Global Supply Chain Analysis: ECCO(USE AS GUIDE ONLY) / Global Supply Chain Analysis: ECCO(USE AS GUIDE ONLY)

Global Supply Chain Analysis: ECCO(USE AS GUIDE ONLY)

Global Supply Chain Analysis: ECCO(USE AS GUIDE ONLY)

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GLOBAL SUPPLY CHAIN ANALYSIS: ECCO

Global Supply Chain Analysis: ECCO
GLOBAL SUPPLY CHAIN ANALYSIS: ECCO
Global Supply Chain Analysis: ECCO
In addition to its privately owned production facilities, the Danish shoe
manufacturer ECCO has two distribution centers in both the United States and in
Tønder, Denmark. From Tønder 60,000 pairs of shoes are trucked daily to 25 European
countries; shoes for markets outside of Europe are freighted to those countries (Nielsel et
al., 2008). ECCO also retails its own products, owning it own stores, opening its 1000th
in 2011 and is currently retailed in over 4,000 locations worldwide. Moreover, the firm
sells its products online via online shops operating in the US, Europe, and Australia.
Denmark’s average salary levels are significantly higher than in other countries
(“Understanding the Tax and Social Security System in Denmark,” n.d.). In light of high
labor costs locally, it is understandable why ECCO has followed an internationalization
of production strategy in having privately owned facilities in Portugal, Indonesia,
Thailand, Slovakia, and China where the cost of labor is considerably less. ECCO’s
production strategy has also helped the firm achieve production differentiation, for
example in Thailand, a country well regarded for its commitment to quality management
and precision. According to Hill (2009) exporting has advantages and disadvantages. For
ECCO this has meant attaining higher profit margin and greater profitability as well as
product differentiation from those of competitors, by basing their operations in locations
where there is value and market creation at lower production cost. Such was the case
with ECCO’s foray into China, where its operation in Xiamen is able to serve the
Chinese market exclusively (Nielsel et al., 2008).