Deckers Outdoor Corp.

Strengthening the chain Keith Regan explains how Deckers Outdoor Corp. is in the midst of a shift in how it handles its supply chain and corporate responsibilities, an evolution that will enable sustainability to come to the forefront across the company. In some ways, Deckers Outdoor Corp. has stayed true to its roots.  Thirty-five years after its founding, the company is still based in Goleta, California, not far from where then-University of California at Santa Barbara student Doug Otto began making and selling sandals.Today, though, Deckers is a global company with a stable of high-profile outdoor footwear brands, including Teva, Ugg, Tsubo and Simple, a line that emphasizes sustainability. Green is more than a marketing technique at Deckers, however, with the company in the midst of internal changes aimed at enabling it to constantly improve the sustainability of its supply chain.Mark Fegley, senior vice president in charge of the global supply chain at Deckers, says the company is gradually shifting its mindset to become more of a process-focused organization. ÔÇ£ItÔÇÖs not a change that happens next week or in two to three weeks,ÔÇØ Fegley says. ÔÇ£But over the course of the next two to three years, the shift will happen.ÔÇØ The evolution is necessary, he adds, because of the way Deckers works. ÔÇ£If you take a look at our operations, there are several areas of our business process that are inextricably linked.ÔÇØ Product developers need to work more closely with buyers who source materials, for instance, and the supply chain needs to support innovation overall. ÔÇ£Being task-focused isnÔÇÖt the way to make that happen.ÔÇØThe journey has begun with six sigma techniques meant to start the change, which will mostly take place in the minds of Deckers employees, Fegley adds. ÔÇ£The whole concept of having customers within the organization is one that weÔÇÖre emphasizing more and more. There was a time when the supply chain stood as a discrete operation, set off from the rest of the company. That isnÔÇÖt how we want to go forward.ÔÇØThe change may be best exemplified by the Simple brand, which emphasizes green materials and fabrication techniques, using materials such as organic cotton. Within Deckers and especially with respect to Simple, sustainability means ÔÇ£from a moral and ethical standpoint, trying to do the best we can to improve every season in how our products impact the world we live in,ÔÇØ says Monica DeVreese, the Simple brand manager.Simple has grown as a brand by focusing on the front-end issues around that equation, developing a strong base of suppliers who can certify that their cotton is grown organically, for instance, or who have their own track record of taking green issues seriously. The attention now is turning to the back-end operations of Deckers and how improvements can be made there in the same vein. ÔÇ£ThatÔÇÖs really the next step for the company.ÔÇØBuilding an ethical supply chain means being able to account for all steps of the processes that produce Deckers shoes. That starts with vetting suppliers carefully and extends to assuring that conditions in the Chinese factories where many of the shoes are produced meet standards as well. Fegley says Deckers is working to have better systems in place to audit the workplace safety and environmental track records of its suppliers and factories. Audits may look at everything from how much workers are paid and how much time off they receive to information on pollution and even what the insides of factories look and feel like for the workers.While all Deckers brands are moving in that direction, the Simple brand is ahead of the curve. Because of the Collegiate Licensing Company (CLC) product collaboration with several universities in the US, the brand complies with the Fair Labor AssociationÔÇÖs standards for sustainability.Another project currently in the works at Simple is to build a Web site where consumers of the Simple brand can go online and track where the organic cotton used in their product comes from, while also monitoring the certification process throughout the supply chain. ÔÇ£We want to be able to offer true transparency to the consumer,ÔÇØ DeVreese says. While more companies every day try to apply the ÔÇ£greenÔÇØ label to their products, ÔÇ£you canÔÇÖt hide behind smoke and mirrors,ÔÇØ she adds. ÔÇ£Part of the attitude of our brand is that we want the consumer to know that weÔÇÖre trying our best to make the right decision. When consumers see what weÔÇÖre doing, we want them to smile and feel good about supporting our brand.ÔÇØThroughout Deckers, there is a growing sense that the supply chain can become a competitive weapon in the marketplace. ÔÇ£My personal view is that it can certainly be a competitive differentiator,ÔÇØ Fegley says. The company is currently revamping the distribution and business model used for the Deckers sandal line of products, seeking to rapidly reduce the time it takes to bring new models to market. While most Deckers brands have typically brought new product to market each season, a more robust supply chain could help reduce that time frame to allow new products to be rolled out far more frequently. Likewise, Deckers is about to launch direct online sales in the European market for the first time. ÔÇ£ThereÔÇÖs an entire back-end operation that has to be working right for that Web shopping experience to be successful,ÔÇØ Fegley notes.Meanwhile, the Simple brand continues to enjoy rising customer adoption and acceptance as the green movement takes root. ÔÇ£WeÔÇÖve been committed to this since 2003, and it gets easier for us as more companies become involved in the market,ÔÇØ says DeVreese. ÔÇ£When we first started talking about making sneaker midsoles from recycled bike tires, people laughed at us and said, ÔÇÿWhat are you thinking?ÔÇÖ Now itÔÇÖs much more accepted. We like to think weÔÇÖre also helping consumers by showing them that buying sustainable products doesnÔÇÖt mean they have to be ugly or uncomfortable. You can be green and have fashion and fun all at the same time.ÔÇØ┬á