Scotts Miracle Gro The Spreader Sourcing Decision Case Solution

1. What are the strategic risks and benefits of outsourcing production of the Temecula plant to a contract manufacturer(s) in China? Use any framework that you feel is relevant to assess this decision of Scott's Miracle-Gro at the strategic level.

Benefits:

• Scott's is functional, previously sourced equipment in Vietnam. Aside through in moulding, producers in Korea have the infrastructure needed to meet volume demands.

• Overhead expenditures, infrastructure expenditures, leasing charges, labour, as well as other expense charges are comparatively cheaper in China, as discussed more below. Considering the facility's Southern proximity, asserting the required amount of pay (which is greater than the estimate for the country) and utility surcharges exacerbate the disparity. 

• Contracting production helps Scott's concentrate leverage labour, wealth and cash on R&D, project management, and important additional expenditures to increase economy position and extend beyond job creation areas. 

• Adaptability to market needs (reduction in total contracted personnel as required) 

Risks:

• Intellectual Property: Scott's must communicate patented concepts, industry standards, and methods (besides labelling) utilizing Chinese suppliers while outsourcing production. Assuming any situation, ambiguity in Chinese real estate rights regulation, Scott's may lose competitiveness with their wares.

• The Chinese price and financial laws are unclear, which might have an influence on tariffs, exchange rates, labour inputs, and other expenditures (e.g., energy). A breakdown in foreign politics may severely impact commerce and profitability. Market circumstances in China may impact the selection of suitable providers. 

• Quality/Oversight: Absent direct management and monitoring, there is a danger of increasing product faults since businesses lack the knowledge of the present Scott's factory and could have less stringent maintenance plans or laxer control systems. Only two executives visit outsourced facility sites each year. Thus, supervision is not constant.

• Operational: China has low efficiency relative to the US, lengthier lead times, a maximum stock level required, and less expenditure on innovation in products and processes.

We developed a SWOT analysis to determine the viability of the manufacturing exporting option: 

• Strengths – The firm's reliance on ongoing technological development enhancement permits one to keep one solid brand reputation and improve the consumer experience. The company has a large global reach, market presence, and powerful product image identification.