Tuesday, February 4, 2014
Aligning Product Design and SCM Strategies (Herman Miller Case Study)
The Herman Miller study has an important lesson for why your supply chain management must align with your product development strategies. The office furniture manufacturer, Herman Miller, wanted to incorporate Cradle-to-Cradle Design into its products – creating manufacturing processes more efficient and essentially waste-free. One of its greatest challenge to developing a product that is composed of 100% biological and/or technical nutrients is using raw materials with green chemistry composition. The challenge of not being able to find such raw materials in the market clearly restricts its ability to design a product that is “truly compatible with ecological systems”.
The new product opportunities for Herman Miller would significantly expand if it had more control over how its suppliers developed the inputs. In most cases that would be difficult to achieve, unless you were a monopsony or were able to take over your suppliers through vertical backward integration.
SCM and product design strategies need to be very well integrated. If companies wish to adopt a system such as Cradle-to-Cradle Design, with the goal to achieving high environmental performance, it should ideally have a SC system that can accommodate such business interests.
There has to be a better integration of product development and SCM within front-end activities, i.e. the stage where companies think of new innovative products or processes. Generally, SCM would only be concerned with the realization of a production and distribution plan that fulfills market requirements, and not product design itself. However, aligning front-end product design development with SCM can help companies unlock new product development opportunities and avoid risks of selecting non-viable options.
The idea is that supply chain constraints and opportunities are communicated earlier in the product design process. This would help companies make better, more informed decisions. Incorporating something like a Cradle-to-Cradle Design into your products can make your supply chain incredibly complex, high risk and costly to manage. The company may end up expanding its supplier base, entering into agreements with unreliable suppliers, or the cost of production may increase, thereby affecting profitability. Unless the tangible benefits from design differentiation and high environmental performance significantly outweigh the associated costs and risks, this may not be a viable business strategy.
You can find more resources on the subject below:
Product Design and Supply Chain 2011,
Benefits of aligning design and supply chain management 2013,
Caridi, M., Pero, M., and Sianesi, A., 2008. The Impact of NPD Projects on Supply Chain Complexity: An Empirical Research, Proceedings of the Expand 2008, Bordeaux, France, 20-21 March.
Handfield, R. B., and Lawson, B., 2007. Integrating Suppliers into New Product Development, Research Technology Management, Vol. 50, No. 5, pp. 44–51.
Khan, O., Christopher, M., and Creazza, A., 2012. Aligning Product Design with the Supply Chain: A Case Study, Supply Chain Management, Vol. 17, No. 3, pp. 323-336.