Question

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 Gators™ 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, Gators™ 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 Gators™ 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, Gators™ are produced by contract manufacturers in the Shenzhen area of China and in Brasilia, Brazil. Generally, the manufacturing costs per unit were lower in Shenzhen and Brasilia, and somewhat higher in Spain. Conversely, the quality of Gators™ 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 Gators™ 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 Gators™ 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 Gators™ product. The following are some of the questions that will need to be addressed by this group.

2. What are the impacts of less-than-perfect demand forecasts for Alligator products, including Gators™, 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?

Answer 1

React quickly to changes in demand, especially for fashion fads

• Unique to gators
• Let product set demand→ $$
• online store for gators.

Excess capacity at production facilities to be able to increase production when necessary and capture the sale. Able to shift demand between plants

• Helps capture the sale
• Not dividing production for multiple product lines in one facility
• Can divert production to a location such as Mexico to reduce lead times, tariffs associated with shipping products from countries like China, or transportation costs o The use of moulds
• Molds were moved to plants that needed them; easy to transport
• Able to capture demand and keep costs low by making products that were closer to the market o Good global supply chain
• Ability to acquire a smaller, niche company and distribute those products internationally using gators good global supply chain

(1) Acquire useful companies to increase the efficiency of the supply chain.

• Vertical Integration allows gator to acquire or own distribution channels, injection machine, and raw materials This matches their competencies

(2) Growth by acquisition: acquiring smaller competitors Does not match - very different cultures may cause challenges Does match in some sense because of Gators has the ability to acquire a company that caters to a niche market

(3) Growth by product expansion - enter new markets by introducing new products and conducting research and development gators have the opportunity to use the shoes to market new products New products may improve brand visibility.

More inventory - available more for sale, more demand in more place •

Less inventory - less to manage. It’s beneficial if testing a new market. Less inventory means that your supply chain is flexible and are able to meet demand.

gators is a high margin company and face competition like Nike, Adidas, and Reebok.

• More inventory - available more for sale, more demand in more place

• Less inventory - less to manage.

It’s beneficial if testing a new market. Less inventory means that your supply chain is flexible and are able to meet demand.