Gateway To Success

The business model of office furniture maker Herman Miller Inc., Zeeland, Mich., is closely connected to the portal it has established for its many suppliers. Herman Miller is much less vertically integrated than most of its competitors, relying on a broad network of suppliers for components and complete furniture pieces. In the late '90s the company was plagued with poor on-time delivery to customers because of problems with information flow to and from suppliers. It had given suppliers secure access to its Baan ERP system via an extranet for invoicing, quality, and engineering information, but that in itself did not impact delivery reliability. "Looking into the Baan ERP system did not give a complete picture," says Michael Brunsting, Herman Miller e-commerce team leader. "We wanted to give suppliers access to other data sources, but didn't want them to have to log on to multiple Web sites to get it." These other sources included real-time demand data from Herman Miller's i2 Technologies finite scheduler, and a variety of unstructured information including bar-code and label requirements, legal documents such as purchase-order terms and conditions, and training material. Overlaying these sources with portal technology from TopTier Software Inc., San Jose, Calif. (since acquired by SAP AG to form SAP Portals Inc.), the company was able to provide single sign-on entry into the new data and the Baan ERP system. In addition, the company set up other valuable Internet sources for suppliers, available through the portal, including search engines, White Pages, and news feeds customized to a particular supplier's interests. Access to the real-time data via the portal has helped suppliers eliminate guesswork and assumptions about demand, translating to a 99% on-time delivery rate, a significant improvement from the 70% rate of the past. Inventory also has been reduced, and inventory turns have increased. "We believe the ability to get digitally connected through the portal with our suppliers reduces all those errors that made most companies want to be vertically integrated," says Michael Volkema, Herman Miller's CEO. "It was that whole transaction cost between a vendor and a company like ours that ultimately lowered the performance and raised the cost to the customer. Now we can go out with a best-of-breed mentality. The supplier portal is a key ingredient in that effort to reinvent the value chain." In fact, 150 suppliers, representing 90% of Herman Miller's total purchases, are connected via the portal.