Logistics

CASE 5.1

Alligator, Inc.Alligator, Inc. is a shoe designer, manufacturer, and distributor that launched its business in 2012. Although the company operates globally, its headquarters location is in Arteixo, Galicia, Spain, which coincidentally is the central location for Zara, the flagship chain store of the Inditex group, the world’s largest apparel retailer. The best- selling brand of Alligator, Inc. is its GatorsTM model, which is a market leader in the funky, brightly-colored, lightweight shoe market that has enjoyed unexpectedly high demand in recent years. Made of a highly-resilient, space-age plastics material, GatorsTM success is related also to the fact that each pair includes “one-size fits all” orthotics to meet the needs of individual consumers. Alligator, Inc. has patented the processes relating to the manufacture of the orthotics, and the overall value of this product innovation is similar to the way in which the super-secret formula for Coke is valuable to Coca-Cola, Inc.The Alligator supply chain begins with retail consumers who are located in regions throughout the world. The GatorsTM product is available for consumers at a wide variety of department stores, airport kiosks, Internet, and a select number of Alligator stores located primarily in developed countries. In addition to proprietary manufacturing facilities in Spain, GatorsTM are produced by contract manufacturers in the Shenzhen area of China and in Brasilia, Brazil. Generally, the manufacturing costs per unit were lower in Shen-zhen and Brasilia, and somewhat higher in Spain. Conversely, the quality of GatorsTM manufactured in Spain was considerably better than that of the other locations. The markets served by the respective manufacturing facilities were those that were in greatest proximity.The supply side of the GatorsTM supply chain was a little more complicated, as most inputs to the finished product were available from suppliers in the regional markets, but the custom-fit orthotics were all produced in University Park, PA in the United States. This is because the developers of the orthotics technology were professors in the supply chain and information systems and footwear technology departments at Penn State University. Overall, Alligator’s relationships with its suppliers could have benefited from better coordination, and more timely and complete exchanges of information. At the time that this case study was published, Alligator was in the process of designing an IT capability that would capture point-of-sale information, for further use in streamlining and aligning supply chain operations. Also, the sales of GatorsTM exhibited seasonal variation, but to some extent seasonal sales in the southern hemisphere complemented sales in the northern hemisphere.To help address some of the supply chain issues facing Alligator, Bryson Wilde has recently been hired as the new SVP Supply Chain, and Molly Walters has been selected as the first chief information officer for Alligator. Collectively, and with the help of consultant Anna Walters, this group has taken time so far to visit the company’s global facilities and to become aware of the situation, problems, and concerns that are faced by Alligator, Inc. with regard to the GatorsTM product. The following are some of the questions that will need to be addressed by this group.

CASE QUESTIONS

1. Based on your knowledge of the global business environment and the positioning of Alligator with regard to its markets and supply sources, what do you think are some of the major global issues that will be relevant to the area of strategic sourcing?

2. What are the impacts of less-than-perfect demand forecasts for Alligator products, including GatorsTM, and of volatility in the length and cost the supply chain services needed to move components from suppliers to manufacturing sites, and the subsequent movement of finished products to market? What should be done to mitigate these problem areas?

3. What elements of the strategic sourcing process do you feel are the top candidates for improvement at Alligator, and why?

4. How would you respond to the assertion that some of your contract manufacturers are involved in producing illegal merchandise (i.e., GatorsTM “knock-offs”) that ends up competing with the branded merchandise of Alligator?