Crocs emerged in 2003, quickly growing in both scope and profitability as a result of its unique value chain management system. Foregoing traditional models, Crocs quickly acquired and established a world-wide network of supply, manufacturing, production, and delivery systems. This gave Crocs the ability to minimize costs, maximize efficiency, and deliver the best value to their customers. Within this customer-focused framework, Crocs created a unique global value management system, superior in execution and focus when compared with traditional supply chain systems.
Traditional Supply Chain Management
Conventional supply chain management is limited in focus. It is internally concentrated on the flow of raw materials through an organization (Robbins & Coulter, 2009). In contrast, value change management focuses on both the flow of incoming materials as well as the outgoing products. In particular, it seeks “manage the sequence of activities and information along the entire value chain” (Robbins & Coulter, 2009, p. 430). In this way, it can be thought of as more customer focused as it aims to best meet the needs of its customers.
Traditional shoe manufacturers have tended to use an inflexible supply chain management model (Hoyd & Silverman, 2008). In this model, retailers submit bulk orders several months in advance of a selling season and manufacturers fill these orders exactly as submitted (Hoyd & Silverman, 2008). This process is inefficient because retailers must anticipate how many shoes they will sell before the selling season starts and are unable to modify orders according to customer needs during the season. Such a system leads to missed revenue opportunities, waste and ultimately reduced profits as retailers either run out of inventory or end up with extra product they must discount at the end of the season (Handfield, 2008). Despite this inefficient system, Crocs was one of the first companies to successfully streamline different aspects of the manufacturing and supply chain to create a new customer-centered value chain.
The Crocs Value Chain
Crocs’ success is partially due to creating an effective value chain management system (Hoyd & Silverman, 2008). Value chain management is a dynamic process focusing on maximizing effectiveness along the entire sequence of operational activities (Handfield, 2011). In accomplishing this, Crocs refined its production, manufacturing, and delivery systems in many ways. Specifically, Crocs bought their resin supplier and engaged in technologically novel processes to create proprietary croslite® resins that are inexpensive to produce, odorless, and available in a variety of colors (Business Pundit, 2008). Likewise, they acquired and created compounding facilities to reduce supply chain inefficiencies and better control manufacturing of their product. Finally, Crocs improved their inventory processes by adding warehouse operations to each factory (Hoyd & Silverman, 2008).