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

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Crocs: Revolutionizing an industry’s chain model for competitive advantage

Executive Summary: Crocs, Inc. experienced astonishing growth within a short period of time and managed its highly flexible supply chain in ways which enabled Crocs to build additional product within the selling season. Building within the selling season made Crocs take advantage of strong customer demand, resulting in the company filling in-season orders totaling many times that of the initial pre-booked orders. But on the other hand Crocs, Inc. has a problem with high excess capacity and inventory levels which could be a threat to the company because so much money is tied up in assets. Crocs should try not
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was able to reduce the lead time between the company and large retailers. In addition in house manufacturing made it possible to flexible with prices, meet customer demands and allow small retailers to order small quantities. Critical Issue(s) / Problem Statement: * Excess capacity in form of molds and molding machines * Excess inventory in order to react to meet changing market demand on a short notice (almost 3 times the total fixed assets of the company) * Excess sunk capital in Denver (underutilized because it only catered to small customers in the U.S. and was sent shoes from manufacturing plants in China) * Increased risk due to high capital expenditure incurred in product development * Frequent transferring of molds between product locations is not cost effective * A lot of money is tied up in assets * A threat of knock-offs * Low inventory turn-over ratio Holding excess stock is usually done by manufacturers in order to overcome forecast errors. Crocs however seems to think that holding excess stock is normal practice, which is misleading in my opinion. Crocs, Inc. held about 1 million pairs of shoes as excess capacity which would hold up valuable financial

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