7 Case 26, Scotts Miracle-Gro: the Spreader Sourcing Decision

RUNNING HEAD: Case 7 Case 26, Scotts Miracle-Gro: The Spreader Sourcing Decision

Unit 7 Scotts Miracle-Gro Case Study Analysis

Kaplan University

School of Business and Management

MT460 Management Policy and Strategy

Author:

Professor:

Date:

Introduction

The Scotts Miracle-Gro Company based in Marysville, Ohio began in 1868 as the Scotts Company until 1995 when a merger between The Scotts Company, known for its weed free seeds and Miracle-Gro occurred. While Miracle-Gro historically outsourced all production to contract manufacturers, most of which are in China, Scotts had been manufacturing its spreaders since its 1992 acquisition of Republic Tool & Manufacturing Company (Gray, Leiblein, 2008).

Synopsis of the Situation

In 2001, Scotts’ (which focus on spreader production) began a 15 year lease of a 412,000 square foot facility in Temecula, California for $3million a year. With Bob Bawcombe (plant director of operations) leading the way, plant director of operations, the Temecula plant has achieved enormous productivity improvements (averaging 6% per year with a 5 year expectancy rate), and also some important innovations including a new hand spreader assembly process and an automated assembly line (Gray, Leiblein, 2008).

While Mr. Bawcombe knew that the domestic production at Temecula was very important for process innovation and product quality, other management personnel were unimpressed with the high labor and energy costs at Temecula and began requesting that production to be moved offshore to a low-cost venue such as China. Scotts had already been buying parts for its spreaders and had often considered the possibility of outsourcing the complete spreader manufacture and assembly to China (Gray, Leiblein, 2008).

Key Issues

Closing down the Temecula plant and outsourcing or off shoring Scotts’ spreader production appears to present opportunities for significant cost-savings. However, it...