As the Scott Companys new European Supply Chain Manager, Roger Bloemen understood his mission: find out why Scotts Europe was not performing as expected. Scotts European management suspected the disappointing results were due to supply chain problems, specifically duplications and inefficiencies in sourcing, manufacturing and distribution. Bloemen would soon discover that they were right.
Just days after starting his new job in late 1999, Bloemen began seeing the big picture: as part of its expansion efforts in 1997 and 1998, Scotts had purchased five sizeable European operations, each of which had a strong local culture and distinct supply chains and data platforms. This resulted in a costly, complex and inefficient supply chain. Bloemen realized that he could immediately realize cost savings simply by consolidating the purchasing functions. After all, there were 75 purchasing employees in Scotts Europe now, and each was buying from separate suppliers hundreds of suppliers in total!
But this was just one of several problems he would need to address, explain Luk Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing, Regine Slagmulder, Associate Professor of Accounting and Control, and Margaret Vaysman, Research Associate, in Part A of this two-part case. Scotts Europe faced numerous complex operations issues. Included in the list was the possibility of plant closures, a process that is far easier to accomplish in the US than in Europe. In addition, each country had its own registration requirements for chemicals, making it difficult to offer the same products across countries. The company also faced warehousing and delivery problems. While many European customers were pushing just-in-time, Scotts Europe was carrying high levels of inventory at a cost of roughly 12 million per year. And its On Time In Full record hovered somewhere between 60 85%, which in 1998 cost the company 2.5 million in lost sales.