Herman Miller

Introduction

Herman Miller, an office furniture supplier, decided to implement the cradle-to-cradle (C2C) design
protocol during the design of its mid-level office chair, Mirra. The C2C protocol was a set of
environmentally friendly product development guidelines created by architect William McDonough
and chemist Michael Braungart. The essence of this protocol was to eliminate waste and potentially
harmful materials by designing the product so that, at the end of its useful life, the raw materials could
be fed back into either a technical or biological cycle and used for the same or other purposes.
Therefore, materials remained in a closed-loop, eliminating the need for landfill and other toxic forms
of disposal such as incineration.

Mirra chair, as well as the impact of the new protocol on their internal processes: design decisions,
manufacturing, and supply chain management. The proximate decision point in the case is whether
the company should replace the polyvinyl chloride (PVC) material in the arm pads of the Mirra chair.
PVC was a highly toxic material to manufacture and dispose of and thus violated the C2C protocol.
However, it was the standard material for arm pads and many other parts in the office furniture
industry as it was durable, scratch resistant, and inexpensive. To switch to thermoplastic urethane
(TPU), a more environmentally friendly material, for the Mirra Chair arm pad required at least
modification of a production tool, or possibly a completely new tool. In addition, the cost of TPU was
higher than PVC. There was also uncertainty about how consistent the quality of the arm pad would
be with TPU.

Problem Statement: With the new ‘Mirra’ chair, Herman Miller is anticipating changing their
production method and adopting the Cradle to Cradle C2C method. C2C involves a more eco-conscious
production approach. Previous to this, the company produced arm pads via PVC (polyvinyl chloride).
Although inexpensive and durable, its production releases toxins very harmful to the environment.
There is an alternative technology called TPU (thermoplastic urethane) to potentially replace PVC
however the cost is much higher and quality consistency in comparison to PVC is unknown. Herman
Miller has to decide if arm cushion in the Mirra chair should be filled with PVC which is cost efficient
yet harmful to the environment or TPU which is more expensive and quality is ambiguous.

I recommend Herman Miller produce Mirra chair arm pads with TPU. The main reason as to why I
believe this is the best option is because of Herman Miller’s emphasis on their culture of environmental
advocacy. Other reasons I believe Herman Miller should produce with TPU is their market share,
customer expectations, and forecast in sales. I recommend not sticking with PVC due to the “green”
publicity the Mirra chair will receive during its launch.

Analysis and Evaluation: Herman Miller’s Culture: • Adopted the triple bottom line philosophy. Using
PVC violates C2C and would contradict their corporate values. TPU is within the guidelines for C2C
protocol). Rather than focusing on eco-efficiency, with TPU, Herman Miller has the chance to focus on
eco-effectiveness, eliminating all risks of pollution and depletion of natural resources.

Market Share• Herman Miller is consistently within the top 4 suppliers of the U.S. furniture industry.
In 2002, Herman Miller had 16% of the domestic market as well as 15% of the international market.

• Although Herman Miller has competitors, producing the new Mirra chair with TPU instead of PVC
will set them apart and give them competitive advantage. More than 50% of office furniture contains
some part of PVC. Customer Expectations. Although product performance and price are dominant
criteria in consumer purchasing decisions, environmental impact is becoming increasingly important
to consumers.

Consumers of Herman Miller have already been asking for PVC-free products as well. Forecasting
Model: • Looking at operating results from 2002, Herman Miller had net sales of $1.469 Billion
Changing arm pad material from PVC to TPU would result in assembly increase from 10% to 30%. If
Herman Miller invested their earnings into this change to cover initial production cost of $500k .there
would be low financial risk and high financial rewards based on projected sales revenue increase of
530.43% for the next 5 years.

Green Publicity If Herman Miller decides to use PVC, this will result in bad PR. • Herman Miller’s choice
could be seen as careless or hypocritical by not upholding the company’s values and beliefs • The
dangers of PVC have been shown previously in an incident where 87 people lost their lives due to toxic
fume inhalation from PVC pipes at the MGM Grand Hotel in Las Vegas in 1980.

• Triple Bottom Line: 3 spheres of the triple bottom line: economic, social, and environmental
responsibility. Herman Miller still wants to be profitable while maintaining a level of sustainability and
appealing to its community. • Efficiency vs. effectiveness: Herman Miller applies this concept to the
environment. Eco-efficiency is used to incrementally improve the established industrial system,
generating less pollution and decreasing depletion rates of natural resources. Relating to class
material, efficiency is producing a good using the smallest input of resources. Eco-effectiveness refers
to creating a whole new industrial system that does not create pollution or deplete natural resources
at all, thus doing the right thing to create the most value.

Trade-offs: The main trade-off in this case is between PVC and TPU. The benefits to PVC are its cost-
effectiveness, durability, and the fact that it is the standard in the industry. The downsides to PVC are
its harmful toxins and “red” level threat. For TPU, the benefits are its recyclability and quality as an
alternative. The disadvantages to TPU include its raw material costing twice as much as PVC and more
testing is needed to ensure its consistency.

There are many positive opportunities for Herman Miller if they choose to use TPU. Herman Miller
could attract a new eco-conscious market segment through emphasis on sustainability. TPU has the
potential to outperform PVC however more testing is required. More media coverage would be a huge
opportunity for Herman Miller to define brand and values to various audiences. One last opportunity
would be their focus on eco-effectiveness instead of just eco-efficiency.

One possible threat could be customer expectations post-launch of the Mirra chair with TPU material.
Consumers may now expect more PVC-free products that perform well and are at a reasonable price.
This could put immense pressure on Herman Miller.

https://video.ibm.com/recorded/124808555

Questions-

1. Conduct the SWOT analysis for the Organization.

2. Analyse the case scenario and suggest the alternative strategic choices available for miller.
3. Identify the problem and recommend the solution for the above case.
4. Explain the Herman Miller’s culture and its impact on triple bottom line.