Scott Miracle Gro Case Summary

INTRODUCTION
The Scotts Miracle-Gro group was formed after the merger of The Scotts Group and Miracle-Gro in 1995. The Scotts company was formed by Orlando Mclean Scott in 1868 as a weed free seed manufacturing company. By, 1879 the company started distribution of horse-drawn farm equipment. Grass seeds for lawn was started by the company in 1907 and distribution through retail channel started in 1924. By, 1930 the company has rolled out different equipment for spreading fertilizers.
Scotts acquired Republic tool and Manufacturing company in 1992. But the ownership of the Scotts company was changed several times, in 1971 ITT bought the company from the Scotts family, in 1986 a leveraged buy-out made it a private company, until 1992, when its stock started trading in NASDAQ.
RISK AND BENEFITS
There are many risks and benefits …show more content…
if the plant remains in Temecula will be $0. But if outsourced to china the freight cost will be $8,000,000 which is expected to increase 3% each year, plus there would be a need to store some safety stock in US which would be additional 8 weeks’ stock and would cost $460,000.
Therefore, even though the labour costs are cheap in China but the supply chain cost is very high and would cover up the savings from labour costs. Also, there are many risks involved in outsourcing to China, even if the costs difference in china might be low but considering other factors it would be very risky to outsource.
CONCLUSION
After looking at all the risks and benefits of Outsourcing to China and the costs analysis, I would suggest that Scotts doesn’t outsource and keep the production at Temecula plant and innovate the production process to reduce the production costs.
Scotts should also reduce the usage of electricity, raw materials and labour as much as they can and will not affect the quality of the product, which will in turn reduce the costs. They will remain in competition even if they do not

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