When some companies set out to overhaul their assembly-line efficiencies, Lean manufacturing strategies are the only step. At Herman Miller, the Zeeland, Mich.-based office furniture maker, Lean was just the first step.

Back in 1996, Herman Miller set out to overhaul its assembly line production system, specifically within its pedestal files manufacturer, Integrated Metals Technology (IMT). In order to reduce leadtimes and increase reliability (the levels of which were at 70%) Herman Miller turned to Toyota's Supplier Support Center for an example to emulate. The two companies collaborated in creating the Herman Miller Production System (HMPS)—an aggressive approach to Lean manufacturing and kaizen that the company rolled out over several years. Seven years later, in 2003, Integrated Metals Technology could boast near-100% reliability, and Herman Miller was quite pleased with cost-savings attained thanks to HMPS.

But the story doesn't end there. Not long after IMT reported gains in reliability and tighter leadtimes, the company "started hitting a brick wall," says Drew Schramm, Herman Miller's senior vice president of global supply and quality. It was no time for the company to rest on its laurels. There was still a lot of work to be done.

When Schramm joined Herman Miller in 1998, "it was a purchasing vice president's dream," as there were many opportunities to introduce purchasing basics: directors were getting different prices from the same suppliers, for one thing. But once the company introduced best practices—such as supplier-qualification programs that helped cut delivery defects from 12,000 PPM to 500, and supplier rationalization that cut the supplier base from 300 to 120—the cost-savings the company first saw began to taper.

It was then that Schramm and his team decided to teach HMPS methods to their suppliers. Before this point, many Herman Miller executives and purchasers, including Schramm himself, had "learned HMPS," which meant spending time in the manufacturing plants right along the assembly lines, watching how employees assembled orders, step-by-step. The idea was that deep knowledge of the manufacturing processes would give buyers a better understanding of where to cut the fat. Schramm then asked: "Why don't we do this with our suppliers?"

One thing he learned while applying HMPS was that operations "had a habit of pushing inventory into the supply base, and letting them be inefficient." Schramm believed that working with suppliers on implementing HMPS would benefit both suppliers and Herman Miller. But this was not an easy idea to implement from the get-go, especially as many on Herman Miller's purchasing staff were not sold on the idea of standing around on their suppliers' plant floors. Though two of the purchasing staff eventually opted to leave, Schramm put aside his doubts and decided to carry out the new strategy.

An important step in implementing supplier-side HMPS was, of course, convincing the suppliers that it was a good idea. Schramm started with suppliers for Herman Miller's steel group, and explained to them why they were rolling out the HMPS methods with suppliers. Most importantly, he wanted suppliers to be confident that HMPS was "not about taking [their] margin away, it was more about eliminating waste in our value string."

Aside from that concern, suppliers also weren't convinced that Herman Miller purchasers weren't going to use what they saw in the suppliers' plants at the negotiating table. To remedy this fear, Schramm says he tries to make sure "the first event where we are there helps them and does not help us." In one case, Herman Miller buyers helped out a supplier in a way that they knew would benefit a competitor.

The HMPS program, dubbed "First Mile," is voluntary for suppliers, though suppliers that do participate improve their standing with Herman Miller. Of course, there are conditions on the suppliers if they decide to participate. First, executives from the supplier company have to be present on the plant floor, learning the processes alongside Herman Miller's buyers. Second, the supplier had to be committed to the program, given the amount of time required to make the program work. "If the suppliers' executives don't understand what we're asking their managers and employees to do, it won't be sustainable," Schramm says.

Herman Miller learned this the hard way when it first tried to roll out continuous improvement programs—the first two years, says Schramm, were a "bit of a debacle," as gains made from Lean processing were temporary. The only way to get the continuous-improvement mantra to stick was to get Herman Miller purchasers and supplier executives involved so everyone is on the same page.

Once the HMPS methods took hold among Herman Millers' steel suppliers, the company began to roll out First Mile with suppliers of other commodities like plastics and wood. Throughout this process, Herman Miller ended up training five employees as continuous-improvement experts—three of whom were sent to Toyota for a year to learn as much as possible about implementing Lean.

One of the results of First Mile is that with increased plant-floor efficiencies, there's more space for suppliers to improve. Schramm had suppliers that participate in First Mile agree to not fire any employees freed up by the process, "otherwise floor people won't want to do improvements."

There's also consistent movement within Herman Miller's purchasing department to choose quality and reliability always, even over cost savings. Schramm says he emphasizes fairness, even if it means not getting the cheapest price—an attitude that has proved valuable. Says Schramm: "We may not be getting the cost decreases my competitors got, but when the chips were down in the steel crunch, I got the steel and my competitor didn't—and I did not get a price hike."