Scotts Miracle-Gro Case Study Analysis

Introduction

Scotts Miracle-Gro (SMG) Company was formed after the merger of The Scotts Company and Miracle-Gro in 1995 in Marysville, Ohio. SMG is the world’s leader in products for someone who wants to take care of their lawn and garden themselves, as well as offering a professional line of products as well. The Scotts Company made it big with the vast line of spreaders over the years, whereas Miracle-Gro was more into the lawn care chemical industry.

Synopsis of the Situation

SMG had acquired three buildings in Carlsbad, California that were used for the manufacturing of the spreaders that were a big part of the company. After some time they realized that having three independent buildings was not efficient, and therefore they explored other options and found a facility in Temecula, California. The facility was over 400,000 square feet, and cost about three million dollars a year, which was very costly. The plant was taught lean manufacturing techniques, along with the employees being trained. Information and technology was put into developing new assembling and manufacturing techniques for items, such as the hand spreader. The labor costs, along with overhead was very costly, which made the company look towards outsourcing the products to be made in China.

Key Issues

The biggest issue was the costs related with the Temecula Plant, which in turn caused products costs to rise. The factor look at labor rates, electricity, raw materials and overhead charges, it just wasn’t cost efficient.

Define the Problem

Due to the higher costs of labor and property here in the United States, especially in Southern California, it caused SMG to have problems with their manufacturing facility. If things continued the way they were for the full fifteen-year lease they signed on the facility in Temecula, the Company could have gone belly up on a key item of the product line. Change was needed, whether some processes were outsourced, or if the whole production was outsourcing, SMG needed to act fast.

Alternative Solutions

The two solutions to the problem would be to outsourcing