The Scotts Company: Transforming the European Supply Chain Essay Example

management is also the reason for not reliable order fillings.

Considering the fact, that one of these customers was threatening to leave, it would leave a significant impact on Scotts’ performance. . Two Growing media plants in France and Netherlands were burdened with much higher structural costs due to their distance from the peat bogs. Also other fertilizer plants should be reorganized because of excess capacity.

Scotts Europe outsourced chemical supplier despite the fact that during off-peak season, one of plants operated at 40% capacity.

13 distribution centers are actually increasing lead-time and delivery costs. In fact, very high inventory levels are lying at distribution centers. Annual inventory turn is 3.3 times.

Only labeling should be made according to specific requirements of each customer/ country.

• Remove supply chain management spread by zones and create European supply chain for each product line.
• Significantly decrease number of suppliers and packaging suppliers. Signing exclusive contracts with a few suppliers will provide significant discounts and enable careful planning of costs. If done carefully, cost savings may range from 5 – 10% from total supply chain costs of EUR 380 mio, that is EUR 19 - 38 mio in savings.
• Implement new IT solution applicable for multi-national companies, for example, SAP.

This will unify forecasting and measurement systems in all of European branches, will significantly decrease number of errors, will enable EDI function with customers and suppliers.Moreover, it will integrate all accounting systems, enabling better control over daily

operations (order processing, inventory analysis) and performance reviews. Estimated savings considering expensive IT costs (around EUR 2 mio), could range from EUR 2 – 5 mio per year.

• Assign special key account managers for large customers.
• Introduce discounting policy and customer loyalty programs.

A detailed analysis should be made on performance of 13 distribution centers – capacity, inventory turnover, costs etc. It appears most of the centers should be closed as they serve as excessive link in the supply chain, accumulating high inventory levels. All these improvements will boost profitability by identifying at least or more that EUR 30 mio required by U. S.

A headquarters. However, we believe it is not realistic to manage all this turnaround in 1 year’s time. It might take from 2 – 3 years.