Digital Intelligence at Crocs, with Erik Olson

¡Woo!

¡Woo! ¡Woo! So my role at Crocs is I have the privilege to lead a global team. We're responsible— maybe I should say they lead me, that feels like most of the time— but we're responsible from upfront designs. Our 3D CAD engineers work with designers to create the initial 3D assets. We develop the product, so all things product development, product testing, bill of materials creation, material libraries, all that. We're responsible for all the costing, we're responsible for all our tooling, and then all the manufacturing of the product. Okay. Right up to shipping. So that includes then quality, social compliance, restricted substance monitoring, and those type of things.

Okay. Yes. Quite a lot to go.

Yeah, yeah. We have, we have a lot of responsibility, a lot of fun, a lot of challenge, but it's all good.

Yeah.

Yeah.

How long have you been leading this?

Well, I've been at Crocs since 2005. I've been in product development and innovation since the beginning. I recently took on the sourcing role within the last year. Okay. Yeah.

Oh, nice. Yeah, because Crocs hasn't been going much longer than 2005, has it?

I was pretty early. When I started, we had basically 8 projects, and it was a clog, a clog without holes, a clog with a couple holes, and a couple of different clogs, and one flip-flop. So it's changed quite a bit since I joined.

Yeah, so you've gone from 8 to how many now?

Oh, in our line at any one time, we would have up to probably I don't know the exact style count, but maybe 150 to 200. And it's always changing colorways and everything and all the different things that we do within there.

So amazing, amazing. Did you always start leading that team or have you—

Yeah, no, I started, but it was much simpler then, right? When I started, I think there were maybe 3 people on the team, right? We were pretty small and lean and I came from it without outside of the industry, so it was a great learning experience.

In that time, even in the last 5 years, technology development in fashion apparel and footwear has been quite large. I mean, footwear is obviously slightly ahead of apparel soft products, but how have you seen that technology shift?

Well, the biggest thing, I mean, for us, we were 3D from the very beginning, from 2005.

Were you?

Yeah, I didn't know any other thing. I didn't know what this 2D world was that everybody was working in, so we went 3D. But it was primarily engineering. It wasn't consumer-facing or design. But the biggest shift then that I've seen that's really exciting to me is now that people are accepting that. We recently hired a new designer. He came in and he's like, "Can I get a 3D? I need a 3D license." And that was to me, bar none, the most exciting news I heard. Because as we can transition and create those assets more dynamically than what we do now, It's really going to unlock a lot of things for us.

So it's not necessarily the technology that's exciting, it's the people accepting and using it.

Yep, exactly, exactly. And, you know, we piloted some sales samples, digital sales samples, and seen salespeople go, "Yeah, we want to try this and see that." And even your wholesale partners or retailers going like, "We'll accept a look at this, you know, we still need a sample, but let's take a look." So you can start to feel that change going, and that to me is really exciting.

Yeah, there's a massive focus on digital transformation across all industries, really. I mean, we hear these, these two words together, it's like innovation, it's a little bit overused, but we all know what it means. What are the common mistakes that people are making when they're sort of trying to make these rapid changes?

Yeah, I think to me, I think the biggest mistake is not thinking that a technology can solve everything. Just by buying a 3D platform, it's not going to solve anything for you. You need the people that can run it, you need the the processes, you need to change your processes. So to me, when I see the use of technologies, the biggest mistake is, another exciting one is automation, the biggest mistake in automation is we automate exactly the way we make our shoes now with people. But automation, you don't need to do that. You need to reimagine how you do it, you need to reimagine your processes, right? So what I see is people buying systems, a few years ago the craze was PLM, right? Buying PLMs thinking, "Oh, this is gonna make all our jobs so much better." And guess what? You still have to have the process, and you have to have the people, and you have to have the discipline to make those things work.

Yeah, absolutely. It's a much bigger story than you make out than just sort of one big 3D implementation to solve all your problems.

Yes.

What process changes do you predict will happen in the coming years?

The biggest process change that's going to impact everybody is the calendar. I think that, to me, the calendar's been dead for years, but we still adhere to it. Everybody does. And it's mainly about buying. So for instance, now we have sales reps out with sales samples selling for spring/summer '20 product, right? And I think there's just going to be an inflection point, and I thought it would be this year, but maybe it's going to be in the next couple years, where retailers just say, "I don't want to buy this stuff now. I want to wait until I know what's out there, right? I want to see what the market is before we buy this." So I think that'll change a lot of things within all the processes that than everybody does in the industry.

I agree completely with that. It seems quite archaic, actually, this cycle that we're in.

It's insane.

What do you think really needs to happen? Does one of the really big retailers or brands need to come out and make a sort of marketing story about the fact that they're not going to do this anymore, and then other people might follow suit?

I believe that that's the way it'll go. I believe when you look at the, in footwear, the industry leaders like Nike and Adidas, They're eventually going to completely change and retailers will go with it. I hope it's not a burning platform where, you know, we read about the retail apocalypse, I think they call it, that type of thing where people are like, I can't buy shoes now because I don't know if I'll have a store in 6 months from now or 9 months from now. So, but I really think it's going to be a couple industry leaders just saying we do things differently, right? Yeah. And, and, um, Not to put it on the industry leaders, I think everybody needs to try in that, but, you know, Nike set, they made this industry, right? They did the prebooks because they wanted to do that, and that was something like 40 years ago and it hasn't changed. That's crazy to me.

Yeah, the thing with Nike, I think they're really good at telling stories. Amazing, yes. And that's one of their amazing things. I mean, obviously the design and everything, but that's one of their amazing attributes, and they can lead massive change that way.

Yes.

What part does technology play in the fashion apparel footwear industries becoming truly sustainable?

I think it plays a huge part. I, again, I talked earlier about don't rely on technology for everything. So it is about the people and the processes. So things like the reliance on sales samples being a process change more or less, but it's driven by technology, right, to have a digital sample that you can sell off of those type of things. The easiest one to point to is sales samples and sales sample reduction is lean and sustainable, but to me it's about the technologies within, even in things that you don't normally relate to sustainability, but like better forecasting and planning and having just enough product for the customer in the right place. As opposed to building up huge stockpiles way in advance, shipping them, putting them in giant warehouses, moving them about. We're a global brand, so we sell in 90 countries. So, you know, a lot of times you'll have inventory in one place and you would need to move it to another and those type of things. So the inefficiencies within just poor forecasting. So I see technology really helping in that when you think about artificial intelligence and all that type of thing. And I think that goes to sustainability. And then of course, just the automation pieces of being able to make our product more efficiently.

Where do Crocs manufacture their products?

We manufacture globally. We work with partners. We don't do any manufacturing ourselves, but our primary factories are in Asia, of course, China, Vietnam, and then we have manufacturing in Mexico, Nicaragua, and Bosnia, and some a little bit in Brazil. Brazil as well.

Oh, right, interesting. Do you ever see and have you considered reshoring that, so having more localized manufacturing plants to try and see if you can combat some of those issues that we were talking about earlier on?

I believe that the footprint of manufacturing is going to change drastically over the next few years, and that to me is really exciting and to see where the opportunities might lie for you there.

Yeah, yeah. Certainly there's a lot of talk about that. I think that could provide some opportunities. There's always the cost-benefit of doing that.

Correct.

Yeah, correct. You have been speaking at Pi Apparel and you've obviously attended before. How have you found this year?

Ah, very inspiring. I don't do a lot of these events, so I always take the time out to do this one because I really like that atmosphere and the people and hearing different people's experience of what they're doing and things that I'm passionate about, which is the technologies and the 3D and those type of things.

Yeah, yeah, absolutely. I know that you were speaking a little bit about siloed approaches to digital pipelines and things like this. Can you tell me a little bit more about that?

Well, again, we have a large global team, right? And we're doing everything from developing to making and ensuring the quality and costing these products, right? And just by the nature of the way things are worked on, they had to build these siloed approaches. So my biggest passion right now is to figure out how to connect everybody on a digital platform where collaboration is completely, completely transparent and open. And so when I think of the future, I think I don't care where the people are. You should be able to go in, check on the product, check on the status of manufacturing, all those things you need to do, and collaborate at great distances, right? So I think that technology and opening the world of collaboration is probably one of the more exciting things. I mean, I love the technical geeky things about getting the 3Ds and being able to mock up and simulation and all that type of stuff. But when I really think of the power of getting the really smart, talented people we have all working on the same platform, that's really exciting, right?

Yeah, something we see here a lot is a lot of companies working together. You, to your point of collaboration, is that really key for the future as well? Different companies and industries working together?

Imperative. Part of my team, which I didn't call out, but we have a small innovation team that's focused on innovation, and we strongly believe in open innovation. The way I say it is like, we're not smart enough to figure it out. Figure all this stuff out. It's not that we're not smart people, but there's so many things and so many specialties and so much technology out there. No one team of people can figure out how to use it to its best. So we encourage open innovation at every level, and we will collaborate with anybody as long as it makes a win-win proposition for both parties.

Yeah. When did you start that innovation team?

We took the, I want to say, 4 years ago we carved some people out of the business to create a dedicated innovation team. And we've had some really big wins with it, from a brand new, what we call franchise and technology, and just the way we're thinking and getting our partners aligned to what's important to Crocs. Because in a lot of ways we're a different brand than the traditional footwear brands.

Yeah, yeah. Well, you're known certainly for being unique.

Yes. Yeah.

With that unique product design, how difficult is it to branch away from that and diversify your product range?

Well, I can tell you it's not hard. We've done it. But what we found is people love us for who we are, not for what we're doing elsewhere. So one of the examples that we like to point to because it's so telling is we did golf shoes for a while. And I'll tell you, they were great golf shoes, fantastic golf shoes. Nobody's looking to Crocs for a golf shoe, right? So it wasn't hard to go out and do all this stuff. We're really good at creating new product and creating new lines. We had a fashion line for a while. We had all kinds of different things. We've done waterproof boots and those type of things. But what we found is if we're true to ourselves, our consumers go along with us, and there's plenty of opportunity within those windows.

Absolutely.

We talk about clogs and women's sandals primarily.

Yeah, yeah, yeah, absolutely. It's been really, really good to have you on the show. So thank you very much, Eric.

It was a lot of fun. Excellent.

Cheers.

Yeah.

Everybody get up.

Woo!