Herman Miller Inc.

Iman Toto P. - Listya Diani P. - Milky Umar - Miranda Margareth C.- M.

Priyodhya
CASE OVERVIEW
 Establish as Star Furniture Company

1905
Produce bedroom suites

Company value :
"all workers as individua ls with

1927
special talents and potential."

First ofce furniture

1942
Scalon Plan :
-"principles of equity and justice for
everyone in the company.

1950
Go global

Creeated the Action Ofce System

Background

Publicly traded company

1960 1970
Aqua Chair launched

1982

All employee become share holder

1989

Environmental Quality Action Team

1989

Herman Miller Home launched

1990
First Decade of 21st Century
Record profit on 2000 & 2001
Post 9/11 :
o Sales drop by 34% from $2.2 billion to $1.5 billion
o Declining profits from $144 million to ($56 million)
Volkema makes changes :
o 38% employee has been cuts on 2003
o Lifelong Employment to Social Contract
o Re-design benefit plans
2003 - 2008 sales are stable Profit
2009 Sales dropped by 19% after recession
2010 introduced new product SAYL line of Chairs.
Herman Miller in 2013

Curiosity & Exploration Engagement

Transparency Performance
Organizational
Values
A Better World Inclusiveness

Foundations Design
Management
- Herman Miller Living Ofce - living room design ofce space

- 10% pay cut on Jan 2009 for BOD, and on March 2009 for the other
employee

- 14 members of the boards should be independent

- equity interest after one year on the Board

Management
Teams were often Cross-Functional -> employee ability to contribute

Teams were often based on product development Workers at all

levels were encouraged to put forth new ideas

Honor organizations where our employees are involved

Employees could work 16 paid hours a year with a charitable

organization of their choice
Production/Operations
Manufacturing operations located in Michigan, Georgia, and
Wisconsin. Europe in United Kingdom. Asia in China.
HM owned their system - called HMPS (Herman Miller Production
System)
HMPS competitive advantage :
Lean system - Just in Time
Order Driven
Limitation of fixed production cost
Continuous Improvement (kaizen)
Benchmarking has been done by subsidiary Integrated Metals
Technology (IMT) with consulting their system to Toyota Supplier
Support Center.
Environmental friendly
Marketing
- Green Marketing (environmentally friendly) :
- Assembly of the chairs used 100 percent renewable energy.

- Builders who used Herman Miller products in their buildings could

earn points toward Leadership in Energy and Environmental
Design (LEED) certification.

- Cooperative advertising

- i.e. : Hilton Garden Inns, some rooms were equipped with Herman Miller's Mirra
chairs. On the desk in the room was a card that explained how to adjust the chair
for comfort and listed a Hilton Garden Inn website where the chair could be
purchased.

- Market Segment : Work, Home, Health care, Education, and

Government.
 Human Resources
During 2010 business down turn, Herman Miller sucessfuly :
"handling the downturn with class and doing what is best for the
collective whole."

Retirement
Compesation
Income Plan
Standard Benefits Extensive Benefits
- Eligible for all employee Health insurance Gym memberships
- 4% from compesation Dental insurance Health services
Base pay Profit Sharing
- Interest paid quaterly Vision care plans Employee assistance programs
- Can be vested after 5 yr Prescription plans Health risk assessments
Flexible spending accounts
etc

- Length-of-service
- Annual
Finance
Ratios Performance Trends

2006:

- Companys leverage ratio was below the industry average and its times
interest earned ratio was over twice the industry average

- Debt to equity ratio rose precipitously, from 1.18 in 20016 to 47.66 in 2008

2007:

- Invest around US$ 10 million in a R&D project called Purple.

(Programmable Environtment)
Financial Performance 2007 - 2012
in million US$
The Accessories Team
- Ofce accessories was one area in which Herman Miller had not
been historically involved.

- 2006, Hofmeyer established the Accessories Team by recruiting

Larry Kallio to be the head engineer and Wayne Baxter to lead
sales and marketing.

- Launching target in 16 months

- Recruited people with different disciplines

- Conduct intensive meetings (1-2x per week)

The Accessories Team
- What happened to the team?
- We all seem to have a very strong voice regarding almost any topic, it's actually quite fun and
dynamic. We all have kind of our roles on the team, but I think other than maybe true
engineering, we've all kind of tapped into other roles and still filled in to help each other as
much as we could.

- We rely more on guts and experienced. At the end of the day, its just fine because we have
enough experience. We're not experts, but we're also willing to take risks and we're also willing
to evolve.

- Ideas and other contributions to the success of the team were accepted from all sources.

- Named : Herman Miller's Thrive Collection

To indicate the focus on the individual and the idea of personal comfort,
control, and ergonomic health.
- Won Gold and Silver honors from the International
Design Excellence Awards (IDEA) in June 2010.
The Industry
Industry sales decreased by approximately 26.5 percent from 2008 to
2009

impacted by couple of trends :

- Telecommuting

- Computer for working

- Raw Material Cost -> Overseas competitor

The Future
Transformational Product and Process

Best of NeoCon recognition for their 5 new Design

Double digit sales growth

Questions
1.Will the strategies that have made Herman Miller an outstanding
and award-winning company continue to provide it with the ability
to reinvent and renew itself?

2.Will disruptive global, economic, and competitive forces compel it to

change it business model?
ANALYSIS
 Strengt Weaknes
- h as
Well-known - s
Vulnerable to heavy
green/innovative company losses in bad economy
- Voted Fortunes 100 best
companies to work for - High price
- Won Gold and Silver honors
from the International Design
Excellence Awards (IDEA).
- Strive to create a better
world
- Promising new R&D project
- Having a solid and helpful
teamwork, esp. Accessories
division
- Having HM Production
System
 Opportuniti Threats
- es
Increase in demand for - The price of raw
ergonomic furniture materials

- Take advantage of the - Many cheaper

growing desire for alternatives product
green products
- People now able to
- Continue to expand work from home or
the business mobile

- Continuous
improvement by the
system
Five Forces Model of Competition
Buyer Bargaining Power:

- Consumers are willing to pay a premium for quality

Substitute Products:

- High threat of consumers to choose alternative products (ergonomic

vs ordinary)

Supplier Bargaining Power:

- Maintain relationship to suppliers for spesific/unique raw materials

to optimize the Just In Time inventory
Five Forces Model of Competition
Potential New Entrants:

- Small profit margin industry

- Existing competitors are struggling to earn good profits. So, its a bit
difcult for new entrants

- Have utilized Just In Time inventory

Rivalry among Competing Sellers:

- Compete with existing competitors like Haworth, Steelcase, etc in

terms of technology and customer needs.
What should
Herman Miller
do?
Herman Miller should update the current
business model

- Improve their current strategy and

create new innovation

- Maintain financial stability, including

improve inventory turnover

- Continue their Purple Project.

- Optimize their HM Production System

- Enhance the Public Relations activity

as an addition to their marketing
activation

- Doing CSR to increase the brand

value
Thank you :)
Any questions?
Michael : Distincitive Competence?

Isa : Tantangan & kelemahan dari HR , terkait Gen Y / millennials

employee

Lutfia : Sistem shareholder untuk karyawan apakah efektif?

Irene Sherlyta : Seberapa efektif Cooperative advertising?

Muadz : Kenapa masih keep barang di kelas premium? Padahal low

profit.

Nia : 2009 lempar saham lagi, kenapa? Apa karena banyak hutang?

Julius : Competitive advantage disbanding competitor utamanya apa?