Case 22: Herman Miller
Case 22: Herman Miller Inc.
History- Herman Miller’s roots go back to 1905 and the Star Furniture Company, a manufacturer of traditional-style bedroom suites in Zeeland, Michigan. In 1909 the company was renamed Michigan Star Furniture Company and hired Dirk Jan De Pree as a clerk. De Pree became president in 1919 and four years later convinced his father-in-law, Herman Miller, to purchase the majority of shares; De Pree renamed the company Herman Miller Furniture Company in recognition of Miller’s support.
1. Describe Herman Miller’s strategy. Is there evidence it has produced a competitive advantage and good financial performance? Explain.
Herman Miller’s strategy is a growth strategy, through innovative products and production processes that focuses on renewal and reinvention. There is evidence that HMI’s strategy has produced a competitive advantage and financial performance. HMI expanded overseas and had a large market. HMI used a system of lean manufacturing techniques referred to as the Herman Miller Production System (HMPS). The HMOs strove to maintain efficiencies and cost savings by minimizing the amount of inventory on hand through a just-in-time process. A key element of HMI’s manufacturing strategy was to limit fixed production costs by outsourcing component parts from strategic suppliers. This strategy allowed the company to increase the variable nature of its cost structure while retaining proprietary control over those production processes that it believed to provide a competitive advantage. In 1996 due to high prices and long lead times, Herman Miller’s IMT (Integrated Materials Technology) leaders decided to hire the Toyota Supplier Support Center, which was the consulting arm of automaker Toyota. With the help and ideas of everyone from IMT and the Toyota supplier support center, improvements were made such as a decrease in quality defects in parts per million, which decreased from 9,000 in 2000 to 1,500 in 2006. Also on-time shipments
History- Herman Miller’s roots go back to 1905 and the Star Furniture Company, a manufacturer of traditional-style bedroom suites in Zeeland, Michigan. In 1909 the company was renamed Michigan Star Furniture Company and hired Dirk Jan De Pree as a clerk. De Pree became president in 1919 and four years later convinced his father-in-law, Herman Miller, to purchase the majority of shares; De Pree renamed the company Herman Miller Furniture Company in recognition of Miller’s support.
1. Describe Herman Miller’s strategy. Is there evidence it has produced a competitive advantage and good financial performance? Explain.
Herman Miller’s strategy is a growth strategy, through innovative products and production processes that focuses on renewal and reinvention. There is evidence that HMI’s strategy has produced a competitive advantage and financial performance. HMI expanded overseas and had a large market. HMI used a system of lean manufacturing techniques referred to as the Herman Miller Production System (HMPS). The HMOs strove to maintain efficiencies and cost savings by minimizing the amount of inventory on hand through a just-in-time process. A key element of HMI’s manufacturing strategy was to limit fixed production costs by outsourcing component parts from strategic suppliers. This strategy allowed the company to increase the variable nature of its cost structure while retaining proprietary control over those production processes that it believed to provide a competitive advantage. In 1996 due to high prices and long lead times, Herman Miller’s IMT (Integrated Materials Technology) leaders decided to hire the Toyota Supplier Support Center, which was the consulting arm of automaker Toyota. With the help and ideas of everyone from IMT and the Toyota supplier support center, improvements were made such as a decrease in quality defects in parts per million, which decreased from 9,000 in 2000 to 1,500 in 2006. Also on-time shipments