Case Study : Patagonia, Inc.

Supply Chain Management: An International Journal, Volume 7, Number 5, 2002, pp. 271 – 282;

Supply Chain Management (SCM) management is the success factor in fast fashion business. SCM deals with suppliers, with supplier’s suppliers, with customers and even customer’s customers (Galin, Zhelyazkov, 2011). Zara’s process focuses from raw materials basis to customer consumption. The supply chain productivities are a physical product, a combination of time, place, form and function of a product and service proposition. In the fashion world, where companies are competing on time the need of new abilities are rising.

Today’s world great organizations are emerging in inventing powerful resources for a competitive advantage. It is called supply chain management and it includes all integrated activates which introduce to market place and maintain customer satisfaction. This supply chain management drives from multi- disciplinary departments such as procuring, transportation, manufacturing products, customer services, distribution of product into integrated program. Successful management will be in coordination and integrated in all these activate in an unbroken chain process. It supports and interconnected to all the partners within the organization, where these partners are merchants, third party companies, transporters, third party companies and product providers.

The profit margins in the grocery business are extremely thin, so the Kroger Company’s supply change management continually works on improving its supply chain to increase efficiency and reduce costs. Kroger utilizes a program of lean process engineering to constantly improve its supply chain. This process involves examining each individual step of the supply chain from its suppliers to product delivery at its stores and furthermore, this process has been proven to drive down waste and reduce cost (Kroger, 2008). Kroger’s supply chain management is located near the top of the organization structure since the company as a whole has a strong emphasis on improving the supply chain to reduce cost and increase profit margins. Therefore the further up the organizational structure the supply chain management team is located the more optimally it will function and the greater the influence it will have on the decision making process (Burt, Petcavage, and Pinkerton, 2010).

Patagonia’s value proposition is based on embedding environmental sustainability in every business decision it makes. Its core strategy is differentiation by focusing on durability and quality of products whilst minimising its carbon footprint and use of synthetic ingredients (what). The business model revolves around developing innovative technologies and influencing competitors and suppliers alike to adopt environmentally-friendly processes (how). Commitment to these causes while maintaining quality has allowed it to develop a loyal customer base amongst high income groups and athletes (who) and significantly increase customer’s willingness to pay.

In the context of our business model our number one key process is our Rules and Norms (a complete breakdown of Patagonia’s current business model and a to-be-proposed business model are available for review in Exhibit I). This ethos that started with the founding of Chouinard Equipment continued through the creation of Lost Arrow and indeed Patagonia. Our self-proclaimed “dirtbag” culture has resulted in some unorthodox business practices over the years. We pride ourselves on our efforts to reduce the social and environmental impact of the lifetime of the goods and services we produce. This is something that our competitors recognize but do not focus efforts on; for

The Patagonia company started in 1974 by founder Yvon Chouinard with a motto that focused on the person (Ferrell, Hirt, & Ferrell, 2009, pg. 352). The free spirited company has lasted over 35 years by always keeping with its original goals and using them to continue to be the driving force that excels the company today. Patagonia is an outdoor sporting equipment and clothing company that has a unique main focus on its employee's benefits and protecting the environment. The work structure is far from a normal business environment it is built on the employees being happy to come to work every day. The business world tries is full of CEO and upper management earning the bulk of salaries and benefits but not at this company.

Under Armour is a company started by Kevin Plank in 1996 in a basement. The company went public in 2006 raising a total of $153 million as equity. From a small private company to a multi-billion generating organisation, Under Armour had to overcome numerous challenges including financial difficulties and sales growth. The founder started with premium quality sports clothes and today the company specialises in diverse sportswear and apparel. Through the development of new hi-tech gears, Under Armour, Inc. has been able to penetrate and establish itself in the sports apparel market. It is constantly coming up with new products and adopting innovative strategies to meet the growing needs of its customers as well as to stay ahead of its rivals. A brand which was hardly known a decade ago is today worn by elite athletes in virtually every sports – for instance, Michael Phelps, the Rio Olympic gold medallist, promotes the brand.

Patagonia is an American high-end clothing company, which produces outdoor clothing. Their clothing are durable and eco-friendly. It was established in 1974 by Yvon Chouinard. Their headquarters are located on a three-acre campus in Ventura, California. Their mission is to “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” (Patagonia). Yvon Chouinard is no longer the Chief Executive Officer (CEO) of Patagonia.

“Patagonia grew out of Chouinard Equipment, a supplier of climbing tools. In the 1970s, founder Yvon Chouinard began selling rugby shirts and shorts

American Eagle is audited by CBP which is Bureau of Customs-Trade Partnership and other agencies within the Department of Homeland Security. The company also has auditors within their company that does pre-inspections of all potential production facilities.

Patagonia is a company built from an idea born from a need to produce better products of the highest quality for those who harbor a love of the outdoors and while creating a workplace offering diverse products for all facets of outdoor life, Patagonia maintains a level of inspiration and implementation of solutions to correct environmental damage while not causing any unnecessary harm and providing the highest standards in work ethics. Patagonia’s founder, Yvon Chouinard, started as a climber in 1953 when he became a member of the Southern California Falconry Club which led to a great fondness of rappelling down cliffs. Soon, climbing up the mountains and cliffs became an every weekend sport and Chouinard realized the only pitons available

Regardless of a company’s size, mission or available resources the strategies that Patagonia has utilized to reduce its employee turnover rate while simultaneously increasing an employee’s ownership can be utilized relatively easily and with minimal costs. Many have asserted that employees value factors such as transparency, one-on-one communications compared to emails and a structured avenue to openly give their opinions just as much as benefits that come at a monetary cost to a company (Taylor, 2016). Patagonia’s strategy of relating their individual employees interests away from the office with their work assignments is also a strategy that any company could utilize to increase an employee’s interest in their workload. For years, the

Effective supply chain management can provide an important competitive advantage for a business marketer, resulting in improved communication and involvement among members of the chain, increased motivation, and decreased costs. Tracking the movement of and demand for components used to manufacture a product across a variety of potential and actual suppliers, provides insight and the ability to respond instantly to shortages, surpluses, and changes in market conditions. It seeks to optimize production, decrease manufacturing time, minimize inventory, streamline order fulfillment, and reduce cost.

Supply chain management is a main process in all kinds of companies. That’s because an optimized supply chain results in lower costs and a faster production cycle.