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Published: May 25, 2010
 / Summer 2010 / Issue 59

 
 

Herman Miller’s Design for Growth

The Last Mile experts began by improving the dealers’ purchase-order-to-cash cycle. Paul Iles, vice president of distribution, reports that Herman Miller has helped shorten those cycles by 15 to 20 days. The company has since taken a close look at how dealers install products. Iles likes to remind people in Herman Miller manufacturing that in the customers’ eyes, “We don’t actually make the product. It’s our dealers.” After all, the dealers do the final assembly of panel systems, desks, and other parts of the office interior; they are the face of Herman Miller.

The dealers now struggle with several issues. One is that unpacking trailers, which were loaded to suit Herman Miller shipping requirements, often takes longer than installing the products. Another is that Herman Miller products come with many supplemental parts, because the factory doesn’t know the configuration in which the dealers will install the pieces. Any excess parts are waste.

Herman Miller’s engineers have been visiting dealer sites to observe installations. They figure they’ll find plenty of waste to cut. Perhaps the simplest example, beyond supplemental parts, involves instruction sheets. A dealer receiving multiples of a product receives multiple sheets — maybe dozens. Herman Miller spends $1 million a year printing them, so big savings are possible from eliminating extras.

The Last Mile program has begun to change dealers’ handling of the logistics of Herman Miller products. Ten years ago, when delivery and quality were abysmal, dealers routinely added weeks of buffer time to delivery commitments. They also stashed plenty of extra stock in warehouses, knowing they couldn’t count on timely deliveries. Now that Herman Miller delivers on schedule 99.7 percent of the time, dealers can do away with both the buffer time and the buffer space.

In effect, Herman Miller has taken its program for win-win supplier relations and begun to duplicate it with its dealers, creating an increasingly smooth end-to-end process. One sign of the dealers’ pleasure with this development: The Office Furniture Dealers Alliance chose Herman Miller for its 2008 Manufacturer of the Year Gold Award.

Creating New Markets

The management skills and rigor acquired by Herman Miller since the 1990s provided the stability and financial support for the skunkworks program of Gary Miller, its Programmable Environments initiative, and the creation of the new Convia subsidiary — which may significantly expand the playing field on which Herman Miller can battle for future revenue. Early on, the Convia team was concerned about its survival because it launched during the dot-com crash, at which time Herman Miller sales plunged as much as 40 percent in some quarters.

Volkema and Walker continued to fund the program in the midst of huge cuts in costs and workforce, reinforcing the company’s commitment to long-term growth. And they continued to support the approach taken by Gary Miller, demonstrating once again Herman Miller’s devotion to fresh thinking about management.

Miller’s first challenge was setting up his Creative Office unit in 2001. To do so, he took into account several facts of corporate life. One was the tendency for companies to support only work that replicates past successes — the not-invented-here syndrome. Another was the tendency to use all available capital to feed the maw of the current product stream — something Miller calls the “tyranny of the urgent.” A third was pressure in economic downtimes for top executives to cut high-risk investments.

Any one of these concerns could have killed Miller’s new-markets initiative. So for starters, he asked Volkema, Walker, and two other top people to sit on his internal board of directors. The objective was to have top decision makers invest themselves in the work — to be companions on the journey, not simply judges of it. “The idea,” Miller says, “was to change the dynamic from traditional review-and-approve to advocacy.”

 
 
 
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Resources

  1. John Berry, Herman Miller: The Purpose of Design (Rizzoli, 2009): A definitive history of the company’s continuing collaboration with some of the giants of modern design.
  2. Kevin Dehoff and John Loehr, “Innovation Agility,” s+b, Summer 2007: How to build the capability to manage a large, global product development portfolio and consistently deliver winners.
  3. Max De Pree, Leadership Is an Art (Dell, 1990): The former CEO on why a leader should recognize human diversity and make full use of his or her employees’ gifts.
  4. Kaj Grichnik and Conrad Winkler, with Jeffrey Rothfeder, Make or Break: How Manufacturers Can Leap from Decline to Revitalization (McGraw-Hill, 2008): A guide to emulating companies like Herman Miller.
  5. Art Kleiner, “Leaning Toward Utopia,” s+b, Summer 2005: Lean production experts James Womack and Daniel Jones talk about how the system has revolutionized industry and can transform the world.
  6. Tim Laseter, “An Essential Step for Corporate Strategy,” s+b, Winter 2009: Though often missing, a formal operations strategy can guide the crucial decisions that build competitive advantage.
  7. Richard Verity and Chris McNally, “Virtuous Connections,” s+b, Spring 2010: How a fine-tuned supply chain can improve performance throughout an organization.
  8. For more thought leadership on this topic, see the s+b website at: www.strategy-business.com/strategy_and_leadership