We’re dealing with a highly competitive, mature industry when it comes to office furniture manufacturing. There are several very well-established, well-regarded multinational companies working in this market, with considerable global reach and distributional capacity. Companies with a more regional or national scope therefore face considerable challenges. Here we’re going to introduce you to some of the key data points and information from this industry. In our, we go full industry analysis video lesson into more depth and pursue additional points, drawing out the lessons for a company like ZX. For now, we introduce you to some of the opening points from that fuller analysis.
We’ll begin with some of the global data, looking at how the industry as a whole has been developing in recent years in terms of market value, and also some projections for the coming years. The first graph below charts European exports in the industry from 2009 to 2014. As you can see, there has been considerable compound growth since 2009. This is perhaps unsurprising in light of the fact that 2007 to 2009 was one of the lowest periods in recent history following the global financial crisis, which witnessed a sharp contraction in new commercial office developments, in conjunction with the closure of thousands of workplaces. Therefore, these recovery years should not be taken as indicative of future year on year trends.
In this second chart, industry analysts envision a much more modest and steady growth rate for the coming years. By 2020 we should see the global market value of the office furniture industry approach $140 billion. These projections are more or less in line with projected global economic growth rates. This is what we would expect from a mature market. Short of another crisis on the scale of 2007-2008, we should expect to see industry growth track economic growth country by country.
As indicated in the pre-seen, modular furniture is one of the biggest growth segments within this industry. According to technavio.com’s “Global Office Furniture Market 2016-2020” report, ‘the demand for minimalistic, multifunctional, and comfortable office furniture is on the rise, primarily because of the high rates of commercial leases across the globe [and] the steep rise in the number of start-ups…’. According to the same report, clients are increasingly interested in both green furniture (i.e. environmentally sustainable furniture), ever broader colour ranges, and ergonomic furniture. Leading companies in the tech industry, such as Google and Facebook, have established office templates that are open-planned, flexible, and incorporate “fun” elements as a way of improving worker morale. Office furniture manufacturers have to be attentive to such trends, and create solutions that appeal to increasingly diverse demands and tastes.
Ergonomics has been an ever-present consideration in office furniture design, especially as workers tend to spend such long periods in the same position at their desks. Ergonomics is the study of designing equipment, devices and processes that fit the human body and its physical/cognitive abilities. As such, ergonomics is a way of optimising furniture so that it avoids potential problems associated with prolonged use, as well as maximising the efficiency of human movements within the workspace. This can apply to office layouts as well as individual items like desks and chairs. Innovation and research in this area is ongoing, and increasingly, clients are attentive to the potential problems caused to their employees by ergonomically sub-optimal furniture design.
Real World Companies
As was mentioned, this industry is a highly competitive one. It’s characterised by a number of major international players, and hundreds of regional and national small and medium sized manufacturers. Here we’ll take a brief look at one company within the industry that is highly regarded, and has been a pioneer in many areas. That company is Herman Miller, a US furniture manufacturer founded in 1905. It moved into office furniture around the middle of the century, and has since become an industry benchmark for style and minimalism. It has a number of iconic pieces, such as the Eames lounge chair and the ubiquitous Aeron office desk chair. It’s generally considered one of the higher end office furniture manufacturers. For instance, a single Aeron chair retails at around $900. These are very carefully designed and calibrated pieces, with elaborate adjustment possibilities and exceptional ergonomics. Herman Miller also offers complete office solutions in the form of their Canvas range, which we look at in more detail in the full analysis.
From 1995 Herman Miller undertook a major overhaul of its assembly process. They were suffering from increasingly long lead times and excessive inventories, and were struggling to meet delivery deadlines. They looked to Toyota for inspiration, and approached Toyota directly in an attempt to gain some insight and advice. Toyota were initially unforthcoming, and Herman Miller resorted to consulting with another US manufacturer in another industry who had themselves adapted some elements of the Toyota manufacturing system to their own production line. The story of how Herman Miller eventually succeeded in radically reducing their lead times and inventories is an interesting one, and we cover it in more detail in our video analysis…
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