Case Study 1 Scotts Miracle Gro
Laura MosierSCM-Professor YorkCase study #1“Scott’s Miracle-Gro”Scotts Miracle-Gro, the largest company in the North American lawn and garden industry, has reached a point in its existence to make a significant management decision. The company is considering whether to continue with insourcing its spreader products or switch to outsourcing in China. The solution lies in an analysis of quantitative and qualitative data comparisons and deciding which ideology would benefit the company in the long haul.
When considering the costs it seems as though outsourcing would save a lot of money for the firm, however, we must think strategically. Thinking strategically means the long run, and using the statistics we were given we can estimate that …show more content…
Energy costs of the plant are currently at an annual total of $21,280,000. In 2009, however, this number will decrease substantially due to the expired surcharge. Assuming the company continues to use the same amount of energy it does now, energy costs will still amount to about $1,300,000 in 2009. I believe our answer to this problem is adopting solar power. Although a new technology, many large and successful corporations that have been around for a long time have made the transition to solar energy because of its costly benefits. These companies include Macy’s, Wal Mart, Apple and Ikea. The success of these corporations at significantly saving on energy costs through this transition can be used as a benchmark for Scott’s Miracle-Gro. Currently the initial costs of installing solar power panels have decreased due to its growing …show more content…
With 195 employees at an average rate of 16.25 per hour and assuming a forty hour work week (although some are temporary workers) this amounts to $126,750 a week; $507,000 a month; and $6,591,000 a year. Although the need for labor has decreased, firing people would not be the answer. Profit will be paralleled with increasing productivity which is estimated to rise six percent every year for the next ten years plus three percent for the next five. The cause of these productivity improvements are thanks to the workforce team employed at the Temecula facility. With the company growing in productivity and profit, plus the savings from adopting solar power energy we would easily be able to dissolve these labor costs. Additionally, our overhead costs would decrease since they are a portion of our energy usage. With the continuous growth of the company we may even be able to open another facility in the future where we can utilize employment
When considering the costs it seems as though outsourcing would save a lot of money for the firm, however, we must think strategically. Thinking strategically means the long run, and using the statistics we were given we can estimate that …show more content…
Energy costs of the plant are currently at an annual total of $21,280,000. In 2009, however, this number will decrease substantially due to the expired surcharge. Assuming the company continues to use the same amount of energy it does now, energy costs will still amount to about $1,300,000 in 2009. I believe our answer to this problem is adopting solar power. Although a new technology, many large and successful corporations that have been around for a long time have made the transition to solar energy because of its costly benefits. These companies include Macy’s, Wal Mart, Apple and Ikea. The success of these corporations at significantly saving on energy costs through this transition can be used as a benchmark for Scott’s Miracle-Gro. Currently the initial costs of installing solar power panels have decreased due to its growing …show more content…
With 195 employees at an average rate of 16.25 per hour and assuming a forty hour work week (although some are temporary workers) this amounts to $126,750 a week; $507,000 a month; and $6,591,000 a year. Although the need for labor has decreased, firing people would not be the answer. Profit will be paralleled with increasing productivity which is estimated to rise six percent every year for the next ten years plus three percent for the next five. The cause of these productivity improvements are thanks to the workforce team employed at the Temecula facility. With the company growing in productivity and profit, plus the savings from adopting solar power energy we would easily be able to dissolve these labor costs. Additionally, our overhead costs would decrease since they are a portion of our energy usage. With the continuous growth of the company we may even be able to open another facility in the future where we can utilize employment