Case Study: Herman Miller

Once a premium supplier of office furniture and systems in the ‘70s and ’80, by the 1990s, Herman Miller saw its category leadership coming under assault from lower- cost competition. How could the company leverage its independent distribution partners to protect its cushy chair in the corner office?

Driving Growth with High-Performing Last Mile

The Situation

While Herman Miller designs and manufactures a broad range of highly regarded office systems, the company relies on fiercely independent multi-brand dealers to sell-in, store and install them.

Instituting an industry-first “Just In Time” manufacturing and assembly process enabled leaner parts inventory, simpler fabrication steps and lower waste. As well, complete order shipping predictability jumped to a near-perfect 99% and corporate buyers and their dealers were delighted by the new ability to order custom product in small lot sizes.

But it wasn’t enough.

Fixing the Last Mile

Fieldwork with end-users in Herman Miller’s target market uncovered where the distribution opportunity was greatest. There were significant gaps between what the company’s customers and independent dealers were getting and what they needed at the point of delivery and installation — “The Last Mile” of end customer experience.

The first problem: Product components were shipped as they were produced — arriving erratically and intermittently — forcing dealers to store, track and retrieve them when needed. Customers experienced messy and disruptive offices during the build-out.

And like most suppliers, Herman Miller packed delivery trucks at its own convenience, without regard for what would make sense at an install site. Dealers often found they would spend more time searching for components at a cluttered job site than doing the install work itself.

These two gaps in “The Last Mile” forced dealers to allocate more installer time to each project, cushion both staffing and deadlines, spend more on hourly worker wait times, and devote more managerial oversight to juggling and monitoring installation progress and accuracy.

Plagued by needless delays, an inevitably untidy job site and higher costs, end customers believed the dealer to be disorganized, which reflected back on Herman Miller. Worse their employees were taxed with working out of conference rooms or lobby space.

Growth Drivers

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Closing Channel Gaps Drove Strategic Growth for Herman Miller and Its Dealers.

 

HERE’S HOW HERMAN MILLER ALIGNED ITS OWN STRATEGY WITH THAT OF ITS PARTNERS TO DRIVE
GREATER END-CUSTOMER SATISFACTION:
  • Collected parts as they were produced and combining them into a single delivery on a single date. (Bonus: Just-In-Time helped make this date and its reliability something competitors   couldn’t match).
  • Loaded job components onto delivery trucks sequentially, in line with how they would be needed for the newly recommended install practices, enabling an onsite install process improvement that dealers couldn’t match with other suppliers’ deliveries.
  • Developed systems that allowed the company to promise both dealers and customers a specific product shipment day — with an error-free guarantee, something competitors couldn’t match.
  • Created a mobile Herman Miller Performance System (HMPS) to help dealer office-design reps develop alternative layouts, specify parts and equipment, and submit orders, collapsing many separate processes into a single digital tool.
  • Trained support to dealers to help them execute a more streamlined and efficient job-site installation process.
  • Reduced job-site clutter and waste through better communication between Herman Miller and dealer, reflecting both the dealer and the Herman Miller brand in significantly improved light.

Driving Results

Despite a tightly constrained advertising and promotional budget, and intense competitor price competition, Herman Miller emerged from the 2008–2010 market recession with a stronger brand, greater market share, and a profi t position that its key rivals envied. And, not least, an even more loyal network of value-adding distribution partners.