Scotts Miracle-Gro: the Spreader Sourcing Decision Essay

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SCOTTS MIRACLE-GRO: THE SPREADER SOURCING DECISION
IVEY BUSINESS CASE STUDY 908M78

Introduction This paper provides a case analysis and case solution to an Ivey School of Business case study on Scotts Miracle-Gro, the biggest company in North America’s lawn and garden industry and the world’s leading supplier and marketer of consumer lawn and garden care products (Gray & Leiblein, 2008, p. 1). The time setting for the case is the summer of 2007. The case focuses on questions about where to optimally locate Scotts’ manufacturing operations for its fertilizer spreaders. Based in Marysville, Ohio and with a history dating back to the 1868 founding of the Scotts Company, the contemporary Scotts Miracle-Gro Company was created by a …show more content…
| | | |manuf. |
|Electricity* |.185 |25%/yr |.065 |20%/yr |35% |
| |per kwt | |per kwt | | |
|Labor – Direct* |6,591,000 |3%/yr |863,117 |4%/yr |13.1% |
|Productivity Improvement* |(395,460) |(6%) | | | |
|Salaried Employees* |2,000,000 |3%/yr |[431,586]# |unknown |22.3% |
|Temecula Raw Materials Savings |(100,000)
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Case: Scotts Miracle-Gro (the Spreader Sourcing Decision) 1. What are the strategic risks and benefits of outsourcing production of the Temecula plant to contract manufacturers in China? Benefits • Significantly low cost supply from contract manufacturers: Labor, electricity (government subsidy), overhead Risks • Some costs are expensive: freight cost from China, inventory (lead-time increase because of shipping), and quality control (testing shipped products from China in the US require some…

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