1. Describe the text’s four external and internal pressures on supply chain design as they relate to Crayola’s supply chains for ColorWonder® and the Washable Deluxe Painting Kit®.
2. Review the strategic implications of supply chains as described in the text. Does Crayola have efficient or responsive supply chains, or both? Explain your position.
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 the perspective of the decision factors and pitfalls for outsourcing discussed in the text.

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.