not very cost-effective. Moreover, with changing trends and frequent new designs the costs and delays of developing moulds were significant. Through outsourcing, Crocs will be able to reduce capital expenditure and the same could be put to better use in product development, customer relationships and marketing. Even if Crocs had excess capacity, then it could easily least it out for its own production requirements if the same was not being utilised optimally. Cost advantage: In my opinion, Crocs lost its cost advantage by reverting back from contract manufacturing to owned-manufacturing. The emergence of knock-offs in large numbers may be reasoned as an outcome of this move. Crocs had outsourced its manufacturing to China and Mexico and after a few years they had their own manufacturing facilities. However, it seems probable to argue that in trying to achieve higher profit margins and creating a better supply chain model, they overlooked the important facts of creating entry barriers and maintaining their cost advantage. It can be said that the large number of knockoffs (Oakland Tribune) have dented the uniqueness of Crocs and in spite the difference in quality the lower price of the Crocs-duplicates have made a large number of customers switch brands. As discussed earlier, customer power is very strong in the footwear industry and as a result, Crocs shoes have come to be considered as a commodity rather than a differentiated product. Core competencies: The main advantage of adopting a 3PL system is that the firm is able to concentrate on its core competencies. Although Crocs‟ supply chain model is considered to be revolutionary, it does not help the company in improving and maintaining its core competencies.

It is a plausible argument that had Crocs not been involved in owned-

manufacturing, it could have utilised the same resources for better development of its products and ensuring that cheap knock-offs do not harm its market share. Although there has not been any significant change in the market share of the inventory turnover of the company‟s products is lower than the industry average and its stock prices have taken a hard beating on the stock market. Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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Inventory management: The inventory turnover ratio of Crocs has been considerably below the industry average in spite of high profit margins (Hoyt, D. and Silverman, A., Exhibit 2, p.16 and Exhibit 4, p.18). Moreover, there has been a steady rise in the levels of inventory, which were nearly three times the total fixed assets of the company (Hoyt, D. and Silverman, A., Exhibit 2, p.16) Although termed as highly flexible and revolutionary, the Crocs‟ production model and inventory management have not been able to keep up with the market demands in recent times. It seems that the Crocs management is unwilling to adopt a more supplier friendly system of inventory management, one that is being followed by others in the industry. As a result, it has been facing difficulties with supplies in Europe and the US. It was recently reported that Crocs‟ inventory levels are well above the appropriate levels and that this has become an issue of concern for the company (www.ap.org). It could also be said that the Crocs supply chain, in trying to be agile was not able to be maintain its lean profile, which led to high fixed costs and low inventory. Another drawback that could be attributed to the supply chain model was that Crocs might be considered as conservative to some extent. In view of the fundamental basis of being flexible and highly responsive to market demands, Crocs was not willing to change its supply chain model as per the requirements of the suppliers or even as per the changes in its organisational structure. In this sense, it is comparable to the traditional approach adopted by Marks and Spencer (Harrison, A. and Pavitt, J.). In view of the issues that have been brought to light in the existing supply chain of Crocs Inc., it may be suggested that Crocs carry out an internal alignment of its system and then move towards creating better integration between the internal and the external systems. RECOMMENDATIONS In my opinion, what is required to be done is to achieve better integration of the supply chain at Crocs Inc. On applying the Kraljic Model, I observed that Crocs needs to have a balance between vertical and horizontal integration rather than being on a single extreme. Assuming that the production process and the raw material required by Crocs to produce its clogs are relatively simple, the Kraljic Matrix for Crocs could be represented as shown on the next page. Of course, this is only an illustration and this is what my seriously limited knowledge in shoe making could conjure in terms of the Kraljic matrix for Crocs. Notwithstanding this Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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ignorance, it can be noted that

Illustration of Crocs’ Kraljic Matrix

the Leverage Items and the Strategic items are likely to affect Crocs Inc. more than the items on

the

Consequently,

bottom it

may

row.

Plastic Pellets Machinery/Equipment

Moulds for shoes Compounding

Paint/colours Rivets Ankle straps/fasteners

Warehousing Production Labour

be

recommended that Crocs strives to achieve vertical integration on the items on the top row and similarly,

it

may

outsource/contract-out the Noncritical and Bottleneck items. In doing so, Crocs should be careful in selecting the suppliers for its raw materials and be able to achieve competitive pricing. As for the machinery and equipment, the firm might find it more suitable to procure it on behalf of the contract manufacturer rather than relying on the latter. Strategically, it should try and find suppliers for leverage items that are closer to the manufacturing facilities otherwise, the transportation costs of raw materials might outweigh the benefits of the same. On the other hand, Strategic items should be kept under the direct control of the Crocs management as the moulds and compounding are the two key advantages that Crocs has over its competitors. Non-critical items like colours and replacement parts should be given to 3PL organisations and so should the bottle neck items. Point to be noted here is that since the actual production of the products can be outsourced to countries with low labour costs, the labour is termed as a bottleneck item. Similarly, warehousing would become the contract manufacturer‟s worry and Crocs need keep only limited warehousing facilities under its direct control. Other improvements in the supply chain could be brought about by adopting the Kaizen and Kanban system in conjunction. This is not to say that these could act as replacements or alternatives to the Kraljic model. Where the Kraljic model shows us an approach to supply chain integration, Kaizen and Kanban (HBR on Supply Chain Management) provide us the means to maintain and continuously improve the supply chain process. Kaizen (Imai, M.) is based on five basic elements (Teamwork, self-discipline, high morale, quality and suggestions for improvement), and provides three key factors that will help Crocs achieve reduced wastage and inefficiency, improved internal Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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standardisation across the whole organisation.

On the other hand, there is a need to

establish a demand-driven supply chain capable of reacting to actual customer requirements, which can be met through the concept of Kanban. Considering the successful implementation of this model by Wal-Mart, Crocs can establish an EPOS system to regulate replenishment and delivery from the distribution centres to the stores and from the suppliers to the Crocs‟ distribution centres. This creates a more accurate and clear picture of customer demand and inventory management throughout the supply chain. This can create better inventory positioning at lower costs and an IT based infrastructure providing flexibility and higher value for the customers. These two methods offers the right solution for Crocs to work towards a supply chain system that is agile as well as lean, which is a better balance than the current system that is highly agile and less lean. GE had a similar process in place which was known as the Quick Response Program (Bartlett, C.A. and Wozny, M.), and it helped GE cut down production cycle in half and reduce inventory costs by more than 20%. The financial implications for Crocs by implementing the prescribed system are evident. Furthermore, I can superimpose the Kaizen-Kanban combine on to the Karljic matrix and it may be inferred that Crocs needs to be lean for the processes it controls itself (Leverage and Strategic items) and be agile for the items that are being outsourced (Non-critical and bottleneck items). Besides the above, rather than depending on its own estimates of stocks, Crocs can use the Kanban system to provide a more accurate and real-time information about replenishment schedules, which will improve the efficiency of the production and inventory management processes. Another important area where I feel Crocs Inc. could have faltered is in their ability to distinguish their products as either „innovative‟ or „functional‟ (Fisher, M.) (Appendix E). According to Fisher, it is very important to match the supply chain with the type of product that the company has. And based on this type, the supply chain of the firm will be efficient or responsive. This is similar to what I have mentioned earlier in relation to the Kaizen and Kanban system and their correlation to the Lean and Agile supply chain systems. However, the underlying area according to Fisher‟s model is the classification of the product. I would like to agree with Fisher here and elaborate this more specifically concerning the Crocs supply chain process. As recommended earlier, Crocs should aim to achieve a combined vertical and horizontal integration; vertically integrated for the critical and strategic processes and horizontally integrated for the non-critical and bottleneck processes. Similarly, Fisher‟s model applies here in that the final product of Crocs Inc., their shoes, will be the Bhooshan Parikh CBS FT MBA 2008-09 Term Paper-Operations Management

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innovative product, characterised by changing fashion trends, consumer demands, and new designs and therefore, Crocs should adopt a more responsive supply chain (may also be termed as Agile). On the other hand, the critical and strategic processes involving the procurement of its secret raw materials and moulds would be mentioned under functional products. As a result, Crocs should develop a more efficient supply chain for these products. In relating this to the changes required in Crocs‟ supply chain management it can be termed as the need for incremental change rather than undertaking transformational change. It is, after all, a change in the work culture of Crocs that is being suggested here and the aspect of change management cannot be overlooked at this point. If Ron Snyder is himself not convinced about this need for change he will not be able to implement the same through the organisation. It makes me consider that applying the Eight Steps of Leading Change (Kotter, J.P.) would bring about a wonderfully methodical implementation plan of the proposed incremental change in the supply chain process at Crocs Inc.

CONCLUSION As seen from the above discussion, Crocs‟ „revolutionary‟ supply chain might have been so only for a short period of time. The current strategy at Crocs Inc. has led to inefficient production and excessive inventory due to inaccurate forecasts of customer demand. To add to this, the Forrester effect explained above leads to stock-outs, sub-optimal utilisation of resources, poor customer service and financial costs all along the supply chain. To stretch this a bit further, the damage to the stakeholder image and loss of loyalty can lead to greater losses for the organisation. Of course, the company has continued to show increasing profit quarter after quarter but it has lost the faith of the stockholders in the market and with increasing competition, Crocs needs to alter its stance. The focus on core competencies, demand-driven supply chain and adding value to the end user is what Crocs needs to work at to improve its market position. Taking cues from Porter, it would be wise for Ron Snyder to rework Crocs‟ approach towards gaining a competitive advantage through a Hybrid supply chain process combining both agility and leanness. Although Crocs did eventually shift to an IT based inventory management and planning process, it could have performed much better had it implemented this earlier. Moreover, referring back to Kotter, the change in corporate culture

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is also an area which Crocs could benefit from by being more flexible and reactive to market trends and consumer/supplier requirements. Finally, it may seem like a wild jumble of words in explaining the complex structure of the supply chain process. But this is the reality. It must be appreciated that supply chains cover multifarious activities and processes and with ever increasing developments in technology and methodologies, it is more likely to get even more challenging in the days ahead. From the above discussion, I would sound wise in admitting that there cannot be a one single solution to all the supply chain worries at Crocs Inc. or for any organisation for that matter, especially in a dynamic industry like footwear. It is also easy to argue that the prevailing supply chain of Crocs is successful, merely based on the fact that Crocs Inc. is still performing better than its competitors and has shown consistent growth in the last few years. The bottom line here is to be able to understand the unpredictable nature of the industrial environment and how important it becomes for every firm to strike a balance between all internal and external processes. There is little doubt that most managers around the world are continuously trying to improve their supply chain efficiencies and controlling costs. However, the question remains as to how many of these managers are taking into consideration the end user; the consumer, and actually attempting to arrive at more accurate forecasts? The following extract throws light on the importance of forecasting in inventory management and supply chain efficiency for Crocs and explains why the contents of the preceding pages makes sense.

The 10Q Detective questions the ability of management to calculate sufficient inventory levels, as the company failed to anticipate the higher-than-expected demand for the Mammoth (new fleece-lined Crocs) during the holidays (and had to air freight in a good deal of products, resulting in some gross margin pressure). However, should Crocs miscalculate demand for its footwear, the carrying costs of bloated inventory levels-warehousing, distribution, work-in-progress and finished goods-will come back to haunt management, especially if prices start to fall (customer discounts or forced liquidation of excess inventories) for some of its ‘fad footwear’. Source: http://seekingalpha.com, David J. Phillips, Crocs: Bloated Inventory Caused Stock Slide, 10Q Detective.

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Appendix A

Supply Chain of Crocs Inc. (recreated)

Adapted from Hoyt, D. And Silverman, A. (2007), Crocs: Revolutionizing an Industry’s Supply Chain Model for Competitive Advantage, Stanford Graduate School of Business, Case GS-57.

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Appendix B

Porter’s Five Forces Framework for Industry Analysis

Source: www.valuebasedmanagement.net

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Appendix C

Product Life Cycle Stages (Wasson)

Source: www.altera.com

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Appendix D

The Forrester Effect

Adapted from Lee, Hau L; Padmanabhan, V. and Whang, Seungjin (1997). "The Bullwhip Effect in Supply Chains". Sloan Management Review 38 (3): 93–102

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Appendix E

Fisher’s Matrix

Adapted from Fisher, M. (1997) What is the right supply chain for your product?, Harvard Business Review, March-April

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References: 1. Christopher, M. (2005) Logistics and Supply Chain Management-Creating Value-Adding Networks, 3rd edition, Pearson Education. 2. Forrester, J. W. (1961) Industrial Dynamics, MIT Press. 3. Harrigan, K. R. (2003) Vertical Integration, Outsourcing and Corporate Strategy, Beard Books. 4. Harrison, A. and Pavitt, J., New Supply Chain Strategies at Old M & S, Cases in Operations Management, 3rd Edition (2002), FT Prentice Hall, pp. 64-68. 5. Imai, M. (1986) Kaizen: The key to Japan’s competitive success, 1st edition, McGraw-Hill, NY. 6. Kotter, J. P. (1996) Leading Change, 1st edition, Harvard Business School Press. 7. Porter, M. E. (1980) Competitive Strategy, The Free Press, New York 8. Porter, M. E. (1998) Competitive Advantage-Creating and sustaining superior performance, The Free Press New York. 9. Wasson, C. R. (1974) Dynamic competitive strategy and product life cycles, Challenge Books. Journals and Articles: 10. Bartlett, C. A. and Wozny, M. (2005) GE’s Two-Decade Transformation: Jack Welch’s Leadership, Harvard Business Review, 9-399-150, May 3, 2005. 11. Fisher, M. (1997) What is the right Supply Chain for your product? Harvard Business Review, Mar/Apr 97. 12. Hoyt, D. And Silverman, A. (2007) Crocs: Revolutionizing an Industry’s Supply Chain Model for Competitive Advantage, Stanford Graduate School of Business, Case GS-57. 13. Kraljic, P. (1983) Purchasing must become Supply Management, Harvard Business Review, Sep/Oct 83, Vol. 61 Issue 5, pp 109-117. Internet Sources: 14. http://articles.moneycentral.msn.com 15. http://money.aol.com 16. www.crocs.com Other References: 17. Harrison, A. and New, C. (2002) The role of coherent supply chain strategy and performance management in achieving competitive advantage: an international survey, Journal of the Operational Research Society, Vol. 53, No. 3, pp. 263-271. 18. Harvard Business Review on Supply Chain Management (2006), Harvard Business School Press. 19. Johnson, E. M. And Pyke D. F., Integration and Globalization in the Age of e-Business, 21st Century Management: A Reference Handbook (2008), Sage Publications. 20. Taylor, D. (1997) Global Cases in Logistics and Supply Chain Management, Thomson.

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