Elizabeth.Marisol.MT460_Case_Study26 Miracle-Gro_Analysis UNIT 7.doc

Elizabeth.Marisol.MT460_Case_Study26 Miracle-Gro_Analysis UNIT 7.doc

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Marisol Elizabeth * 1 Unit 7 Case 26, Scotts Miracle-Gro Unit 7 Case 26, Scotts Miracle-Gro: The Spreader Sourcing Decision Study Analysis Kaplan University School of Business and Management MT460 Management Policy and Strategy Author: Marisol Elizabeth Professor: Marian Leerburger Date: March 9, 2010
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Marisol Elizabeth * 2 Introduction Scotts Miracle-Gro Company was created on 1995 and merged with The Scotts Company (known for its grass seed, fertilizers and fertilizer spreaders) and Miracle-Gro (a leader in the lawn and garden care chemical industry). While Miracle-Gro historically outsourced all production to contract manufacturers, Scotts had been manufacturing its spreaders since its 1992. In 2001, Scotts’ manufacturing facilities (which focus on spreader production) have been located in a 412,000 square foot facility in Temecula, California. Under the leadership of Bob Bawcombe, plant director of operations, the Temecula plant has achieved significant productivity improvements averaging 6% per year, and also some important innovations including a new hand spreader assembly process and an automated assembly line. Bawcombe believed that the domestic production at Temecula was critical to process innovation and product quality, management at headquarters were unhappy about the high labor and energy costs at Temecula and as a resulting pushing for production to be moved offshore to a low-cost venue such as China. Synopsis of the Situation Closing down the Temecula plant and outsourcing Scotts’ spreader production seems to be presenting opportunities for significant cost savings. However, it may be that shutting down the Temecula plant’s negative benefits of high shipping costs and other cost disadvantages associated with outsourcing, possible advantages of moving to a low-cost production in China. Outsourcing from China would mean that the lead time of Scotts’ supply chain would increase.
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Elizabeth.Marisol.MT460_Case_Study26 Miracle-Gro_Analysis UNIT 7.doc

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