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Crayola: Using Operations to Create Value at Crayola
Length:
07:50
Subject:
Using Operations to Create Value at Crayola
Textbook Reference:
Chapter 1: Using Operations to Create Value, page 29
Summary
This video discusses the operations and supply chain strategy and challenges at Crayola, the
world’s leading company in arts and crafts products. A set of supply chain leadership principles
are defined as cost, innovation, quality & ethical responsibility, sustainability, and resilience and
agility. These principles are derived from the daily decisions Crayola faces such as choosing colors
to drive demand, and launching new products while maintaining quality standards. As the supply
chain grows globally and the company enters new foreign markets, operations challenges arise in
managing fluctuating demands and a complex supply base.
Key Concepts related to the chapter
The video case includes rich discussion avenues in operations strategy, competitive priorities and
capabilities. Also, the written case in the textbook covers Crayola’s potentially new markets in
China, which creates challenges as well as opportunities. The instructor should make sure that
students understand and become comfortable in applying the core concepts of operations strategy
and competitive priorities/capabilities to this case.
Operations Strategy
The corporate strategy and market analysis of Crayola can be discussed in detail. In order to
develop a corporate strategy, Crayola first monitors and identifies adjustments that need to be
implemented. Already being the dominant player in the North American market, Crayola is now
looking for new markets overseas including China. Consumer needs are becoming more
diversified than ever, and a large portion of purchasing takes place online. Crayola has strong core
competencies in terms of customer-focused culture, strong innovation capabilities, and reliable
Competitive Priorities and Capabilities
The competitive priorities of Crayola are characterized by its five principles. These critical
operational dimensions can be elaborated in detail based on the case information. Crayola focuses
on environmentally sustainable low process costs, high safety quality, and high flexibility that
enable the company to cope with uncertainty. Competitive priorities of cost, quality, time, and
flexibility should be critically evaluated to make sure that its achieved competitive capability goals
Discussion Questions Based on Video
1. Map Crayola’s five pillars of operational leadership to the competitive priorities in Table
1.3.
2. Create an assessment of Crayola’s competitive priorities as it relates to their Asian
expansion plants.
Competitive
Priority/Pillar
Measure
Capability
Gap
Action
Low cost
Operations
Production cost
Transportation cost
Material cost
Mostly sourced in
USA
Automated with
US workers
Foreign
expansion
causes
additional
costs
Multilanguage
packaging
Offshore
production and
sourcing
Sustainable
efficiency
Carbon dioxide
emission
Energy
consumption
Recycled plastic
Reforested wood
Solar farm
Acceptable
No action
Consistent
quality
Percent defects
Rework, scrap
Product returns
High consistency
in packaging and
product quality
Acceptable
No action
High safety
quality
Certifications
Chemical use
All products are
non-toxic
Acceptable
No action
Development
speed
New product time
to market
First to the market
with every
innovation
Acceptable
No action
Variety
Product mix range
Wide variety of
colors
Acceptable
No action
Volume
flexibility
Utilization
Order-fill rate
Maintains
capacity and
integrated supply
base in US
Less
responsive
to overseas
demand
fluctuations
Postponement
Modular
process
3. Which of the competitive priorities might present the biggest challenge to Crayola as it
expands internationally?
In order to maintain their emphasis on quality and environmental sustainability, Crayola sources
most of the required materials from the USA. However, this practice could be put into question
