Crayola, LLC is a profitable, wholly owned subsidiary of Hallmark Cards of Kansas City, Missouri. The company’s world he
Posted: Thu Apr 28, 2022 2:23 pm
Crayola, LLC is a profitable, wholly owned subsidiary of
Hallmark Cards of Kansas City, Missouri. The company’s world
headquarters are located in Easton, Pennsylvania, and house
marketing, sales, operations and manufacturing, finance, R&D,
Internet services, customer care consumer affairs, and corporate
communications. Sales offices in Easton, Bentonville (Arkansas),
and Minneapolis manage domestic accounts, while offices in Canada,
Mexico, France, Italy, Japan, and Hong Kong handle international
business. The Global Operations Division in Easton is responsible
for the sourcing, quality, manufacturing, and logistics of Crayola
products worldwide.
Two thirds of what Crayola sells globally is produced in its
three Pennsylvania facilities in the Lehigh Valley. The “Forks I”
plant is devoted to manufacturing crayons and markers, the “Forks
II” plant handles plastic molding, and the Lehigh Valley Industrial
Park (LVIP) plant creates paints, modeling compounds, activity
kits, and Silly Putty®. A single 800,000-square-foot distribution
center in nearby Bethlehem, Pennsylvania, handles finished goods
for logistics to U.S. and international customers, and to global
business units.
Each plant and its products have their own unique supply chains
because the raw materials, suppliers, and requirements all differ.
For example, paraffin wax for crayons comes from sources in
Louisiana and Pennsylvania via rail tanker cars twice a week, so
proximity to the railroad is essential for the Forks I plant making
crayons. All raw materials for each supply chain are first
evaluated by independent board-certified toxicologists so Crayola
can assure its products are not only of the highest quality, but
also safe and nontoxic. Then, design hazard and risk assessments
are done for all products during development to ensure production
meets the stringent standards set by the Art and Creative Materials
Institute (ACMI).
Pete Ruggiero, Executive Vice President—Global Operations, and
his team have responsibility for designing supply chains that are
innovative, resilient, responsive, and sustainable while assuring
quality, ethics, and cost considerations are met. Whenever the
company’s marketing division develops a new product kit that might
contain paints, clays, crayons, markers, or other products, the
supply chain sourcing of the raw materials as well as the
downstream production processes must be addressed to be sure the
forecasted demand can be accommodated within the existing
facilities. Not long ago, the company introduced an innovative
product called ColorWonder® that consists of pens that only
write on the special paper they are packed with for sale. This
required examining whether the existing supply chain could support
the addition of producing the specialized ink markers, where to
source the coated paper, and how to best create the kits containing
both markers and paper.
Now in production, ColorWonder® is a bestseller worldwide,
with nearly 40 percent of Japanese sales coming from this product
alone. Managers received feedback from the market that the pens in
the kits were lasting longer than the paper, so the supply chain
responded by creating separate paper packets so consumers may
purchase just the paper after the initial pages in the kit are
used. The result of this action has had a ripple effect on the
demand for markers, which is now lower, since consumers are buying
fewer full kits but more Color Wonder® books, so the supply
chain and production had to adjust once again.
Another major challenge is the assembly of kits whose components
are derived from diverse supply chains and assembled into finished
products in the company’s LVIP plant. An example is the popular
Washable Deluxe Painting Kit®. The kit consists of paints and
watercolors, paint brushes, smocks for the artist, and sponges for
special effects. The company wants to expand sales into the growing
Asian market. The kit’s paints and watercolors are made by Crayola
in the United States, but the paintbrushes and sponges come from
China and the smocks come from Vietnam. Labor costs for assembling
the kits in the United States is a significant component, so if
Crayola wants to sell the kits internationally, it needs to explore
whether it makes sense to keep the existing supply chain design in
place, or make a change to begin producing the kits closer to the
growth in its international customer base. The lynchpin of this
decision is that all components (including paint and watercolor
trays historically manufactured in the United States) need to be
made in Asia to make production efficient, and minimize duties and
lead times. By producing the entire product—including its
components and packaging—in Asia, Crayola is able to optimize its
delivered cost to the markets. Producing this product in the United
States and shipping it to Asia would be an impediment because of
cost and lead time challenge
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 the perspective of the decision factors and
pitfalls for outsourcing.
Please no plagiarism ( I want a critical answer) with
citation
Thank u
Hallmark Cards of Kansas City, Missouri. The company’s world
headquarters are located in Easton, Pennsylvania, and house
marketing, sales, operations and manufacturing, finance, R&D,
Internet services, customer care consumer affairs, and corporate
communications. Sales offices in Easton, Bentonville (Arkansas),
and Minneapolis manage domestic accounts, while offices in Canada,
Mexico, France, Italy, Japan, and Hong Kong handle international
business. The Global Operations Division in Easton is responsible
for the sourcing, quality, manufacturing, and logistics of Crayola
products worldwide.
Two thirds of what Crayola sells globally is produced in its
three Pennsylvania facilities in the Lehigh Valley. The “Forks I”
plant is devoted to manufacturing crayons and markers, the “Forks
II” plant handles plastic molding, and the Lehigh Valley Industrial
Park (LVIP) plant creates paints, modeling compounds, activity
kits, and Silly Putty®. A single 800,000-square-foot distribution
center in nearby Bethlehem, Pennsylvania, handles finished goods
for logistics to U.S. and international customers, and to global
business units.
Each plant and its products have their own unique supply chains
because the raw materials, suppliers, and requirements all differ.
For example, paraffin wax for crayons comes from sources in
Louisiana and Pennsylvania via rail tanker cars twice a week, so
proximity to the railroad is essential for the Forks I plant making
crayons. All raw materials for each supply chain are first
evaluated by independent board-certified toxicologists so Crayola
can assure its products are not only of the highest quality, but
also safe and nontoxic. Then, design hazard and risk assessments
are done for all products during development to ensure production
meets the stringent standards set by the Art and Creative Materials
Institute (ACMI).
Pete Ruggiero, Executive Vice President—Global Operations, and
his team have responsibility for designing supply chains that are
innovative, resilient, responsive, and sustainable while assuring
quality, ethics, and cost considerations are met. Whenever the
company’s marketing division develops a new product kit that might
contain paints, clays, crayons, markers, or other products, the
supply chain sourcing of the raw materials as well as the
downstream production processes must be addressed to be sure the
forecasted demand can be accommodated within the existing
facilities. Not long ago, the company introduced an innovative
product called ColorWonder® that consists of pens that only
write on the special paper they are packed with for sale. This
required examining whether the existing supply chain could support
the addition of producing the specialized ink markers, where to
source the coated paper, and how to best create the kits containing
both markers and paper.
Now in production, ColorWonder® is a bestseller worldwide,
with nearly 40 percent of Japanese sales coming from this product
alone. Managers received feedback from the market that the pens in
the kits were lasting longer than the paper, so the supply chain
responded by creating separate paper packets so consumers may
purchase just the paper after the initial pages in the kit are
used. The result of this action has had a ripple effect on the
demand for markers, which is now lower, since consumers are buying
fewer full kits but more Color Wonder® books, so the supply
chain and production had to adjust once again.
Another major challenge is the assembly of kits whose components
are derived from diverse supply chains and assembled into finished
products in the company’s LVIP plant. An example is the popular
Washable Deluxe Painting Kit®. The kit consists of paints and
watercolors, paint brushes, smocks for the artist, and sponges for
special effects. The company wants to expand sales into the growing
Asian market. The kit’s paints and watercolors are made by Crayola
in the United States, but the paintbrushes and sponges come from
China and the smocks come from Vietnam. Labor costs for assembling
the kits in the United States is a significant component, so if
Crayola wants to sell the kits internationally, it needs to explore
whether it makes sense to keep the existing supply chain design in
place, or make a change to begin producing the kits closer to the
growth in its international customer base. The lynchpin of this
decision is that all components (including paint and watercolor
trays historically manufactured in the United States) need to be
made in Asia to make production efficient, and minimize duties and
lead times. By producing the entire product—including its
components and packaging—in Asia, Crayola is able to optimize its
delivered cost to the markets. Producing this product in the United
States and shipping it to Asia would be an impediment because of
cost and lead time challenge
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 the perspective of the decision factors and
pitfalls for outsourcing.
Please no plagiarism ( I want a critical answer) with
citation
Thank u