Embed Size (px)
Citation preview
Derek Mitchell Ecco Supply Chain & Operations Analysis
Policy & Strategy Atlanta Module-Summer 2012
ECCO Vertical IntegrationCow Shoe to
• Ecco value chain is actually rawhide to shoe • Purchases raw hides and transforms into leather used in shoe production • Owns tanneries in Netherlands, Indonesia and Thailand • Processes 3,500 raw hides a day equalling 1 million cows per year
Product Development
(R&D)
Raw hides
Tannery Operations
Post Tannery
OperationsFinishing
Operations
Full Scale
Bench marking Prototype Ramp-up Laboratory
Production
ECCO Value Chain
Design Shoe Production DistributingLeather
Manufacturing
What is the future of ECCO's leather manufacturing?
Discontinue-"blow it up" Sell it
Product Development
(R&D)
Full Scale
Bench marking Prototype Ramp-up Laboratory
Production
ECCO Value Chain
Design Shoe Production DistributingRaw Material
Procurement
What is the future of ECCO's leather manufacturing?
But let's stop to reconsider.........
Global top five leather producerLeather centre developing leading technology
Supplies automotive and furniture industry
Leather manufacturing Value Add
Product Development
(R&D)
Full Scale
Bench marking Prototype Ramp-up Laboratory
Production
ECCO Value Chain
Design Shoe Production DistributingRaw Material
Procurement
What is the future of ECCO's leather manufacturing?
Leather Manufacturing
Quality Materials
Quality Products
Resources Strategy
Leather Manufacturing
VRIO AnalysisVRIO
Leather Manufacturing
VRIO Analysis
VRIO
aluable
aremitable
rganization
Leather Manufacturing
VRIO Analysis
ReframeResources
Leather Manufacturing
Bolster Brand Recognition
Increase Perceived Consumer Value
QUALITY
MATERIALS
QUALITY
PRODUCTS
Leather manufacturing Value AddGlobal top five leather producer
Leather centre developing leading technology Supplies automotive and furniture industry
Product Development
(R&D)
Full Scale
Bench marking Prototype Ramp-up Laboratory
Production
ECCO Value Chain
Design Shoe Production DistributingRaw Material
Procurement
What is the future of ECCO's leather manufacturing?
Leather manufacturing Value AddGlobal top five leather producer
Leather centre developing leading technology Supplies automotive and furniture industry
Remove "blow up" leather manufacturing from value chainRestructure operations as an ECCO subsidiarySupply ECCO and competitors in shoe industry
Product Development
(R&D)
Full Scale
Bench marking Prototype Ramp-up Laboratory
Production
ECCO Value Chain
Design Shoe Production DistributingRaw Material
Procurement
What is the future of ECCO's leather manufacturing?
Leather
Leather Manufacturing Restructuring Plan
Shoe Manufacturing and assembly
Online, Catalog and Other Retail
Sporting Goods,
Department and Shoe
Stores
Industry/Competitor Value Chain
Product Development
Marketing
Company Branded Specialty
Store
Customer Feedback
Customers
Customers
OutsourcedIn-house
Rubber, Fabric and Other Raw Materials
Shoe Manufacturing and assembly
Online, Catalog and Other Retail
Sporting Goods,
Department and Shoe
Stores
Industry/Competitor Value Chain
Product Development
Marketing
Company Branded Specialty
Store
Customer Feedback
OutsourcedIn-house
Customers
Customers
Rubber, Fabric and Other Raw Materials
Leather
Leather
Introducing...............Co-Branding
Co-Branding
Co-Branding
Co-Branding
Supply Chain & Operations Breakdown
• Product Development (R&D)
• Design
• Leather Manufacturing
• Shoe Manufacturing
• Distribution
ECCO Divisions
• Development of products, prototypes, laboratory production technology, processes, materials
• Laser technology development in Portugal facility
Locations
Value Add
• Bredero • Tonder • Indonesia • Portugal
Product Development
• Design in manufacturing facility to foster practical, high-quality product design
Locations
Value Add
• Bredero • Indonesia
Design
Locations• Netherlands • Indonesia • Thailand
Raw Hide Suppliers• Germany • Finland • France
Leather Manufacturing
• Amongst five largest leather producers worldwide • Leather research centre with 15 specialist developing new technology
and tanning techniques • Developing less polluting tanning methods • Processed 3,500 raw hides per day equaling 1 million cows per year • Sells excess to automotive and furniture industries
Potential Subsidiary Value (see IBIS report)
• Buying industries: footwear industry, automotive, furniture, Luggage manufacturing, Gym & exercise equipment, Athletic & sporting goods
• U.S. Leather industry value: $1.2 billion • Key Success Factors: Economies of scale, Effective quality control,
guaranteed key input supply (raw hides)
Disadvantage • Leather quality does not add to perceived customer value
Value Add
Leather Manufacturing
• Established production systems, streamlining processes and specific volume materials
• Perform small tasks making quality and production methods hard to imitate
Disadvantage • Procurement of raw materials to Indonesia facility takes 13 weeks from
order to delivery
Locations
Value Add
• Slovakia • China • Thailand • Indonesia • Portugal
Shoe Manufacturing
• Harbor of Aarhus • Denmark vans and freight planes for emergency
shipments
Locations
Transportation Methods
• United States • Tonder • Denmark
Distribution
Value Add• Tonder warehouse capacity: 2 millions pairs • Bar code system can facility shipment of
60,000 pairs per day to 25 countries
Disadvantage • Distribution system may not be able to
handle replenishment orders with short lead times
Distribution
ECCO Supply Chain Rawhides
Shoe Manufacturing
Leather Manufacturing
Distribution
Main Markets (U.S., Germany, Japan)
Slovakia
Indonesia
Portugal
France
Germany
Finland
China
Thailand
United States
Japan
Denmark
