Supply Chain Design at Crayola - Case Study

This case study discusses Crayola's supply chain management and design, including the pressures on supply chain design for new products, strategic implications, efficient and responsive supply chains, and evaluating the strategy of next-shoring in Asia. It also includes an analysis of Crayola's cost of goods sold and inventory turnover.

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Supply Chain Design at Crayola
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Table of Contents
Introduction..........................................................................................................................2
Learning Outcomes..............................................................................................................3
Question 1........................................................................................................................3
Question 2........................................................................................................................5
Question 3........................................................................................................................6
Question 4........................................................................................................................8
Conclusion...........................................................................................................................9
References..........................................................................................................................10

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Introduction
The following case study is based on the supply chain management and design of a
profitable organization named Crayola LLC, situated at Kansas, Missouri. The organization is
wholly-owned subsidiary of Kansas city’s biggest greeting card retailer – Hallmark Cards. The
organization’s headquarters are at Easton which is at Pennsylvania. Almost two third of the
whole production of Crayola comes from the three main facilities that are situated at
Pennsylvania. The facility situated near Bethlehem, Pennsylvania, where a 800,000 square foot
distribution center that deals with the finished goods logistic that are circulated in the United
States of America and rest of the globe (McKenzie 2018).
Rest of the facilities are located at Easton and Arkansas; that consists of facilities like
sales, house marketing, finance, operation and manufacturing, research and development,
internet services, and customer care. The customer affair and corporate communication facilities
are located in Bentonville. The domestic accounts are managed from a facility at Minneapolis.
The organization have facilities at Canada, Italy, Japan, Mexico, France and Hong Kong that
deals with international businesses (Collins et al. 2018). Each manufacturing plants have their
own unique ways for dealing with supply and their own supply design. The organization does not
follows a same pattern of supply chain design in all of their facilities as the availability of the
raw materials, suppliers, workers’ efficiency differ from place to place.

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Learning Outcomes
Question 1. Describe the four external and internal pressures on supply chain design as
they relate to Crayola supply chains for ColorWonder® and Washable Deluxe Painting
Kit®.
Answer – At times when Crayola have introduced new products in the market, the supply
chain and the sourcing of the raw materials that is needed for the production and also the down-
streamed of the production has been addressed by the management for the assurance of
betterment at forecasting the demands of the customers that have to be accommodated in all the
facilities that are currently existing. There have been pressures on the organization’s supply
chain design regarding the new products they have launched in the market namely the
ColorWonder and the Washable Deluxe Painting Kit. The ColorWonder kit consists of pens that
are used to be written on specially packed papers that comes with the kit only (Henry, Krieger
and Allen 2018).
The internal pressure that Crayola had to deal with their supply chain design for the
production of the specialized ink that is used to make the pens available in the Crayola’s
Colorwonder Kit. With the current production rate of the normal pens, colors and crayons or any
other material that is used for drawing, they are feeling pressurized with the production of the
specialized ink used for the production of pen that comes with the kit. However, the organization
are getting marvelous profits from the ColorWonder kit throughout the globe where
Japan Alone is making 40 percent of the total sales (Skinner et al. 2018). Feedbacks were
gathered by teams of Crayola that the pens are running more that the number of papers that are
provided with the kit. It came as an external pressure to the organization for producing more

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paper separately that are to produce in the market for selling. This step was taken as the pens that
come with the ColorWonder kit are only used to be written in the special paper only. This came
as big blow to the organization as the consumers are now buying more ColorWonder books
rather than the entire kit. Thus, the organization have to been facing problems with the
production of the ColorWonder Kit (Volzer, Brand and Skinner 2018).
The supply chain design in all the facilities of Crayola again faced some issued and was
pressurized both internally and externally when the organization introduced another new product.
The global market for children’s painting goods saw another innovative product from the
organization Crayola which goes by the name Washable Deluxe Painting Kit at the market. It
was under no time that the kit was acknowledged in the market. The kit became very famous and
lovable among the kinds around the globe (Allison and Skinner 2016). It helped Crayola of
generate huge amount of revenue. The kit is comprised with colorful paints, watercolors,
brushes, smocks that would assist the artist and also for giving special effect to the art a sponge.
The product received excellent reviews in the market. Despite all the good side, the product had
its own draw backs that would become external pressure of the organization (Nguyen et al.
2018). The kit consist of various components for the customers. Although, all the products that
are available in the kit are not manufactured by the company itself. The paint is made by the
company, but the various other components of the kit are imported from different facilities
around the globe. The brushes are imported from China, the smock’s come from Vietnam, and
the sponge’s is also delivered to the packaging and distribution facility at Bethlehem,
Pennsylvania. All these components are imported from their origin country’s and are collected in
the distribution facility at Pennsylvania. Then the kit is assembled and the distributed in the
different facilities to be sold in the market. Thus, these extra work have been a pressure for

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Crayola as most of the market of the kit is Asia and the organization mostly imports most of the
component of the kit form there only. This have challenged the implemented supply chain design
of Crayola at the facilities. Initially it have been dreadful for the organization to import the
component for the kit at assemble it and then supply it. The management of the organization is
not able to provide any other design chain supply to tackle with current scenario. The only
logical explanation would be creating a facility at Asia only where the paints and watercolors for
the kit would be exported form the United States of America and the other components of the
product assembled in that facility only as most of the components are from Asia only (Skinner
2018).
Question 2. Review the strategic implication of Crayola’s supply chains. Does Crayola
have efficient or responsive supply chains, or both? Explain your position.
Answer – The company has its main operation form the United States of America.
Although, most of the facilities of the Crayola is spread around the globe. These facilities follow
the same supply chain design that was created as a strategic management to assist the supply
chain of the organization. The complex supply chain factors are assisted by the strategic
application of the management plans such as the centralized supply chain. The company have
standardized the supply chain plan and also processed it globally in order for the implication of
innovation and integrating the production speed to much higher speed. The unique
manufacturing advantage that the company enjoys is classified as the scale for monitoring the
operation. This is have affected the substantial that is related to the industry of art and painting.
As the scale of the business is immensely large, the availability of the raw materials in bulk
quantity have been helpful for the organization as they are getting it at a very low cost that the
marginal cost. The company enjoys such facilities for their strategic plans (Henry, Krieger and

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Allen 2017). The company adopted the plan for locating suppliers that are nearby, that is, at one
day transition distances from any of their plants of manufacturing. This provides them with an
advantage for responding to forecasted orders.
Crayola have both efficient and responsive supply chain. For the betterment of the
production and manufacturing limits, the company have hired many skilled workers and have
also improved the workplace that helps in extensive usage to the automations that re appointed
for the customers and for maximizing the production capacity at all the facilities of the
organization. All of the aspects that is adopted by the company helps the organization in
maintaining and executing a better supply chain model that could be easily activated and also for
the management to react to the plans rapidly in need of any changes in the model for betterment
in sessional business (Orem et al. 2018). The components for automation that are initiated as
business strategy for Crayola, plays important role in the model for production, as it allows the
organization to viably manufacture their products at their origin country, the United States of
America, enjoying costs competitive in comparison to that is at offshore (Henry et al. 2016).
The supply chain managers are up for determining the maximum optimal supply for each
and every stock that is produced at the 1500 plus, that is effective in keeping the units to the
primary factor component. The drive of the supply of Crayola is designed for tackling decisions
related to extensive production (Moskal et al. 2019). The supply chain managers are also
considering the possibility of considering the margins and a factor that is known as Total Cost of
the Ownership. The model is actually developed by the organization for being used by the
ownership so that it helps the organization in servicing the risks of the products in expediting all
the risk that comes over the organization which would have a potential effect on the cost and the
actual cost of the products.

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Question 3. Regarding the design of the Washable Deluxe Painting Kit supply chain,
Crayola must evaluate the strategy of next-shoring in Asia or retaining an existing network
that involves the assembly of the kits in the United States. Compare and contrast these two
supply chain designs from perspective of the decision factors and the pitfalls for
outsourcing.
Answer – The Washable Deluxe Painting have been able to make a place in the global
market. Most of the profit that Crayola have got form the Washable Deluxe Painting Kit comes
from Asia. Ironically, most of the components of the Washable Deluxe Painting Kit is imported
from different parts of Asia. The kit consists of paints and watercolors, paint brushes, smocks for
the artist and sponge for adding special effect to the painting of the piece of art and craft. The
paints and the watercolors are made in the manufacturing facilities in the United State of
America. The brush in the kit id imported from China (Rieland et al. 2017). The smocks are
imported from the tribal parts of the country Vietnam and the sponges that enables the artist to
add some special effect for making is art one of a piece is imported from China only. These
components are imported to the distribution and final packaging facility, which is situated in
Pennsylvania. These components of the kit are assembled together and then distributed from the
distribution center located at Pennsylvania, to the different parts of the globe at centers of
Crayola to be sold. This extensive import and export are arising problems at the supply chain of
the organization (Nguyen et al. 2018).
The organization have been conducting the supply of the Washable Deluxe kit form the
United States of America. One thing that could be recommended to the organization regarding
the production of the Washable Deluxe Painting kit. The company should import the components
of the kit form other parts of the United States of America only. This would help them in

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reducing the pressure on the supply chain of the organization. This would also reduce the
organizational cost factors (Allen 2018). Another factor for developing the supply chain could be
used by the organization. The company could shift the manufacturing facility of the kit at
somewhere in Asia only. This would in turn help them keeping their authenticity with the
product and also save them from getting too much pressurized (Brand et al. 2017).
Question 4. Crayola’s cost of goods sold last year was $3,410,000, and the company
operates 52 weeks per year. It carries seven items in inventory: three raw materials, two
work-in-process items, and two finished goods. The following table contains last year’s
average inventory level for each item, along with its value.
Answer –
Catgeory Part no. Average level
Unit
Value($)
Total
value($)
Raw materials 1 15000 3 45000
2 2500 5 12500
3 3000 1 3000
Work in progress 4 5000 14 70000
5 4000 18 72000
Finished goods 6 2000 48 96000
7 1000 62 62000
Total 32500 360500
Average aggregate inventory value 360500.00
Cost of Goods sold(COG) 3,410,000
Average weekly sales at costs(COG/week) 65577

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Weeks of supply(Average aggregate
inventory vale/weekly sales at cost)(in
weeks) 5.5
Inventory turnover(annual sales at
cost/avg. aggregate inventory value)(in
turns) 9.5

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Conclusion
Thus the report could be conducted by providing insight about the supply chain design,
its implication and its usage. The report have provided in understanding the position of Crayola
in the global market. From the report, it could also be seen how the fact that about the supply
chain design have raised serious problem regarding the manufacturing and supply of the
products. Some products like ColorWondr kit and Washable Deluxe Painting kit produced by
Crayola have received global fame as an art product but also created various supply base
problem for the organization.

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References
Allen, J., CRAYOLA, LLC, 2018. Breakaway clasp. U.S. Patent Application 15/382,301.
Allison, K. and Skinner, C., Crayola LLC, 2016. Enhanced washability inks and methods
of making the same. U.S. Patent 9,321,927.
Brand, D., Sharp, A.S., Rau, T.R., Sandt, A. and Mcbride Jr, J.D., Crayola LLC,
2017. Marker airbrush. U.S. Patent 9,713,815.
Choike, A.M., 2017. Gallery-Supported Art Exhibitions: Critiquing Crayola. Colum. J.
Tax L., 9, p.67.
Collins, S., Brand, D.A., Henry, R.J. and Rau, T.R., Crayola LLC, 2018. Crayon carving
device. U.S. Patent Application 15/993,202.
Henry, R., Krieger, C. and Allen, J., Crayola LLC, 2017. Paint maker and mixing device.
U.S. Patent 9,808,777.
Henry, R., Krieger, C. and Allen, J., Crayola LLC, 2018. Paint Maker and Mixing
Device. U.S. Patent Application 15/725,013.
Henry, R.J., Moll, J., Allen, J. and Cziraky, D.A., Crayola LLC, 2016. Marker maker.
U.S. Patent Application 14/881,988.
McKenzie, A., 2018. Crayola: Wild World of Animal Colors.
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2019. Moldable compositions and methods of using thereof. U.S. Patent Application
15/969,253.

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Nguyen, C., Moskal, M.G., Rowan, D., Spera, M.L. and FITZPATRICK, J.B., Crayola
LLC, 2018. Moldable compositions and methods of using the same. U.S. Patent
Application 10/138,358.
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AND MARKER PHOTO ARRAY ASSEMBLY AND KIT. U.S. Patent Application
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