Derek Mitchell Ecco Supply Chain & Operations Analysis Policy & Strategy Atlanta Module-Summer 2012
ECCO Vertical Integration
Cow to Shoe
• • • •
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
ECCO Value Chain
What is the future of ECCO's leather manufacturing?
Full Scale Bench marking
Prototype
Ramp-up
Laboratory Production
Product Development (R&D)
Design
Leather Manufacturing
Shoe Production
Distributing
Raw hides
Tannery Operations
Post Tannery Operations
Finishing Operations
Discontinue-"blow it up"
Sell it
ECCO Value Chain
What is the future of ECCO's leather manufacturing?
Full Scale Bench marking
Prototype
Ramp-up
Laboratory Production
Raw Material Procurement
Product Development (R&D)
Design
Shoe Production
Distributing
But let's stop to reconsider.........
ECCO Value Chain
What is the future of ECCO's leather manufacturing?
Full Scale Bench marking
Prototype
Ramp-up
Laboratory Production
Raw Material Procurement
Product Development (R&D)
Design
Shoe Production
Distributing
Leather manufacturing Value Add Global top five leather producer Leather centre developing leading technology Supplies automotive and furniture industry
Quality Materials
Resources
Leather Manufacturing
Strategy
Quality Products
VRIO Analysis
Leather Manufacturing
VRIO Analysis Valuable R are Imitable Organization
Leather Manufacturing
VRIO Analysis
Reframe Resources
Leather Manufacturing
Bolster Brand Recognition P Q R U O A D L U I C T T Y S M QA UT AE L R I I TA Y L S
Leather Manufacturing
Increase Perceived Consumer Value
ECCO Value Chain
What is the future of ECCO's leather manufacturing?
Full Scale Bench marking
Prototype
Ramp-up
Laboratory Production
Raw Material Procurement
Product Development (R&D)
Design
Shoe Production
Distributing
Leather manufacturing Value Add Global top five leather producer Leather centre developing leading technology Supplies automotive and furniture industry
ECCO Value Chain
What is the future of ECCO's leather manufacturing?
Full Scale Bench marking
Prototype
Ramp-up
Laboratory Production
Raw Material Procurement Leather
Product Development (R&D)
Design
Shoe Production
Distributing
Leather manufacturing Value Add Leather Manufacturing Restructuring Plan
Remove "blow up" leather manufacturing from value chain Global top five leather producer
Restructure operations as an ECCO subsidiary Leather centre developing leading technology Supply ECCO and competitors in shoe industry Supplies automotive and furniture industry
Industry/Competitor Value Chain
Rubber, Fabric and Other Raw Materials
Shoe Manufacturing and assembly
Marketing
Sporting Goods, Department and Shoe Stores
Customers
Product Development
Online, Catalog and Other Retail
Customers
In-house Outsourced Customer Feedback
Company Branded Specialty Store
Industry/Competitor Value Chain
Leather
Shoe Manufacturing and assembly
Marketing
Sporting Goods, Department and Shoe Stores
Customers
Product Development
Rubber, Fabric and Other Raw Materials
Online, Catalog and Other Retail
Customers
In-house Outsourced Customer Feedback
Company Branded Specialty Store
Leather
Introducing...............
Co- Branding
Co- Branding
Co- Branding
Co- Branding
Supply Chain & Operations Breakdown
ECCO Divisions
• Product Development (R&D) • Design • Leather Manufacturing • Shoe Manufacturing • Distribution
Product Development
Locations
• Bredero • Tonder • Indonesia • Portugal
Value Add
• • Development of products, prototypes, laboratory production technology, processes, materials Laser technology development in Portugal facility
Design
Locations
• Bredero • Indonesia
Value Add
• Design in manufacturing facility to foster practical, highquality product design
Leather Manufacturing
Locations
• Netherlands • Indonesia • Thailand
Raw Hide Suppliers
• Germany • Finland • France
Leather Manufacturing
Value Add
• 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
Shoe Manufacturing
Locations
• Slovakia • China • Thailand • Indonesia • Portugal
Value Add
• • • 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
Distribution
Locations
• United States • Tonder • Denmark
Transportation Methods
• • Harbor of Aarhus Denmark vans and freight planes for emergency shipments
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
Denmark France
Finland
Slovakia United States Portugal Germany Thailand China Japan
Indonesia
Main Markets (U.S., Germany, Japan)
ECCO Supply Chain
Rawhides Distribution
Leather Manufacturing Shoe Manufacturing
Thank You
Contact info. Derek Mitchell dlmitchell3001@gmail.com www.linkedin.com/in/dereklmitchell
, shoes, 