$1.$ What problems were Scotts Miracle$-$Gro facing? $2.$ Which software was used to analyze data collected by Scotts? $3.$ How does a software tool such as Luminoso analyze data? $4.$ What are some strategic applications of software tools such as Luminoso?SCOTTS MIRACLE$-$GRO: THE SPREADER SOURCING DECISION

Professors John Gray and Michael Leiblein wrote this case with assistance from Shyam Karunakaran solely to provide material for

class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The

authors may have disguised certain names and other identifying information to protect confidentiality.

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cases@ivey.uwo.ca$.$

As Bob Bawcombe drove to work on a warm California morning in June $2007,$ his mind was occupied

with an upcoming meeting with the folks from the corporate office in Marysville, Ohio. Bawcombe was

the director of operations of Scotts' Temecula plant. For over five years, he had been in charge of the

Temecula manufacturing plant, which produced all of Scotts Miracle$-$Gro's domestic lawn seed and

fertilizer spreaders $($see Exhibit $1).$ As a result of the plant's location in Southern California, Bawcombe

was under constant pressure to justify why Scotts should not offshore$/$outsource production of its spreaders

to a low$-$wage manufacturing site, such as China.

COMPANY HISTORY

The Scotts Miracle$-$Gro Company $($Scotts$),$ based in Marysville, Ohio, was formed by a $1995$ merger of

Miracle$-$Gro and The Scotts Company. The merger made Scotts the largest company in the North

American lawn and garden industry. It was the world's leading supplier and marketer of consumer

products for do$-$it$-$yourself lawn and garden care, with products for professional horticulture as well. ${?}^1$ In the

$2007$ fiscal year, Scotts had net sales of $$2\mathrm{.}7$ billion $($see Exhibits $2$ and $3).$

The Scotts Company was founded in $1868$ by Orlando McLean Scott as a purveyor of weed$-$free seeds. By

$1879,$ Scotts had diversified into distribution of horse$-$drawn farm equipment and also started a mail$-$order

farm seed distribution channel. Scotts began offering grass seeds for lawns in $1907,$ distributing through

retail channels beginning in $1924.$ In $1928,$ Scotts introduced Turf Builder ${?}^{},$ the first fertilizer specifically

designed for grass. Scotts started its spreader business with the introduction of drop spreaders in $1930$;

broadcast spreaders were rolled out in $1983.$ Scotts acquired Republic Tool & Manufacturing Company in

$1992$ and gained competencies in total quality control over spreader manufacturing. Ownership of the firm

changed hands several times, beginning in $1971$ when ITT bought Scotts from the Scotts family. In $1986,$ aleveraged buy$-$out $($LBO$)$ made Scotts a private company again for a time, until $1992,$ when its stock

started trading on the NASDAQ.

Miracle$-$Gro was founded in $1951$ by Horace Hagedon. Unlike Scotts, Miracle$-$Gro had no internal

production; all production was outsourced to contract manufacturers. Before the $1995$ merger with Scotts,

Miracle Gro was already a leading brand in the lawn care chemical industry. By early $2000,$ Scotts

Miracle$-$Gro products were No$.1$ in every major category and in virtually every major market in which

they competed. ${?}^2$

TEMECULA OPERATIONS

The $1992$ acquisition of Republic Tool & Manufacturing Company from the McRoskey family provided

Scotts with a spreader manufacturing plant which occupied three buildings in Carlsbad, California. By

$2000,$ the cost and inefficiencies associated with managing production across three independent buildings

had spurred Scotts' management to explore alternative methods of producing or procuring spreaders. At

that time, Scotts' senior management decided that a move to the current facilities in Temecula was the

most efficient solution.

In $2001,$ Scotts leased its current $412,000-$square foot facility for $15$ years at an anual cost of $$3$ million. ${?}^3$

The move allowed Scotts to consolidate production in one building to rationalize its production processes.

While there were eight years left on the current lease, Scotts was fairly certain that it could terminate this

lease quickly $($in less than a year$).$

Although the decision had been made to keep the plant in California in $2000,$ the comparatively high plant

and labor costs of the Temecula plant continued to create intens