A supportive foundation for Lean excellence

Herman Miller, Inc.’s people-centric focus and its focus on Lean manufacturing has helped the company through rough patches and has helped the company's culture.

By Lea Tonkin June 19, 2017

Values in action—“doing things that matter to us”—continually inspire the Herman Miller, Inc. organization. The Zeeland, Mich.-based furniture manufacturer, known for the exceptional design and high quality of its office furniture, adopted the Herman Miller Performance System (HMPS)—its own version of the Toyota Production System (TPS) Lean practices—more than 20 years ago, blending this approach with its commitment to creating a better world. Its mindful culture, embracing a collaborative supplier development program and a pledge to share the bounty of Lean learnings with other organizations, is also marked by:

  • Commitment to “we’re in this together” operational excellence and sustainability.
  • Adopting and adapting a flexible performance approach yielding measurable progress.
  • Engaging employees at all levels—and with suppliers, customers and other stakeholders in getting the right things done—and then continuously exploring new improvement options.

Need for a new approach

There’s no simple, straight-line route to operational excellence reflected in Herman Miller’s extended/continuing Lean transformation. Persistence and a willingness to evaluate/adopt new strategies,  sometimes letting go of traditional practices, would be a more apt description.

The company faced several significant challenges in 1995. “We had lead times to our customers of six to eight weeks, worked in big batches and had lots of time to put orders together and keep costs under control,” recalled Matt Long, vice president of continuous improvement. “We were also pursuing a strategy of automation at that time. One of our major customers wanted shorter lead times and lower pricing: a three-day lead time (ours was ten days) and a 30% price reduction.”

Prospects for Herman Miller’s 15-20% margin dimmed, as the company’s leadership evaluated strategies for meeting the key customer’s requirements at a Herman Miller file cabinet manufacturing plant (Integrated Metal Technology, or IMT) in Spring Lake, Michigan. Added to its challenges: Traditional, big batch production didn’t jibe with shifting customer ordering patterns for pedestals (small, under-the-desk filing cabinets). Reduced order quantities meant increased setups/time and cost.

“We had to accept our challenge,” Long said. Confronted by customer demands for faster service and dramatically reduced pricing, the company initially focused on the potential for a lights-out, automated factory approach. Herman Miller leadership later chose an alternative path, suggested by the vice president of finance; they reached out to the Toyota Production System Support Center (TSSC) for guidance and assistance. Hajime Ohba, leader of the TSSC support group, eventually agreed to provide assistance to Herman Miller, sometimes in the form of assignments to identify and eliminate waste. “We were taken on by TSSC as a project company,” Long said. TSSC coaches trained and worked with the leadership of that Herman Miller plant to introduce and implement the concepts and thinking of the Toyota Production System (TPS) techniques for eliminating waste.

“At that time, they didn’t even charge us for that service,” Long said. “For the next several years, they sent coaches to work with us, developing a Lean value stream for a pedestal filing cabinet.”

TSSC’s Ohba and other TSSC coaches assigned Herman Miller various tasks at the plant during the next several years, including:

  • Starting the focus nearest the customer at shipping and assembly, instead of stamping (the front end of the process).
  • Reducing to one assembly line.
  • Decreasing lineside parts inventories.
  • Reconsidering parts container sizes.

Although workers expressed skepticism about the changes at first, positive results began to win over converts. Among the implemented changes: line balancing to the pace of customer demand or take time, supported by decreased parts production quantities; and use of a kanban card to signal the need for parts on the line. Inventory/ racks, floor space, scrap, the number of forklifts and other wastes shrank as Herman Miller employees implemented daily improvements/kaizen in their work areas.

The army of expeditors previously needed to track parts amid the massive number of parts racks, outside trailers and the “black hole” (a space populated by a sea of work-in-process components) were trained for other tasks in the plant. Quality issues that used to emerge at the end of a run disappeared, along with glitches caused by complex welding system breakdowns. Use of a quick-change manifold for paint guns cut time and paint waste. Wait times and inventory shrank at various value stream areas, including stamping, assembly and paint. Over time, the production pace aligned with the pull of customer demand (continuous flow).

Assembly workers, supervisors and others sometimes balked at making Lean changes, including standardization. They expressed concerns ranging from potential layoffs caused by the changes to poor communications about the reasons for change. After listening to these concerns, leadership shifted the focus from implementing Lean tools to listening to the team members and solving problems that created struggles for them such as ergonomic, process or quality issues and trying their ideas for countermeasures to these problems.

Despite performance hiccups, course adjustments, progress plateaus and more questions arising about the need to adopt Lean ways, the Spring Lake evolution continued. Productivity rose. The lead time for the pedestal filing cabinet dropped to four hours. “We also met our cost target and improved our margins and quality, as well as morale in the plant,” said Long. Plans for a new addition to the facility (destined to house excess inventory) were scrapped.

The Herman Miller Performance System

Success with the new approach got the attention of Herman Miller corporate staff. By 1999, the president (now CEO Brian Walker) made the decision to extend TPS-inspired Lean strategies (renamed the Herman Miller Performance System, or HMPS) across all production sites. The company describes HMPS as “a system that focuses on understanding and meeting our customers’ needs exactly through the engagement and development of our employees.” Its four philosophies are:

  • Being customer first.
  • People are most important.
  • Kaizen is a way of life.
  • Shop floor focus.

During the next several years, adoption of the Lean-inspired HMPS turned out to be good timing, according to Long. Impacted by market shifts linked with dot.com startups and failures, the company required greater agility in its new product development and production capabilities. “We needed to deepen and spread HMPS,” said Long.

An evaluation of customer feedback in 2002 revealed that Herman Miller needed to share its HMPS learnings more broadly, working with suppliers and dealers. The finding triggered new training and coaching initiatives with these fellow stakeholders, resulting in increased on-time deliveries and improved customer/dealer satisfaction ratings. “So much so that it became a differentiator—when you buy Herman Miller furniture, you’re getting more than product value,” said Long.

Collaborative learning

Herman Miller has consistently honored its “pay it forward” commitment to TSSC: Share Lean practices with other organizations. Herman Miller regularly hosts TSSC workshops and learning visits from numerous companies seeking HMPS/Lean learnings. For example, representatives from USG, a wallboard manufacturer (one year into Lean), were recently introduced to Herman Miller by professor and consultant Jeffrey Liker. “We’ve also developed collaborative learning relationships with companies such as GE Appliances,” said Long. “Their employees might spend anywhere from a day up to six months learning with us on our shop floor. Conversely, we’ve sent people to GE Appliances to learn how they handle Lean product development, and we collaborate with Liberty Mutual and the Lean Enterprise Institute (LEI), so learning goes both ways.” Its collaborative methodology is being extended to business processes within Herman Miller, such as customer care and product services, as well as engineering.

Progress and people power

Collaborative innovation, powered by engaged employees, continues to generate performance gains. Using the PDCA (Plan-Do-Check-Act) process, repetitively asking, “Why?” to identify and eliminate waste and other basic Lean tactics, workers find new ways to align their daily tasks with the pace of customer demand.

Measurable improvements reflect their commitment to a streamlined, end-to-end value stream. Take lead times, for example. “It used to be that you got it when you got it, in six to eight weeks, or ten weeks; that was our business model,” Long said. “Today, our lead time is typically ten to 20 days or less, with 99%-plus on-time delivery. If that falls below 99%, there will be many questions.” He views such advances—lead time, reliability, quality and flexibility—as a plus for customers as well as the company and employees. Job security and the satisfaction of successfully meeting on-the-job challenges encourage buy-in for added progress.

Herman Miller continually adapts its Lean practices to reach new performance milestones—or implement a course correction. “There were a couple of cases where we implemented strategies to reach just-in-time (JIT) targets, and created more waste,” said Long. Collaborative innovation sparked new processes to address these issues. “For example, we use powder paint,” he said. “We learned that we can recycle some waste powder by using it for interior paint processes or in counterweights (strategies that support zero waste-to-landfill efforts).”

Asked about key “lessons learned” on the HMPS journey, Long said, “For the first couple of years, we were in a crisis mode. We were missing a key component; we needed to pay more attention to the needs of our employees. The Lean tools we were implementing were highlighting many problems, but we had not developed our problem-solving capability to respond appropriately. We stopped implementing the Lean system for six months and focused on things they struggled with. Satisfaction increased by making the work better for them, and we gained better conformance to standards.”

Suppliers: Partnership rather than a transactional relationship

Suppliers also play a crucial role in Herman Miller’s quest for innovation, waste reduction and quality. “When we look at our supplier base, it is an extension of us, not a means to an end,” said Kent Ensing, vice president of supply management. “We’re strategically, not vertically integrated. We rely on supplier partners for processes, innovation and materials.”

Mutual transparency throughout the supply base enables shared understanding about Herman Miller requirements and processes as well as suppliers’ material and information flow. Regular coaching sessions with Herman Miller’s top suppliers encompass current business conditions/needs, the HMPS approach for business improvement and collaboration on standardized delivery/installation processes, problem-solving capability development as well as implementation of quality and improvement opportunities.

“We’re spending time on their shop floor to get the picture of why things are moving the way they do,” said Ensing. “There’s been a lot of coaching both ways. Suppliers teach us about their processes and we teach them about our Lean principles, helping us to develop improved value streams.” Their shared goal: aligning the value stream with the customer and eliminating waste throughout the value stream. Intense customer focus yields improved leadtimes, reliability, design quality and flexibility to meet changing requirements.

Herman Miller trimmed its supplier base by approximately 60% 12 years ago. “We were looking for suppliers that were going to be part of our future and partners in waste reduction, innovation and HMPS—rather than transactional relationships,” Ensing said. “The Aeron chair is an example. We wouldn’t have been successful without our supplier base. Our suppliers understand our design and our vision, working with us in ways that had never been used before—not only the materials, but also assembly.”

Ensing commented that the current roster of suppliers includes many that have worked with Herman Miller for multiple decades, as well as new suppliers identified when new technologies emerged. “It’s not just about intellectual property,” according to Ensing. “You need to build trust, partnering with suppliers that are willing to work collaboratively to create successful relationships.” (See the “Supply Base Effectiveness” illustration.)

Boot camp and management system experience learnings

Inviting key supplier personnel (including senior leadership) to participate in Herman Miller Boot Camp and its “management system experience” (one-week programs including time spent on the shop floor and in various perspectives) introduces them to HMPS at work. “They work through all the roles in the chair plant, from front-line operator to facilitator, supervisor and plant management,” said Ensing.

These up-close Lean learnings serve suppliers well. They learn how HMPS techniques can purge waste and improve the work for the team members, value stream-wide. The resulting operational improvements enhance teamwork with Herman Miller as well as other customers. Ensing recalled how one supplier took boot camp and management experience learnings to heart. “They were able to look at their business differently—not just looking for ways to reduce overhead, but how to train people and procure differently,” he said. “They took down cost 18% without cutting their margin.”

Making measured improvements

Paul Haverkate, president of Sparta, Michigan-based Moiron (a Herman Miller supplier and manufacturer of tube and wire assemblies for chair frames) said his company bought into the HMPS approach about ten years ago. “Now we meet with Herman Miller every two weeks. Our operators and I have worked on the floor there through the boot camp and the management experience,” Haverkate said. “We were pretty good at continuous improvement (CI), but we’ve been able to improve how we approach waste and measuring progress. When you stand back and look at an improvement in safety or quality or production time, you need to measure what you do, using a scientific approach. What’s changed for me is the level of training we’ve put into our organization. We’re not just going through the motions; we’re doing real problem solving. Our team members understand the difference between making changes and making measured improvements.”

Small, day-to day changes such as putting parts closer to the operator create measurable improvements over time, Haverkate commented. Other improvements involve large capital investments and extended project periods. Specific improvement results since Moiron adopted its customer-first Lean approach:

  • Lead time reduced from 20 days to five.
  • Fewer safety claims/days off.
  • Improved quality ppm scores.
  • Standardized work implemented in a production assembly cell, with balanced operations, enabled a one-shift operation (previously two-shift).

“It’s a journey,” Haverkate said. “You never get to true north. There are always things to work on.”

Supplier potential assessment

Herman Miller will continue to fulfill its commitment to Toyota—sharing its Lean knowledge and experience with suppliers and noncompeting companies, according to Ensing. “It’s provided a huge benefit to our company,” he said. Herman Miller also shares its learnings through HMPS and Toyota training with various customers such as hospitals, serving as teacher/mentor.

“Another area we’re focusing on is not only supplier quality, delivery and cost, but also sustainability and transparency,” Ensing said. “We are shifting to a focus on what could happen in the future, a supplier potential assessment process.” This evaluation may include how employees are treated in a supplier operation, investment in training, leadership capabilities and succession plans, financial stability, innovation performance, continuous improvement progress and other factors.

“We are experiencing big challenges across the company,” continued Ensing. “How do we improve flexibly, driving out waste and meeting customers’ shifting lead time requirements? We need a partnership mentality.” He added that Herman Miller looks beyond suppliers’ cost, quality and delivery performance to environmental/energy/sustainability progress. “Now that they are measuring it, they can manage it, understanding related drivers such as equipment that isn’t as efficient as it could be,” Ensing said.

The importance of sustainability

20% of a supplier’s rating in Herman Miller’s SQP (Supplier Qualification Process) scorecard supplier process (applied, with some adaptation, for the last 15 years) reflects how they perform from a sustainability and diversity perspective. This approach highlights suppliers’ related progress and opportunities for improvement, according to Gabe Wing, director of safety and sustainability.

Since Herman Miller relies so heavily on suppliers for materials/components, this collaborative focus is crucial in the furniAssembly operations at the Herman Miller GreenHouse facility in Holland, MI. (Courtesy of Ryan Lowry.) ture manufacturer’s quest for world-class performance. Its target is for 100% of direct suppliers to adopt and implement strategies based on Earthright principles by 2023.

Herman Miller annually publishes its sustainability statistics, and it will expect direct suppliers to make the same commitment. “We want best in class,” Wing said. “The better our suppliers understand our values, the quicker we can be to market with better products.” Herman Miller developed a list of chemicals that are not used in its products, for example; alternative materials must be specified. The remedies have included innovative materials and processes that eliminate chemical hazards. Sometimes, though, improvements can be as simple as fixing a leaky toilet to reduce water usage.

Herman Miller’s commitment to share its Lean expertise with other organizations is reflected in its support for suppliers’ sustainability initiatives, according to Wing. “Members of its supply team rotate through related projects at supplier facilities, for example. We teach, coach and also audit their practices,” said Wing.

This collaboration yields mutual benefits. Herman Miller achieved a cost savings of more than $300,000 a year by adopting a supplier’s suggested parts washing process. It decreased water and energy usage, thanks to the installation of an aerator (to minimize algae growth) in a tank used for washing parts, which enabled the tank temperature to be substantially lowered. Suppliers also share sustainability and waste elimination ideas among themselves. “They’re working as partners with us, allowing us to have conversations about improvements,” said Wing.

Teamwork between sustainability, production and other functions has already sparked dramatic progress toward Herman Miller’s aggressive waste, water and energy goals, according to Wing. “We put out more product today, in less than half the previous real estate, and we’re still learning,” he said.

Shared experiences, learnings and trust earned through challenging times continue to propel new discoveries and opportunities for improvement at Herman Miller. “The marketplace, economy and workplace are constantly changing, so our performance system needs to change as well,” said Matt Long. “We have learned how important it is to listen closely to the needs of our customers and align our organization to those needs while remembering our core philosophies such as valuing our employees, dealers and suppliers and engaging them in daily improvement. We have living proof that this approach will give us a sustainable advantage.”

Lea Tonkin is the owner of Lea Tonkin Communications, Woodstock, IL. This article originally appeared on AME Target MagazineAME is a CFE Media content partner. Edited by Hannah Cox, content specialist, CFE Media, hcox@cfemedia.com.

Original content can be found at www.ame.org.