...Scotts Miracle-Gro : The Spreader Sourcing Decision John Gray Michael Leiblein 1 As Bob Bawcombe drove to work on a warm California morning in June 2007, his mind was occupied with an upcoming meeting with the folks from the corporate office in Marysville, Ohio. Bawcombe was the director of operations of Scotts’ Temecula plant. For over five years, he had been in charge of the Temecula manufacturing plant, which produced all of Scotts Miracle-Gro’s domestic lawn seed and fertilizer spreaders (see Exhibit 1). As a result of the plant’s location in Southern California, Bawcombe was under constant pressure to justify why Scotts should not offshore/outsource production of its spreaders to a low-wage manufacturing site, such as China. COMPANY HISTORY 2 The Scotts Miracle-Gro Company (Scotts), based in Marysville, Ohio, was formed by a 1995 merger of Miracle-Gro and The Scotts Company. The merger made Scotts the largest company in the North American lawn and garden industry. It was the world’s leading supplier and marketer of consumer products for do-it-yourself lawn and garden care, with products for professional horticulture as well. 1 In the 2007 fiscal year, Scotts had net sales of $2.7 billion (see Exhibits 2 and 3). 3 The Scotts Company was founded in 1868 by Orlando McLean Scott as a purveyor of weed-free seeds. By 1879, Scotts had diversified into distribution of horse-drawn farm equipment and also started a mail-order farm seed distribution channel. Scotts...
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...RUNNING HEAD: Scotts Miracle-Gro : The Spreader Sourcing Decision Unit 7 Scotts Miracle-Gro : The Spreader Sourcing Decision Kaplan University School of Business and Management MT460 Management Policy and Strategy David H Brose Professor: Zurick October 11, 2011 Introduction Scotts merged with Miracle Gro in 1995 to form the largest lawn and garden supplier to the do it yourselfer. The company started as a seed supplier in 1868, claiming to distribute a weed free seed. Scotts marketed fertilizer in the late 1920s. In 1930, they developed their drop spreader business and their broadcast spreader business in 1983. Synopsis of the Situation Scotts had developed an injection molding process that is more appropriate for their industry. The old process of “hot stamping” labels left a manufacturer expiration on Scotts product. The new “label stamping” process made for a more unique and efficient manufacturing process. Key Issues The manufacturing process required fewer employees to produce. The location of the manufacturing facility requires high paid production labor, leased facilities, and limited manufacturing capabilities. Define the Problem Scott manufactures their label stamped spreader in a state with expensive cost of living and more expensive realty. The cost of moving the manufacturing facility is unthinkable with the specialty equipment and training required for the product. ...
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...Scotts Miracle-Gro | September 7 BUAD 6600 | SCMers Meagan Frances AyersJames FranksEmelie HallJean-Hubert Trahan | Instructor: Sachin Modi | Objective/Scope The purpose of this article is to determine whether staying at the Temecula plant or outsourcing to China is the best option for Scotts Miracle-Gro. A cost analysis will be used to determine which option will give Scotts Miracle-Gro the best opportunity for long-term growth and profit. Recommendations It has been determined that staying in the United States at the Temecula plant in California will be the best decision for Scotts Miracle-Gro financially and with regards to their image and product quality. However, in order to remain competitive, costs must be lowered to keep profits up to par with where they would be had the company decided to outsource. To do this, it has been recommended that Scotts Miracle-Gro cut production costs by reducing: 1. Energy Costs, 2. Raw Materials Costs, and 3. Labor Costs. By reducing costs, Scott’s Miracle-Gro can remain competitive while in the United States and avoid outsourcing the production line to China. Analysis Risk and Benefits Upon reviewing the information regarding the production line of The Spreader, it has been concluded that there are many risks with outsourcing the production line overseas to China which include but are not limited to: 1. Loss of quality 2. Loss of production innovation 3. Forgoing in-mold label capabilities...
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...Scotts Miracle-Gro | September 7 BUAD 6600 | SCMers Meagan Frances AyersJames FranksEmelie HallJean-Hubert Trahan | Instructor: Sachin Modi | Objective/Scope The purpose of this article is to determine whether staying at the Temecula plant or outsourcing to China is the best option for Scotts Miracle-Gro. A cost analysis will be used to determine which option will give Scotts Miracle-Gro the best opportunity for long-term growth and profit. Recommendations It has been determined that staying in the United States at the Temecula plant in California will be the best decision for Scotts Miracle-Gro financially and with regards to their image and product quality. However, in order to remain competitive, costs must be lowered to keep profits up to par with where they would be had the company decided to outsource. To do this, it has been recommended that Scotts Miracle-Gro cut production costs by reducing: 1. Energy Costs, 2. Raw Materials Costs, and 3. Labor Costs. By reducing costs, Scott’s Miracle-Gro can remain competitive while in the United States and avoid outsourcing the production line to China. Analysis Risk and Benefits Upon reviewing the information regarding the production line of The Spreader, it has been concluded that there are many risks with outsourcing the production line overseas to China which include but are not limited to: 1. Loss of quality 2. Loss of production innovation 3. Forgoing in-mold label capabilities...
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