Supply Chain management is a very
important aspect within business operation to make sure that the company is
able to operate and meet the marketing demands. It is also important to
consider that through the
use of an efficient supply
chain management a company is able to get raw materials from suppliers
and render the finished goods to the customers. Hence, it
can be said that a good supply chain should be maintained by an organization to
make the company acquire the ability to meet up the deliverables of the market.
In this assignment there will be [1] a discussion
over Crayola formerly known as Binney and Smith Company which is an American
company operatingin the
stationery and handicraft industry. The company sells non toxic
children’s safe product of stationery such as crayons, colour and
oil paints. It Operate in America, Canada and Australia and is looking to
expand in Asian continents which is why evaluation of supply chain is essential to determine whether
the following will be successful or not.
There are both internal and external elements which are going to affect supply chain design of a company like Crayola for its expanding in to the China market. The external pressure will be created through external forces which can have adequate amount of pressure created through suppliers and other where internal pressure can be created by the management itself in order to construct an prominent supply chain design. Crayola Products such as Color Wonder and Washable Deluxe Painting Kit are front line products of the company which have successful in the company’s domestic and international market hence supply design of these products should be accurate in order to ensure that there is effect supply chain design implemented for operation of the products and to meet the demand of the customer and retailers on time as per the reputation of the firm (Beske and Seuring, 2014). The external pressures which will be on the supply chain design of the company are as follows:
Suppliers: Suppliers and the availability of suppliers within the market of expansion play an important role for determination of the supply chain design within a market. Supplier are the main source through which the company will be able to get raw materials for its manufacturing or packaging process which is why supplies are an important factor within the supply can of the company if a company like Crayola wants to manufacture product within China (Wang and Cullinane, 2015).
Distributors: As the company is new in the market it will have to establish its market in the region in this regards distributors are very important they are the one which will help the company in supplying finished good from the manufacturing point to retailers and customers. If the distributors change or there is unavailability of trustable distributors it will be hard for the company to create an accurate supply chain design.
Customers: As said that demand of the products like Colour, Wonder and Washable Deluxe Painting Kit in Chinese market is unknown this means that it is not predicted the way in which customers will react and demand for such product hence customer are an external force which will be affecting the supply chain design of the company (Coyle, Langley, Novack and Gibson, 2016).
External risk factors: In every market there is risk which is associated with the company’s operating in it reeks of economic distress and others as well. In the Chinese market the market is very price sensitive this means there is expectations of lower prices and value for money goods hence in case of inflations and other economic imbalance there will be effect on Crayola’s Supply chain design (Wang, Gunasekaran, Ngai and Papadopoulos, 2016).
Now there are some internal factors as well which will affect the overall supply chain design of Crayola in the new market and they are as follows:
- Company’s strategy: Now it has been
very evident from the case the strategy of expansion in China will decide the
fate of the company’s supply chain in the new market. The company has two
option one in which it will produce goods in US and export its to the China
Market and the other is that the company will manufacture its product in China
Itself. In both the scenario the supply chain design will be different. If the
company goes for the first option it will not have to look for suppliers in
china whereas in the second option the company will have to look for suppliers
in China to get raw materials. Hence it can be said that the company’s decision
will tend to affect the supply chain design the company will follow in the
current market (Martínez-Jurado and Moyano-Fuentes
,, 2014). - Management: The management of the company plays a vital role in the supply chain process of a company. It can be said that through management the overall supply chain design is managed hence the management will have effect on the supply chain design. This is because supply chain design will determine the extent to which the company is looking to expand their supply chain through which the company will determine the ways in which the products will be render to the market in lieu of meeting the market demand in a prominent manner. The management will decide the operational activities of the firm which then will further establish the procedures of the supply chain hence it has become very clear that management will have an crucial impact of the supply chain design of the company (Fredendall and Hill, 2016).
- Workforce: Workforce of the company is very much an evident parts of the company’s manufacturing and marketing process. The workforce of the company determines the effect of the firm in terms of its operation and supply chain management. If the workforce of the company is efficient them the supply chain design will also become effect and the company will be able to effectively deliver product on time which will create its good reputation in the ew market. It can be said that the fate of the supply chain design will mainly depend on way the workforce of the company operates in (Beske, Land and Seuring, 2014). The workforce will have an significant impact on the supply chain expansion within the market as the demand and market of the company will grow there will be high expectations with the workforce of the firm as it will help in determining the extent to which the company is able to meet the customer demands ensure efficiency in supply chain management of the firm. Hence it can be said that workforce will have a significant amount of impact on the company supply chain design (Waters and Rinsler, 2014).
- Internal risk: As explained above there are risks associated with the company expansion in a new market it can be said that there are internal risk as well which tend to affect the company company’s supply chain internal (Govindan, Kaliyan, Kannan and Haq 2014). Breakdown of manufacturing is a risk which the company will have to consider as it can happen causing disruption in the supply chain line. The company risks of various incidents and accidents within the firm operations will evidently affect the supply chain of the company which cause problems in the supply chain. Hence it can be said that internal risk is very evident to have an effect of the supply chain design of the company (Touboulic and Walker, 2015).
Review the strategic implications of Crayola’s supply chains
The Crayola Company follow a basic supply chain system in which it is communicating with the customer in a very simple way. The company has an unique supply chain for each of its product which helps the company in efficient on time delivery of the products to their customers. The company supplies its products to the customer on time without any obstacles. The company by following a basic supply chain is able to communicate easily with their customers. The suppliers of Crayola Company deliver their products to the customer and client. The Crayola Company maintain a standard when it comes to their products (Robinson and Fairchild 2018). The Crayola Company makes products of crayons, slates, pencils and colours which are not harmful for kids. The Company knows very well that kids sometimes eats crayons and colours so they make products which are not harmful and toxic. The company in terms of quality does not compromise with their quality of products. The company holds a good market position as it fulfils the demands of their customer and satisfies their customers. The Company plans their inventory level for the entire one year beforehand which helps in balancing relating to their cost. The Crayola Company deals with both large and small inventories. The company works on their supply of products and demands of their customers. The company deals with other companies like Walmart and Target. The Company maintains a proper customer service where they provide on time service and on time guarantee of their products. The companies at present manufacture and sold their products in five different countries which includes United States America, United Kingdom, Canada, Mexico and Australia. Among these countries the maximum sale is in North America which is around 86%. The companies also launch some of their famous product among which there is a washable deluxe painting kit containing water colours, paint brushes, sponges and packaging box (Christopher, 2016). Thus it can be said that Crayola has both the efficient and responsive supply chain of management.
The Crayola Company has two options in terms of supply chain and manufacturing. The company can choose the manufacturing in America and create their supply chain China. The advantage of manufacturing their product in America is that the Company does not have to share their formula which they use for making their product toxic free. The Crayola Company makes chemical free products like crayons, watercolours, pencils etc. which is not harmful or toxic even if any children eat that. With the advantage the company also have disadvantage of manufacturing their product in their native land. If the company will manufacture their products in China then they will not have to pay high taxes which they pay for supplying their products to China (Mangan, Lalwani and Lalwani, 2016). Another option is that the Crayola Company can manufacture and supply their product in China. In this the advantage is that the company will be able to create a new supply chain management and they do not have to pay any extra tax which they pay for supplying their goods. The disadvantage of manufacturing their products in China is that China will come to know about their formula of making chemical and toxic free products which the Crayola Company make for the children. Once the formula is revealed to Chinese Counterpart after some years of working together it will open its own personal company where the company will face a tough competitor. It can be said that during this kind of situation the company will take some decision by discussing it with their employers and people who are related to this business (Stadtler, 2015). The company manage the supply chain management properly when it comes to their quality of products and time management. The Crayola Company maintains a good quality of products and deliver the products to their customers on time.
Average aggregate inventory value
Raw materials
= (15000 * 3) + (2500 * 5) + (3000*1)
= 45000 + 12500 + 3000
= 60500
Work in Progress
= (5000 * 18) + (4000 * 18)
= 90000 + 72000
=162,000
Finished Goods
= (2000 * 48) + (1000 * 62)
= 96000 + 62000
= 158000
Weeks of supply
Raw materials = 60500 / 65577
= 0.92
Work in progress: 162000 / 65577
= 2.47
Finished Goods: 158000 / 65577
= 2.41
Inventory Turnover
= Annual sales at cost / Average aggregate inventory value
Raw Materials
= 3410000 / 60500
= 56.3
Work in progress
= 3410000 / 162000
= 21 .04
Finished Goods
= 3410000 / 158000
= 21.58
Concluding in the light of above
context it can be said that supply chain management through effecient measure
and decision making will determine Crayola’s fate in the New China market. The
company will have to decide the terms on
which the supply chain of the company will be built following which the company
will establish itself within the market. The company will have to ensure that
the effect of the firm in US is maintained in the newmarket as well which will
help the company in growing within this new market. Using effective supply
chain management will help the company in delivering at accurate time increasing
its brand image within this new market.
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