Scotts Miracle-Gro Case Study Analysis Essay
Scotts Miracle-Gro Company was brought together by two of the top leaders in lawn and garden care, Scotts and Miracle-Gro. Merged in 1995 they were the largest lawn and garden company in North America. Scotts was founded in 1868 and Miracle-Gro was founded in 1951. Synopsis of the Situation
The company Scotts Miracle-Gro is on the verge of outsourcing to China to increase production and cut expenses. The operations manager, Bawcombe, has overseen operations of the company over the past 5 years and needs to justify why the company should not outsource/offshore production of its spreaders to China. Key Issues
One of the main reasons that Scotts Miracle-Gro should not outsource to China is that the productivity of China workers is not as high as in the United States. With the rising prices of labor wages and low production of workers it would cost the company more money than it would earn. Not to mention transportation taxes that they would pay to import the spreaders. Administrative costs would also be a factor because the company has weekly meetings to oversee the production and ensure the company is meeting its quality standards. Define the Problem
The cost of outsourcing to a lower wage country like China may seem like a great idea. Once the implementation of import taxes and administrative costs begin to rise, the company may began to realize that maybe outsourcing/ off shoring costs more than it produces. The added costs of transportation might not be the only problem. The labor wages in China are forecast to rise over 10 year’s timeframe.
Alternative Solutions Another solution could be that buying direct from a manufacturing firm in China. This may be a difficult task because the process of “in mold labeling.” The facility in Temecula is one of the few facilities in the world to use this technique. Selected Solution to the Problem
There really is no big problem with Scotts Miracle-Gro operations. The operations manager, Bawcombe needs to prove that outsourcing would only bring the company problems more than solve any. With over 5 years as the operations management and Scotts Miracle- Gro the largest lawn and garden company the solution lies within the management team. Implementation
Continue to process spreaders in Temecula, California. With the opening of the new facility in Temecula, production increased. Once lean management techniques were implemented the plant was ready to compete on a global basis.
Recommendations Keep the vision of implementing the whole plant as automated as possible. Leave the idea of outsourcing to China a thing of the past. Scotts Miracle-Gro does not have many competitors as it is the industry leader in lawn and garden. Conclusion
In conclusion Scotts Miracle-Gro is the top company for lawn and garden. Without the added costs of transportation, taxes, administrative expenses the company has net sales over 2.7 billion dollars. Although the labor wages are fairly low, the added expenses can cost as much as they are within the United States. The new facilities in Temecula, lean management techniques are all good reasons to continue the manufacturing process in California.