Operations - Herman Miller

Operations Design Analysis: Herman Miller

By: Gavin P. Smith with teammates Christy Kollmar, Stephen Land, Fernando Tarafa and Mei-Shu Chang

CRADLE-TO-CRADLE DESIGN AT HERMAN MILLER

I. EXECUTIVE SUMMARY

“At best, the view of sustainability as an endless journey of incremental steps does a disservice to managers seeking to square economy with ecology sooner rather than later. At worst, it serves as an excuse for inaction when it comes to building a truly sustainable business.” -Gregory Unruh

To quote a great operations professor, “It’s not just about doing things right, it’s also about doing the right thing.” We believe that Herman Miller lives by this statement and that it is the main reason why it chose to undertake the strategic environmental initiative. Therefore, Herman Miller must use the TPU instead of the PVC for the Mirra Chair.

The ‘Cradle to Cradle’ initiative launched by Herman Miller encompasses what all companies should be doing; not just looking at better materials for their products, but also revisiting business processes in engineering, supply chain management, and manufacturing and design, to ultimately institute meaningful and lasting change. Once all emerging economies are developed, it will place unprecedented pressure on the already strained resources. Taking this into account, we need to pave the way to search for more effective and efficient ways of achieving sustainability.

Due to Herman Miller’s conviction and commitment to the C2C initiative, it was able to not only implement the processes internally, but also get buy-in from its suppliers. With luck (and time), C2C will not just be a fad taken up by some businesses primarily concentrated on gaining market share, but rather it will be the standard way of doing business.

Operations - Herman MillerII. MIRRA CHAIR ARM PADS:  PVC v. TPU

We strongly believe that Herman Miller should use TPU in the Mirra Chair arm pad, instead of PVC.  The Herman Miller culture is not just driven by innovation or good design.  It is also driven by “a moral purpose”.  The tenets at the center of their progressive culture include “curiosity and exploration, design, a better world, performance, relationships, transparency, engagement, inclusiveness, and foundations.”  A company that fully embraces these tenets sometimes has to make a qualitative judgment call about the overall product and strategy it pursues.  That is not to say that quantitative support is not desired or required.  Often, however, the decision comes down to what reputation you wish to be known for by your customers.  Perception is a powerful driver in any industry.  The wrong one can dramatically shorten your life cycle.

Herman Miller thrives from its adherence to the “triple-bottom line” philosophy of people, planet and profit.  This is precisely why the EQAT (Environmental Quality Action Team) was formed in 1989.  How important is this as part of the Herman Miller culture?  Employees are not recruited or selected for this team.  They volunteer to be a part of it.  They desire and fight to be a part of it.  By 1991, they drafted Design for Environment (DfE) protocols for the company to follow.  These protocols had buy-in from all corners of the company (Supply Chain management, Product Management, Healthcare Marketing and Project Services, Concept Development, and Environmental Health and Safety).

The DfE did not just make sense to their people and to the planet, but also to their profit.  Why?  Leaders at Herman Miller are well aware that the ongoing trend of constant revisions to environmental standards would eventually catch up with them if they sat idly by.   As with any company, staying ahead of innovation, technology and changing regulations only serves to keep it competitive.  Therefore, it is inevitable that Herman Miller fully embraces DfE protocols on all of its products.

It is not only necessary for Herman Miller to adopt better environmental materials standards for their Mirra chair, it is absolutely vital to their industry perception, value proposition and customer expectations.  Further, they should not be satisfied by simply switching from PVC to TPU.  According to their weighted DfE percentage scorecard, Herman Miller needs to also focus on all items that are coded orange or red.  Bringing all low scoring items to a grade of yellow or above would be better aligned with their overall philosophy.  This includes sourcing an alternative to the silicone rubber fill O-ring (part #123468) and the super rubber bumper (part #123460).

Of course, there is resistance to the use of TPU by certain departments.  Yet, the company as a whole has shown no track record of fear when it comes to staying at the forefront of environmentally conscious products.  Referring to the DfE scorecard again, 91% of the material chemistry by weight falls within yellow or green categories.  It makes no sense to go so far already, only to stop short of 100% recyclability by just making one significant material adjustment.  The upside of the marketing and customer perception gained from this adjustment is immeasurable.

The reasons against PVC are also clear. First of all, PVC produces toxins during its manufacturing process. This will not only harm their employees’ health, but also damage the environment and further poison our future generations.

Second, PVC also releases toxins in a fire. This makes it a notoriously high risk material for office equipment. Because consumers are aware that PVC was the major cause of 87 fatalities in Las Vegas’ MGM Grand Hotel, more and more customers are interested in a PVC-free product alternative. To be a responsible corporation, Herman Miller should stop using PVC in the manufacturing of any of its future product line(s).

Third, Herman Miller, as an industry leader, has always adopted environmental sustainability as its corporate mission. Since PVC is not environmentally friendly, and against Herman Miller’s dedication towards sustainable design, it should not use PVC, as it will damage its brand and pristine reputation.

Summarily, combined with C2C implementation, TPU is a recyclable material that helps Herman Miller to initiate the close loop cycle and reduce future material costs in the long run.  Moreover, this decision will further maintain their leading position in the industry, and safeguard critical world resources.

III. ASSESSMENT ON THE IMPLEMENTATION of C2C PROTOCOL

We feel like Herman Miller did an excellent job with the implementation of the C2C protocol. In 1997 the leadership at Herman Miller sent a very strong message to the entire company concerning the C2C process through their obvious commitment to the program. By appointing a senior advisory team comprised of representatives from all departments to identify the best sustainability program, the company’s dedication to the issue was obvious. The company demonstrated its dedication to the program by assigning product developers, engineers, supply chain managers, and the environmental affairs department to work alongside the MBDC in developing the practical means of the C2C design process. Even as money and resources were directed toward the program the company did not rush the process. Instead, the C2C protocol was studied for three years prior to implementation. This display of patience and willingness not to rush the process spoke to their devotion to creating a viable C2C program.

The company continued their strong commitment to the implementation of the C2C protocol through the formation of the DfE team. The DfE team was tasked with creating evaluation standards by which products at Herman Miller could be measured, creating a database for suppliers’ materials, and establishing disassembly guidelines for new products. All of these steps took this pretty complicated sustainability program and made it very feasible.

Another important aspect of the implementation was the changing of the processes. Herman Miller had to relook at business processes in engineering, supply chain management, manufacturing and design to institute the C2C idea. This required the DfE team to train over 300 of the Herman Miller employees. The training consisted of an overview of the protocol, a detailed explanation of the DfE process, and a hands-on session for disassembling a chair.

Implementing the process inside Herman Miller was one thing, but selling the idea to the supplier’s was the most impressive part of the implementation. Charon and Wing had to get buy in from the suppliers or lose the business relationship. They achieved the support of the suppliers’ through pitching the benefits of the new program and ultimately threatening to end the business relationship. By taking such a serious stance with the suppliers, Herman Miller again was demonstrating its commitment to the program.

IV. THE WHY BEHIND HM’s STRATEGIC ENVIRONMENTAL INITIATIVE

Herman Miller (“HM”) undertook the strategic environmental initiative for a number of reasons that we enumerate below.  HM’s corporate environmental goal is “to become a sustainable business- manufacturing products without reducing the capacity of the environment to provide for future generations”.   This goal was founded on the principal that Herman Miller served a moral purpose; not just a manufacturer that provides unmatched innovation and unique design.  With its triple bottom line philosophy, HM has been considered an environmental leader in the industry.

The HM corporate values statement, expressly states, “We contribute to a better world by pursuing sustainability and environmental wisdom.  Environmental advocacy is part of our heritage and a responsibility we gladly bear for future generations.” Clearly, the culture of HM is one of respect for all persons and the environment.  For reasons highlighted above, the HM Environmental Quality Action Team developed numerous initiatives and drafted “Design for Environment” (DfE) guidelines to formalize environmental aspects in the design process.   These guidelines were put into place because without concentrating on global impact, HM would be at a disadvantage in the marketplace for several reasons.

Consumers consider a lot of factors when making purchasing decisions, including impact on the environment.  More and more, environmentally savvy individuals/companies consider the footprint manufacturers are leaving behind and find value in companies that care about the impact they have on the world.  HM will be at an advantage in the global marketplace catering to customers who expect companies to focus on positive environmental impact and who care about the future.  Because of this, HM concentrates on balancing its environmental goals with its business decisions.

HM also is looking towards the future, betting that “tighter environmental regulations are the way that the world is going”, where global resource constraints lead to more stringent legislation on the “use of materials, energy and waste disposal”.  Legislation/regulations are mandatory concerns that must be addressed when running a business.  HM knows that being a cutting edge leader by setting the industry standard places them in a more competitive global advantage over companies that use environmentally unfriendly materials and processes.

HM’s C2C design goes a step beyond “digging up, cutting down, or burning natural resources… to make products that become useless at the end of their useful lives”.  The C2C design reshapes the manufacturing processes so that it circumvents pollution or waste by creating materials that are regenerative and available to make equally valuable products.  This type of design will put their company and products at the cutting edge of this environmental need where they will capitalize on the revenues by providing savvy consumers options on products they did not have and making a positive impact on the world.

Ultimately, HM initiated this product design to better position the company for overall environmental sustainability.  Management had the vision of making the C2C design “standard across all industries”.  They wanted to “close the loops” and move all businesses into a green consumption paradigm by initially designing the product with its end of life in mind.  Moreover, the C2C design falls directly in line with the HM’s mission/goals which are to be socially and environmentally responsible towards positive, sustainable global impact. HM managers know that they must implement provable processes towards environmentally sustainable products to stay at the cutting edge of the green industry.  By reusing, reducing, and recycling the same materials, HM’s goal of being an industry leader and obtaining overall sustainability will be realized.

V. CONCLUSION

While there is always inherent risk built into any decision to alter a piece of your operational supply chain or process, in this particular case, the risk is far less than the potential reward.  Herman Miller has established a vision of corporate sustainability that is recognized by the marketplace.  Further, they have tasked their two main design leads to create the new DfE for Herman Miller based on the CDC environmental sustainability protocols.  Therefore, it is clearly aligned with the value system of Herman Miller to pursue TPU.  To do so would better align their operations process to towards a closed loop system.

While some within the organization may argue that this change may drive increased customer demand for further improvements, this is a “can of worms” argument at best.  There is no conclusive data that would negate this move.  Furthermore, many in the process may simply be resistant to change, but as already stated in the case, existing infrastructure can be retooled or adapted and the materials easily acquired.  It simply comes down to a justification of cost in the short term versus the longer term payoff as a result of a more closed loop, sustainable, recycled material throughput.

Posted in W & M Mason MBA.