Revolutionizining on industry’s supply chain model for competitive andvantage

Revolutionizing on Industry’s Supply Chain Model for Competitive Advantage
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Abstract
The success of a manufacturing company is a strong influence of the management of their supply chain, which encompasses the organization, people, activities, information, and resources that together enhance the movement of a product from the supplier to the customer. Supply chain management includes the planning of activities, coordination with partners, and managing manufacturing process. In regards to the company Crocs, its success in managing the supply chain provides it with a competitive advantage over other producers. Additionally, its efforts in managing marketing, introducing new products, and designs significantly contribute to its success. The presence of strong leaders positively influences the company’s decision making and addressing challenges in production and distribution of the products. In regards to strategic planning of its operation, the company introduced models parallel to its objectives in expanding their production capacity. The use of the inventory module assists in planning and strategizing on the future trends of the business. Although the company faces creating success, it is important to address the various methods it uses in meeting the customers’ needs. Some of the methods expose the business to high risks, which may threaten its future success.

Revolutionizing on Industry’s Supply Chain Model for Competitive Advantage
Introduction
Supply chain encompasses a system of organization, people, activities, information, and resources that together enhance the movement of a product from the supplier to the customer.

It includes the transformation of natural resources and the raw materials into a finished product sold to the consumer. It is important for the production company to effectively manage its supply chain in promoting the performance of the business. Thus, supply chain management includes the planning of activities, coordination with partners, and managing manufacturing process. The essence of the paper is to perform an in-depth analysis of the Crocs Company looking into their operation capabilities, strategy evaluation, and risk management.
Crocs Operational Capabilities
Crocs, Inc is a footwear company established in 2003 following the efforts of three friends from Boulder, Colorado. The materials for the shoes include a cross lite material made into very comfortable designs incorporating funky designs and color. The pump includes the features of being light, odor resistant, ventilation holes, and ease in washing. Through word of mouth, the shoes gained popularity and professionals such as doctors and gardeners sort the shoes owing to their comfort. The early success of the business saw the need to contract Ronald Snyder as the consultant of the company. The move to include a specialist immediately encouraged better management and generation of significant ideas that positively contributed to the growth and expansion of the enterprise. In particular, Snyder saw the purchasing of the manufacturing company and thus giving Crocs the position to directly handle the production of its products. Consequently, Snyder as the presidents influenced other significant personalities from Flextronics to join Crocs and built infrastructure in preparation for the expansion of the company. The worldwide launching of the products provided a sustainable ground for the brand. The idea is the work of the new executives from Flextronics having experienced the advantages of global distribution.
About marketing, the company began with local areas including the participation in trade shows, concerts, festivals, sports tournaments, and working closely with stores purchasing their products. In the US, the company involved the representative to help push sales through their engaging the customers to the products. Similarly, in other countries, Crocs used sales staff and third-party distributors. According to a financial report of the company’s’ success, the revenue increased from $ 1.2 million in 2003 to $ 355 million in 2007. The going public in 2006 saw an increase in capital from the initial $ 1 billion to $ 2.7 billion by the first quarter report in 2007. Following the release of the report, the company projected the 2007 revenue to range from $ 670 million to $680 million. The net income at $ 0.61 per share equaled to more than 17 percent of the total sales registering unexpected market growth. Consequently, the company announced a two-for-one stock split resulting into an upsurge of the stock price.
The inclusion of more designs and products by 2007 also contributes to the success of the company. Data provided on their website indicate 31 essential footwear models ranging from sandals to professionally designed shoes. The establishment of a license agreement with companies such as Disney offered new designs into the company and thus provided its customers with a range of products to choose. The company expansion to include caps, t-shirts, socks, shorts, backpacks and accessory products contributed to their massive sales and increase profit margins. Consequently, the idea of adding logos to the products according to the specific targets enhanced the sales of the products. An example of this is the provision of university logo attracting schools such as USC, UCLA, Notre Dame, and Ohio State among other institutions. In December 2006, Crocs purchased a family owned company Jibbitz producing decorative accessories to insert into the ventilation holes of the shoes. Additionally, the company strategic move into the acquisition of sports protection equipment, apparel markets, and action footwear broadened its product line to include the production of leather products.
A significant success of the company involves the manipulation of the supply chain to provide a competitive advantage over other shoe producing companies. Traditional companies practiced the placing of orders through the retail distributors for each season in advance, which set the production plan. Comparatively Crocs model involved the production of the product according to the customers’ needs. The design effective met the demands and satisfaction of the customers. The models’ flexibility allowed the company to respond to changes in the request and trends in design. Additionally, through the use of the model, the company managed to limit unsold stock avoiding engaging in discount prices to eliminate the surplus production.
Operations Strategy Evaluation
The key to success of the business is efficiently carrying out of the process function. It allows for the production of the products sold to the consumers and thus generating revenue. The operation strategy must be in support of the goals, and objectives of the business. Its targets must also be realistic to ensure the structuring of a plan to meet the said objectives. The performance of the evaluation helps predict the direction of the business and thus contribute to amending the plan or coming up with an even better method of meeting the production. The operation strategy binds the various operations decisions and action into a cohesive, consistent response by linking the firm policies, programs, and system. Is long-term aim is to determine and develop the business operations resources to achieve a high degree of compatibility with the resources. Relevant issues addressed in the action strategy include long-term decisions, capacity, location, processes, technology and timing.
The strategy employed by Crocs involved the taking over the production of the shoes. Initially, the company Foam Creations handled the production function, but the contraction of Snyder saw the buying of the enterprise. A significant contribution of the move included the avoidance of supply chain interruption. The manufacturing control of Crocs enables it to control the CRO site resin and purchase of the pellet materials from other producers in Europe and the United States. As part of the success, the strategy is the use contract manufacturers in handling global production. Following their expansion into China in 2005, the company sent the compounded pellets from Italy to Canada and China. Later, shipment of the shoes occurred from China to Denver for packaging and delivery. Initially, all compounding took place in Italy, but through the Worldwide launch the company sort to distribute the manufacturing capacity by including other contractors in Florida and Mexico. Snyder generated the idea borrowed from the company Flextronics. Although the use of third-party manufacturers proved successful in Asian countries, it provided quite a challenge in other nations and thus discouraged the use of the method in fueling expansion to other countries. To counter the limitation of the use of contract manufacturers, the company sort to bring the global supply chain in-house. The model involved the opening up of company-owned manufacturing operations, which resulted in increased capacity.
It is imperative to consider that as the size of the company grew, the centralized compounding in Italy faced supply chain inefficiency. Compounded material required their transportation from Italy to all other manufacturing branches significantly reducing the flexibility in production. In 2006, the move by Crocs to create compounding facilities in Canada, Mexico, and China positively enhanced the movement of the raw materials and reduced the risk in determining the customers’ preferences in design and color. Additionally, the change strengthened the protection of the Intellectual property (IP) across the lite compound. Consequently, the company included a warehouse to each factory to allow an efficient process of labeling and filling customers’ orders. The company decision to take control over warehousing is partly due to the progressing loss of interest to the contract warehouses used in different countries. Initially, the contracted storage companies took interest only to change later and become less enthusiastic about their participation with Crocs. In effect, the change in interests affected the output and delayed the process of delivery of the goods.
In handling the different needs of the small and large retail customers, the company provided the shipment of products to the company-owned warehouse in Colorado. Comparatively, the large retail customers exercised the use of their distribution centers coupled with the advantage of placing orders electronically. As a way to meet the increase in demand, the company procured injection molding machines that would be moved from one location to another depending on the urgency of the products and the need. Consequently, the company kept the manufacturing capacity at 1million pairs per month to efficiently meet and address the increase in demand for the products. About infrastructure, Crocks structured a plan to have adequate personnel and equipment to handle any increase in demand. The strategy allowed for modern production and transportation of the consumer’s products. In managing the marketing of the goods, the company took the approach of allocation of funding about the demand. The increase in demand led to a proportional increase in the financing for advertisements as well. Additionally, the firm kept ad campaigns readily prepared in the case of increased profits that allowed for increased funds in the advertising sector.
The need to reduce duty charged for goods produced resulted in the decision to move production to areas attracting fewer charges and duty-free agreements between the trading companies. An example is the duty-free trade policies for shoes running in Canada and Israel. These provisions allowed the company to enjoy maximum profits both from the setting up of a warehouse and manufacturing plant in Canada. Consequently, the company benefited from the Israel markets totally to over 1 million pairs in 2006. Their acquisition of the Ocean Minded in 2007 influenced their participation in producing other products using different materials such as the leather while still preserving the original model. About introducing a new product, the company performed an analysis of its marketability in the spring or summer season in the southern hemisphere before embarking its production in the US and the Europe. The study provided the company with a prediction on the acceptance of the product and thus could project the number of products to produce. In regards to developing a plan to meet the supply chain, the company initially established a home-grown database system. The system faced challenges such as the need to continually evolve to incorporate the rapid increase in capacity. Consequently, the company resolves to use inventory module providing information for the planning system.
Risk Analysis
The performance of a risk analysis greatly assists the management to structure their objective to include the action and direction to follow in mitigating the risks. A risk analysis also identifies the sources of the risks and develops appropriate strategies of preventing their occurrences. In regards to Crocs, the introduction of new products presents the potential for product acceptance to the public. Additionally, the setting of a capacity limit to meet the projected increase in demand is based on an assumption and thus contributing to the risk of the company. It is, therefore, important for the company to incorporate the performance of market trends and analysis before deciding on a minimum capacity of production of its products. The company, through its various representatives, could interview the customers to allow their participation in decision making about innovation of the products. In effects, the company can be in a better position of meeting the customers’ needs based on their suggested preferences. The expansion of infrastructure including the increase in machinery and personnel contributes to the risks the business faces in its operations. Great losses can occur in the occurrence of a decline in customers demand leading to the loss of finance and revenue. It is thus appropriate for the company only to increase infrastructure proportionally to demand. Additionally, the company can hire the injection machines during periods of increased demand rather than inquire enormous costs of purchasing and end up not utilizing these devices when demand is weak.
In capacity building, the company resolves to establish its warehouses and manufacturing plants. Although the method significantly expands the capacity and eases the supply chain, the plan contributes to the risks. In that, future markets of the products are unpredictable and also the customer’s preferences is always in a constant change influenced by different conditions and fashion trends. Appropriate use of third-party contractors is a positive recommendation that leads to sharing of losses and profits in case of any eventuality in the future. The company also faces competition from other production companies that are constantly innovating products to meet the customers’ needs. Competition poses a significant threat to any business, and the company needs to allocate more funding in the departments of advertising and entrepreneurship to provide an upper hand against the competitors.
Conclusion
Crocs, Inc Company, is an example of a company that sufficiently revolutionized its supply chain in respect to the markets to gain a competitive advantage. The company success is an outcome of success evaluation of the operation strategy to meet the different challenges and risks that threaten its operation. It is imperative to consider the role of organization structuring and incorporation of the various skills in influencing the success of the company. The founders identified the need to contract an outsider with management, marketing, and designing skill to enhance the success of the business. A constant risk analysis also significantly contributes to the future success of the firm by pointing out areas that need urgently addressing.