Scotts Miracle Gro

Only available on StudyMode
  • Topic: Scotts Miracle-Gro Company, Marysville, Ohio
  • Pages : 11 (2658 words )
  • Download(s) : 271
  • Published : June 26, 2011
Open Document
Text Preview
Scotts Miracle-Gro: The Spreader Sourcing Decision

By

Harvey L. Brooks
Don Billoni
Valarie Haywood
Cynthia Wiley
Procurement 5820

Professor: Dr. Innocent

July 22, 2011

Table of Content

Case Introduction………………………………………………………………….3-4 Statement of Problem……………………………………………………………...4-6 Causes of the Problem……………………………………………………………….6 Decision Criteria and Alternative Solution……………………………….……7-8 Decision Matrix and Scoring………………………………………………………...9 Recommend Solution and Implementation…………………..……………….…..9-10 Reference Page……………………………………………………………………...11 Appendix A……………………………………………………………………..…..12 Appendix B………………………………………………………………………....13

Case Introduction

This is an in-depth case analysis of the Scotts’ Miracle-Gro Company (Scotts) alternative decisions regarding what to do with the Scotts’ plant based in Temecula, California. The Scotts Company was founded by Orlando McLean Scott in 1868, and was located in Marysville, Ohio. Scotts started its spreader business with the introduction of drop spreaders in 1930. In 1995 Scotts Miracle-Gro was formed after the merger of Scotts and Miracle-Gro making it the largest company in North America’s lawn and garden industry, and the worlds leading supplier and marketer of consumer lawn and garden care products (Gray & Leiblein, 2008). Unlike Scotts, Miracle-Gro had no internal production; all production was outsourced. In 1992, after Scotts acquired Republic Tools & Manufacturing Company, a three building spreader manufacturing plant in Carlsbad, California was provided by the McRoskey family. In 2001, to cut the cost of maintaining three independent buildings, Scotts’ senior management decided that a move to the current facilities in Temecula would be most efficient. Since 2001, Scotts’ manufacturing facilities (which focus on spreader production) have been located in a 412,000 square foot facility in Temecula, California. Under the direction of Bob Bawcombe, plant director of operations, the Temecula plant (which employs 190 workers and (16 salaried employees) has achieved productivity improvements (averaging 6% per year) and has also made important innovations, including a new hand spreader assembly line. Moreover, the Temecula plant pioneered the use of “in-mold labeling” for injection molding on its spreader product. At the same time Bawcombe, director of operations, realized how critical domestic production at Temecula was to process innovation and product quality, management at headquarters were questioning the feasibility of outsourcing or offshoring production to China.

Statement of Problem

At a first glance, closing down the Temecula plant and outsourcing or offshoring Scotts’ spreader production seems to present opportunities for significant cost savings. However, it may be that shutting down the Temecula plant’s apparent negative benefits of high shipping costs and other cost disadvantages associated with outsourcing or offshoring may out way the possible advantages of moving to a low-cost production in China. Herein lies the dilemma for this case analysis; where to locate Scotts manufacturing operations for its fertilizer spreaders in order to best serve Scotts’ interests and the interests of its key stakeholders. A comparative analysis of the cost of manufacturing through a contract manufacturer in China versus keeping manufacturing at the Temecula plant is a necessary prerequisite to any decision on this matter. The comparative analysis will include the following: Costs, inefficiencies, and managing the Temecula plant in Temecula, California; Outsourcing the complete spreader manufacturer and assembly to China; Transitional costs-search contracting and Temecula shut down, etc. Outsourcing from China would mean that the lead time of Scotts’supply chain would increase. Scotts figures that it would have to hold an additional eight weeks of safety stock at current annual cost of $460,000 to offset...
tracking img