Crocs Inc. – The Origin

Crocs Inc., which was founded in the year 2002, started its journey in 1998 by a different name, Western Brands (with a clear plan to be a ruling western brand). The concept of the extremely soft, comfortable and flexible footwear came to their minds when the founders Lyndon Hanson, Scott Seamans, andGeorge Boedecker had set themselves sailing for a trip.

On their boat, they accidentally came across a boating clog that was worn by the sailors, produced by a Canadian company, Foam Creations, Inc. What next, the three friends planned to acquire Foam Creations, Inc. and named it Croslite.

Croslite, the mysterious plastic king, is the trade secret of Crocs Inc. The main reason behind the company’s success in such a small period of a decade was its efficient supply chain and warehouse management system.

With all that said, let’s dive deep into what and how Crocs Inc. manages its forecasting, suppliers, warehouse, and their entire inventory.

Crocs Inc. ‘Porter’s Five Forces’ Analysis

#1. The Entry Barriers

For Crocs Inc., it wasn’t really difficult to enter the market keeping besides all the worthy competitors – the reason, (i) the easy governmental policies at that time, and (ii) easy availability and accessibility to raw materials. Although both the reasons mentioned remained the same for all the players that were in the game, Crocs wasted no time in taking the rights over the raw products that they use for their footwear – Croslite.

#2. The Supplier Power

Crocs Inc. acquired ‘Foam Creation’ – the company which produced the raw material for many other clog makers, and named it ‘Croslite’. Since then, Crocs Inc. has simply extended its outreach by expanding the Croslite factories and warehouses, just to make sure that the supply power never falls ill and there is enough of everything to meet the demand.

#3. The Threat of Substitutes

The changing technology has been an imminent threat to all the present substitutes for the Crocs Inc. products. Being a humungous player when it comes to clogs and other footwear that fall in this category, Crocs Inc. has become a ruler (never forget that they started with the name – Western Brands). And this superiority is the only reason to keep Crocs Inc. forecast all the probable threats and stay firm in the competition and constantly improvise their portfolio.

#4. The Buyer Power

The buyers demand, and there is nothing that can stop them to expect. All they want is to buy the best at the minimum possible price. Crocs Inc. had been constantly working on improving their designs and bringing in new products to cater to consumer demand and maintain their rapport in the market. It’s always kept in mind that the new products will always have a tendency to reduce the defection of existing customers to its competitors.

#5. The Competitor Rivalry

If the rivalry is really intense and the competition is at the peak, then it will certainly drive down the prices and eventually decrease the overall profitability. Crocs Inc. has collaborated with most of the competitors, just to make sure that there is nothing that can obstruct the growing market size of its niche.

Crocs Inc. – The Supply Chain story

Crocs Inc. has always opted for a global strategy when it came to logistics. It has different production facilities catering to varied markets. Crocs Inc. has a centralized inventory and a specific localization scheme so that their products are directed by their suppliers to the distributors in the local markets, easily. This helps Crocs Inc. an ability to cater to sudden fluctuation in the market demand with either limited or no impact on their supply power.

Crocs Inc., at a point in time, failed to do well with their supply chain and thus their continuous improvement in sales was put to halt. Getting in excess raw material and not understanding the fluctuations in customer demand was something that Crocs Inc. did not study. A bit of over-confidence and lack of homework impacted their supply chain.

Outcome of the Bullwhip (Forrester) Effect

If Crocs Inc. failed to identify that the customer demand never stays perfect when it came to the fashion industry. Maybe they cannot be blamed as their time was just not right or maybe the price analysis didn’t come along pretty well. Talking about the warehouse management, it’s been said and always practiced that some quantity of stock is kept as safety stock, Crocs Inc. didn’t do it and it is believed that that was the point where they went wrong.

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