Scotts Miracle-Gro Case Study

September 5, 2012

PROC 5000

Case Study Assignment #2

SCOTTS MIRACLE-GRO CASE

Bob Barwcombe has been challenged to justify whether to outsource to production of Scotts Miracle-Gro (Scotts) spreaders to China. There are a number of risks Scotts face from outsourcing production of the Temecula plant to a contract manufacturer in China.

Scotts’ risks damaging the workers morale if the Temecula plant moves the work. While there is no metric to measure worker morale, the correlation can be made that morale impacts productivity and quality. Morale costs could also impact other functional areas of the company. Moreover, quality can be sacrificed when control is no longer an in-house function.

They also risk external failure costs if there is a decrease in the quality of spreaders being produced. In addition, to keep using the “in-mold labeling” technology, Scotts would have to provide training and equipment. This opens up the chances for this capability to be shared with others companies by the Chinese company thus causing a competitive advantage to potentially be lost.

In addition, there is a major risk to the possible impact on the company’s image. Closing the plant and moving the operations to China could easily result in negative publicity for the company. Since Scotts is the largest company in North Americana in the lawn and garden industry, it is likely that the decision would be reported on a national/continental level. If this would occur, it could result in an image damaging nightmare.

Lastly, there are risks associated with the stunting of future automation efforts. Benefits have been gained throughout the organization from the gains in automation and working lean at the Temecula plant. They risk losing these with the decision to outsource production. Internal changes would have to occur since the current plant has trained their employees on lean processes and they take these lessons to other areas of the business. They would continue to...