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
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.
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
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.