Essay Sustainability Along the Global Supply Chain Spring Term 2011 Herman Miller Case Analysis Name: Victoria Kondratova, Ekaterina Tarkhova Address: Bischof-Dirichs-Str. 56, 65375 Oestrich-Winkel Submitted to: Prof. Dr. Julia Wolf Submission Date: April 1st, 2011 Table of Contents: Table of Contents List of Abbreviations 1. Introduction 2. Herman Miller’s Environmental Protection Strategy and its Necessity 3. Cradle-to-cradle Design Protocol 4. TPU verses PVC Approach 5. Implementation of C2C Protocol in Herman Miller 6.
Advantages and Disadvantages of C2C Protocol 7. Conclusion Reference List 1 1 2 3 4 5 5 6 Sustainability Along the Global Supply Chain ii List of Abbreviations C2C C2G DfE EQAT MBDC PVC TPU Cradle to Cradle Approach Cradle to Grave Approach Design for Environment Environmental Quality Action Team McDonough Braungart Design Chemistry consulting Polyvinyl chloride Thermoplastic polyurethane Sustainability Along the Global Supply Chain 1 1. Introduction Founded in 1905, throughout the time Herman Miller has become a leader of residential and office furniture.
During the entire span of its long-time existence, it has been precisely focusing on financial, environmental and socially responsible performance in order to attain and maintain its leading market position. As a result, Herman Miller established itself as an industrial leader of environmental protection. In this paper we try to finalize and analyze initiatives and programs, the company was involved in, to understand their core and evaluate their impact on the company’s current position in particular, as well as on industry, society and environment in large. . Herman Miller’s Environmental Protection Strategy and its Necessity Throughout its operation, Herman Miller has been engaged in continuous series of environmental initiatives and programs. There are several rationales behind such strategic approach; however, in our paper we would like to point out and discuss the main three of them: culture, image and economic sense. Beliefs and assumptions of its founder (D. J. De Pree) have substantially contributed to the development of company’s culture.
By the precise look at Herman Miller’s history we see that they are behind company’s corporate values, operational and working standards, strategic approaches, and focuses. For instance, D. J. De Pree believed that his firm serves a moral purpose in everything it does. Therefore, he aimed to attract and retain talented employees with the same mindset. These people were ready and able not only to work efficiently, but also respect each other and take care about the environment in large.
As a result, in 1989 environmentally responsible workers formed the EQAT in order to generate and implement ideas aimed towards achievement of the company’s environmental goals. Consequently, EQAT has established a range of sustainable initiative targeting such aims as zero landfill, zero hazardous waste generation, and zero air and water emissions from manufacturing processes. Sustainability Along the Global Supply Chain 2 Apart from culture, company’s image is another rational for the environmental initiatives engagement.
Herman Miller has succeeded in positioning itself as an environmental leader of the industry with the rivals following its lead on many environmental initiatives. Such position of the company partially can be explained by the structure of its final customers. A relatively big fraction of Herman Miller’s customers are healthcare providers; therefore, company’s environmentally-friendly products are perfect tool to attain them overtime.
Further engagements in the environmental initiatives gives company a chance not only to maintain its lead, but also to sustain it in the long-run, since it has a first-mover advantage among rivals. Final rational behind environmental initiative is an economic sense. Since, there is a global trend towards environmentally-friendly products as well as growing pressure from the governments towards tougher regulations on the use of energy, raw materials and disposal waste. Sooner or later all companies will be pushed to make their products and processes more sustainable.
By realizing such trends today, Herman Miller makes its investments right now in order to secure high pay offs in future. 3. Cradle-to-Cradle Design Protocol C2C protocol became an alternative to the previously accepted C2G approach. C2G was based on monitoring every aspect of a product through its entire life cycle; from design to disposal (Business Dictionary, 2011). C2C, in its tern, is a holistic economic, industrial and social framework that seeks to create systems that are not just efficient but essentially waste free (Lovins, L. Hunter, 2008).
C2C is based on two premises: ? Eco-effectiveness vs. eco-efficiency Eco-efficiency is achieved through delivery of competitively priced goods that satisfy human needs while reducing environmental impacts and resource intensity throughout the entire life-cycle. However, being an eco-efficient company is not enough now. Therefore, the central design principle of eco-effectiveness is waste equals food. ? Waste equals food Sustainability Along the Global Supply Chain 3 At the end of a product life cycle, product can be reused; therefore creating a virtually closed loop.
There are four aspects helping to implement C2C approach into life: 1. Biological and technical nutrients (these two types of nutrients should be separated during the production process; otherwise it will be impossible to efficiently recycle each of them independently at the end of product life-cycle); 2. The Green-Yellow-Orange-Red list (assessment of materials in special groups according to their recyclability and harm); 3. Disassembly (product should be easy to disassemble and have its different components marked so that they could be properly recycled); 4.
Recyclability and recycled content (products have to be produced of recyclable components; companies should try to use as much already recycled components as possible). 4. TPU versus PVC Approach In terms of materials, used in production process, implementation of C2C protocol was supposed to be done with the use of TPU-materials instead of PVC. In order to anticipate Herman Miller? s initiative of “no PVC is used in the production” we would like to analyze it on example of Mirra Chair’s arm pads. We derived a list of advantages and disadvantages of switch from PVC to TPU and present them in the table 1.
Table 1 – Pros and cons of using TPU-materials in arm pads of Mirra Chair TPU + 1) Better image in marketing prospective 2) Reduction of toxic materials in Mirra Chair 1) PVC is durable, easily formed and inexpensive 2) With TPU it becomes more difficult to work with suppliers 3) Growth of claims for PVC-free products on customers’ side 3) Difficult and costly to switch all the production process to new technology 4) TPU is not enough tested material 5) Using of TPU is more expensive (increase in costs of the arm pad assembly by ? 30%)
Sustainability Along the Global Supply Chain 4 As we see from the table, it turns out that for the entire production line it is easier to continue working with PVC, even though in the long run such approach is rather narrowminded. Therefore, if Herman Miller wants to adopt TPU approach it should be done for the whole production line, so each component is TPU-based. However, such initiative is very costly and time-consuming, so to adopt it efficiently Herman Miller needs time and additional investments. 5. Implementation of C2C Protocol in Herman Miller
The C2C protocol implementation was designed together by Herman Millerspecialists and McDonough Braungart Design Chemistry consulting firm (MBDC). Over 300 Herman Miller-specialists were trained afterwards in order to make them familiar with what they are doing, what the C2C stands for. Now we will look at the implementation of C2C protocol from five major sides of Herman Miller business: 1. Design process: all the spare parts of a product were carefully analyzed. They were given a score according to DfE scorecard. DfE classified components considering their harm, level of danger to humans and the environment.
Red – the most harmful components – were replaced. For example, the Y-spine of the Mirra Chair was planned to be produced from the hybrid of metal and plastic. After the implementation of C2C protocol it was replaced by recyclable Nylon 6. 2. Manufacturing: simpler production line was created. Herman Miller Production System was also implemented. Basing on “no waste of parts and time principle” this system was aligned with DfE. 3. Supply chain management: while implementing C2C design protocol Herman Miller specialists worked with suppliers in order to find out which of them use appropriate materials.
They also helped companies to switch to new materials offering those help and advice. Suppliers who refused to do it were excluded from the list of Herman Miller partners. 4. Sales and marketing: the key success factor of a new PR-campaign was the fact that Mirra Chair was a first product made under C2C protocol requirements. Sustainability Along the Global Supply Chain 5 5. Closing the loop: the problem of getting back old Mirra Chairs is the only unsolved one. Herman Miller has different options, not clearly developed in fact. So, we consider this point as a weakness for the company. 6. Advantages and Disadvantages of C2C Protocol
In order to understand advantages of C2C protocol, it is the best to go back to its core premises. Based on them we can derive two groups of advantages: first – relates to companies’ efficiency, second – to the society in large. Referring to the companies’ efficiency it is apparent that at first they benefit from reusability of resources. Eco-effectiveness achieved through “upcycability” of the materials (“upcycled” materials are those, utilized over and over for the same high-quality use in an infinite series of product cycles) gives companies a significant cost reduction both in terms of production processes and in the products disposal.
Second, renewability of energy permits companies to decrease their dependence on fossil fuels and therefore to some extent stay away from the highly volatile energy markets. Third, early adoption of environmental initiatives permits companies to prevent costly investments in the future when these initiatives will become industrial norms and standards. Forth, open embracement of the green initiatives creates positive image among customers who are willing to pay price premiums for it. Talking about society, first of all, it benefits from the toxic emission prevention and resources depletion decrease.
Second – from the environmental norms and standards, that will become industrial benchmarks and will allow other companies to get better overtime. To understand disadvantages of C2C, it is the best to go back to the challenges that Herman Miller faced while implementing this initiative. From our perspective, there are two points which are worth mentioning. First is current inability to replace all the materials with eco-friendly alternatives due to their high costs and poor performance in comparison to the well-known ones.
Second is suppliers’ reluctance to release the compositions of their materials, which hinders negotiations and prevents successful implementation of the initiative itself Sustainability Along the Global Supply Chain 6 7. Conclusion Since Herman Miller focuses on close collaboration with its suppliers, buyers, consulting agencies, and even critics, we would like to position it as a Winner referring to the framework developed by Prahalad & Nidumolu (2009).
However, we also assume that with more time and investments Herman Miller can do even better in terms of sustainability promotion – for instance, come up with the solution to the TPU vs. PVC issue. Reference List Business Dictionary (2011). Cradle to grave. Retrieved March 29th, 2011, from Business Dictionary web site: http://www. businessdictionary. com/definition/cradle-to-grave. html Lovins, L. Hunter (2008). Rethinking production in State of the World 2008, pp. 38-40 Prahalad, C. , & Nidumolu, R. (September 2009). Why Sustainability is now the key driver of innovation. Harvard Business Review , 56-64.