Herman Miller Case Study

Case study analysis of Herman Miller

Ashwin Chengappa Mollera

Introduction:

Herman Miller is a modern technology based furniture company that was founded in 1905 and still continues to produce world class furniture even after over a century. It was originally named star furniture company known for designing world class bedroom suites.

In 1909 D.J who joined the company as a clerk grew to become its president after working for a decade in 1919. An interesting fact is how he managed to rename the company to Herman Miller Furniture Company after persuading his father in law to invest in 51% of the company’s stock.

The company in 1960 went on to become Herman Miller Inc. It is the first company to make cubical office spaces which is today used by almost all corporate organizations.

Environmental Analysis:

Herman Miller believes that the quality of life for humans is clearly dependent on sustainable and healthy environment and economic stability.

HM has had global recognition for:

• Solid waste recycling and product designing using sustainable resources.
• Environment friendly products where its products have 45% recycled material and 96% of a product can be recycled later. Further they are assembled through renewable energy. The fact that sustainability and concern for environment is given importance in every step of the manufacturing process sets Herman Miller above its competitors.
• Cooperative advertising where Herman Miller partners with hotels and other industries where people visit to promote their products and provide them with options to buy the products online.

Analysis of production system:

The production system will be discussed as both advantageous and disadvantageous process by breaking into pros and cons.

Pros: 

Customer first: This is a global practice to run any business. If you do not prioritize the customer, then you are sure to fail. HM does that well by combining customer satisfaction with human development.,

Just in time process: This process of producing what is needed and when its needed meeting customer demand works only when the customer is ready to wait for a definite period of time to get the product. But however this helps the company to maintain its goal of avoiding stagnation of workflow and producing one piece at a time.

Safety of employees: By using the philosophical line People are the most important resource HM shows it is committed to both mental and physical safety of the employees. This makes a huge difference in the quality of the product produced since there is a process involved in each step of production.

Cons: 

No on demand supply: Since HMs production system works on producing products after the customer has placed the order could be one of the biggest disadvantages. This happens when a consumer places an order for a large quantity of products and cannot wait for too long until its delivered. This could lead to losing business to the competitor.

Demand prediction: Like discussed above the inability to analyze and predict future demands could lead to drop in orders due to long wait time.

Inventory management: The inventory management is solely focused on using the resources wisely and avoiding over production and not on meeting customer demands in record time. Something which Walmart does could be an example of best inventory management HM wants to use.

Human resource:
Treating its employees like shareholders is one of the biggest assets of the organization. Not many companies give so much benefits and importance to its employees.

Work life balance where an employee could either do laundry at work or carry a meal home are some of the smallest gestures which make a huge impact in the performance of the company and Herman Miller played this part very well and made sure its employees are treated well above other competitors and get what they deserve.

Benefits such as post-retirement plans and tuition reimbursement are not offered by all organizations and this made Herman Miller stand out in the market and justifies its inclusion in the fortune 100‘s best companies to work for.

Transparency: Keeping its employees posted about company’s growth and including them in the list of shareholders helped Herman Miller to handle economic turmoil and recession periods well.

Finance:

One of the reasons Herman Miller has had a fairly consistent financial performance even through the economic meltdown shows its planning and ability to survive tough times. For example, its daring decision to run a project named “Purple” involving investments worth tens of millions of dollars in research and development during the dot com crash shows its hunger to grow and do better for the sake of tomorrow.

Also its global presence helped the company to not just depend on one continent or one part of the world for profits. While north America had the biggest impact during 2008, although its profits dipped in north America, non-north America parts continued to generate consistent profits thus keeping a fair balance in the financial sheet.

SWOT Analysis:

SWOT analysis is made to determine organizations strengths, weaknesses, threats and opportunities and below is the analysis for Herman Miller.

Strengths:

• Customers belief in the brand: Herman Millers high standard of quality and its commitment to being environment friendly and using recyclable materials sets its standard high and prestigious among its competitors.
• Herman Millers strong and cordial relationship with its vendors and suppliers is one of its biggest strengths. The financial ratio shows how it has maintained its accounts payable section consistently paying its vendors and suppliers on time to continue with the best service and support.
• Certain marketing strategies like explaining the environment friendly products all the way till the end user and co-operative advertising with hotels gives HM an edge over its competitors.

Weaknesses:

• Inadequate use of technology: Herman Miller does not make use of the latest technology for marketing or selling its product which puts them at risk of being overtaken by its competitors in the long run. Its presence in the social, web or print media is limited.
• Its idea of always promoting internal employees to the top management level restricts Herman Miller from bringing in new and different ideas and innovations from outside the organization.

Opportunities:

• Outside office furniture: Herman Miller should think of expanding its presence from just office furniture to home and outdoor furniture and beyond. It could use its current processes and ideas to build furniture’s for various other purposes than just office or commercial. This will help them handle economic meltdowns rising from corporate sector better.
• The increasing demand for ergonomic furniture these days is one of the opportunities Herman Miller should capitalize on. It should divert its R&D expenses on more sophisticated ergonomic designs.
• Global expansion is an opportunity because more and more countries are developing and catching up on quality environment friendly and sustainable products.

Threats:

• Vulnerable industry: Office furniture industry continues to remain vulnerable since it depends a lot on world economy.
• Since a lot of organizations (Oracle and IBM for example) are increasing telecommuting and work from home and a lot of organizations are planning to follow, this is one of the biggest threats.
• Increase in cost of raw materials especially naturally raw which HM specifically uses could be a big threat.

Recommendations:

1. Diversify business:

Herman Miller should diversify the products it offers to consumers by using ideas like it did with project Purple where a process called “Thrive collection” was used to see huge profits. As discussed in the case where office equipment industries are volatile and depend on corporate economic status and often gets hard hit by recession, HM should try and stretch its scope from just offering office furniture to others areas like home and outdoor. Diversification will help Herman Miller handle impacts from one industry affect the company in its entirety.