Reshoring Case Study: Crayola
Crayola is a U.S.-based company that has remained true to its roots throughout its growth history. Crayola’s domestic manufacturing is impressive, with over three billion crayons rolling off of the Easton, PA production line yearly. 83% of Crayola’s customers are in North America, and over two thirds of all products sold globally are made in the USA.
The case study below was the result of hours of research regarding how Crayola’s supply chain model helped in retaining manufacturing in the United States. Being one of the largest players in the arts and crafts industry, Crayola provided a strong example for others in the industry to follow suit.
To take advantage of low international wages and operating costs, American corporations began offshoring manufacturing in the 1990s. But, in recent years, several tax reform benefits for U.S. manufacturers such as government incentives for reshoring, grants for manufacturing in USA, tax deduction for U.S. manufacturers, etc. have made overseas manufacturing less desirable for American corporations.
Despite the offshoring movement, the U.S.-based company, Crayola has remained true to its roots since its inception. With over three billion crayons rolling off the Easton, PA production line yearly, Crayola’s domestic manufacturing is impressive. A whopping 83% of Crayola’s customers are in North America, and over two thirds of all products sold globally are made in the United States. Crayola’s manufacturing decisions is based on several complex supply chain factors, with an elaborate Total Cost of Ownership (TCO) model being at its core. The sourcing team analyzes many TCO factors, such as lead times, inventory risk, and carrying cost, before deciding on where raw materials are sourced and where products should be built. This TCO model has led Crayola to evolve its regional supply chain modeling, whereby the company produces as much as possible in geographic regions where products will be sold. The strategy enables a core supply chain foundation of close to-market responsiveness, which Crayola executives believe distinguishes Crayola from the competition.
Due to its scale of business, Crayola acquires bulk raw materials at cheaper costs. The company locates raw material suppliers within a one-day transport to its plants, enabling the response to unforecasted orders. In addition to employing a highly-skilled workforce, Crayola extensively uses custom automation in its manufacturing to maximize capacity, which in turn, allows them to viably manufacture products in the United States at competitive costs.
Crayola created a supply chain that can quickly and effectively respond to seasonal peak demand for their products. Statistics indicate that Crayola traditionally experiences high sales volume around the back-to-school period. By using TCO and cost management, Crayola has been able to minimize inventories, and maintain service levels on product range and competitive costs.
Crayola employs over 1,250 people across North America, Australia, and Mexico, with the majority staff working in their Lehigh Valley, PA location. Crayola has strategic advantage in the art supplies marketplace due to their continuing dedication to quality and domestic manufacturing serving America. Their ‘American Made’ standard makes them an outstanding example for U.S. manufacturers considering reshoring advantages.
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If you would like more information regarding Crayola’s reshoring efforts or you are interested in partnering, please feel free to contact us.