20. Andy Delisi on furniture remanufacturing and reuse

Audio Transcript:

[00:00:07.150] – Garr Punnett

Hey everybody.Welcome back to the Multiusiverse podcast. My name is Garr Punnett, Chief Strategy Officer at Rheaply. You might be noticing if you’re viewing this actually now that we are doing a little bit of a different intro. Andrew and I forgot to cut the intro when we did the interview yesterday with Andy Delisi of Envirotech. We got to have a great conversation around the furniture industry. What it’s like from a circular capacity with refurbishment and remanufacturing? What changes we need to actually see in the industry to see more growth from a circularity perspective. And really, what could we be doing differently when we start thinking about planning around spaces and planning around our facilities with our office infrastructure? Great conversation as he breaks it down for us. Please enjoy. Thanks for joining us here, Andy. You’re here in town because of Neocon, a big furniture design type of conference. I know very little about it. I only go and participate because I love looking at pretty things. Can you tell the people why you’re here? Tell more of them about the organization that you’re with and the work that you’re doing?

[00:01:14.600] – Andy Delisi

Yeah. My name is Andy Delisi. I work for a company called Envirotech. I’m very much excited to be back in Chicago. It’s been two years of not being at a Neocon and not being in my favorite city. And so it’s just awesome to be back and to see what’s going on in the account, which is really the premier furniture conference in the world, I would say is very helpful for companies like us to understand what the trends are in office furniture and commercial furniture, especially after such a challenging time like Covet. And what our company does is a little bit different than a traditional furniture manufacturer or dealer in the sense that we’re the largest remanufacturer of high end product in Canada and we’ve been doing it for 25 years and it’s been an amazing two years. Crazy to say because we can talk about a little later. But there has been a shift in the way that not only we’re thinking about the workplace, but the way we’re thinking about the products we’re putting into that workplace. And really from a sustainable side of things, more organizations are doing things differently.

[00:02:28.560] – Garr Punnett

What have you seen in terms of an evolutionary change for people or for companies that are now responding potentially a little bit differently to this option?

[00:02:38.850] – Andy Delisi

So the biggest change is that the majority of clients who would come and purchase furniture from us would be looking for something that they need cost effective. First and foremost, no one was coming because we are more sustainable. Right? I can get basically a Herman Miller, a steel case, a hayworth grade product, but it’s 50% less. There’s a lot of companies out there that were looking to take advantage of that. Two is how fast we can produce it. It’s only since Covet that more and more organizations came to us specifically because we proved it with a life cycle analysis that we did on our products. But the conversation around reuse, around circular economy, it seemed like it was a period where it was just buzzwords. And then certain companies said, well, how do we actually start implementing this and what does that actually mean? And are there companies that do this and that could do this for us? We’ve just done a project for 900 remanufactured workstations, and it was required on the tender. They’re starting to rewrite tenders to say, well, look, we need to have a percentage that needs to be reused or remanufactured.

[00:03:57.340] – Garr Punnett

A tender being an offer that a company is saying for business.

[00:04:01.850] – Andy Delisi

A tender would be like for the listeners, sorry. A tender would come out where they’d invite certain vendors to bid on a project. So let’s say it’s a government project. A tender goes out and they go, these are the specifications we need to fit out this office. And they’re usually standard, and then everyone kind of can pull their products and say, okay, Steel Case is going to do this. Hayworth is going to do this. Herman Middle will do this. But for the most part, they’re meeting the spec now. They’re rewriting certain tenders so that they’re saying what our client wants or what this project requires is a remanufactured component. And now all the other vendors have to go, where are we going to get that from?

[00:04:44.490] – Garr Punnett

Fascinating.

[00:04:45.240] – Andy Delisi

And so that’s a very interesting shift that has happened, and elements of it are happening across the board.

[00:04:52.290] – Garr Punnett

Why? You mentioned COVID specifically, I’ve talked about on LinkedIn or I’ve mentioned in others in passing at conferences about how, again, as we saw kind of post 2008, which was like almost a great surge of innovation, a great priority around new business models. This seems like coming as we sort of dealt with challenges around supply chains or that this is a great time to reevaluate one’s business. Are you all finding that? Is this a time where it’s like, oh, wait, we can actually change what has been status quo and start thinking about this a little bit differently? Why Covet in terms of that?

[00:05:36.850] – Andy Delisi

It’s a great question. It seemed like there was a period during Covet when it’s almost like, so we’re in a crisis. And then I think what started happening is that people realize there’s other crisis on the horizon. The climate crisis could be even worse, as you say. Exactly. I don’t know if covid caused that, but there was a period, I want to say it was in 2020 when everyone started coming out large organizations saying, we’re going to be net zero. Remember, this whole thing totally LinkedIn just blew up one day. It’s like every single company announces, by 2050, we’re net zero. By 2040. Okay, yeah, great. Then some of them started putting plans together, and then they were looking at, well, where’s our carbon footprint coming from? How can we actually reduce it? And I think that’s really what fueled the fire a bit.

[00:06:38.120] – Garr Punnett

Well, and for many of those, a low hanging fruit are the pieces of infrastructure that are located within their offices and it’s like, why not think about that a little bit differently? They were almost forced to as well, probably because of remote workforce of which some, I’m sure, companies that you all are getting are probably thinking about how are we supplying furniture, office infrastructure, workspace infrastructure to our remote workforce. That’s fascinating because then again, that’s now in direct conflict of what has been the status quo, which is just now everyone shows up, everyone sits in the same stuff, right? But now it’s like, all right, how do we actually start to create a system in which maybe we can take back from a decentralized model of a remote workforce or just trying to figure out how to actually supply those people that are at their homes or figure out what to do with the stuff that’s in the office. It is that great, almost reshuffle, that great rethink of what has been a priority at the office. I know we’ve seen that. I mean. We’ve seen an element from a technology part where there’s now an opportunity to think a little bit differently and it was that simple almost gap of time where they were like.

[00:07:47.320] – Garr Punnett

Wait. Now we see that there’s a problem. That now we can actually start to think of innovative solutions to your point to solve potential crisis to come. Supply chain crisis. Just carbon crisis in general of trying to sort of rethink their own supply chains from a scope three emissions standpoint that that might be the case.

[00:08:07.430] – Andy Delisi

Reshuffling is a great way of putting it. Right. There is tons of reshuffling happening right now and there’s a lot of opportunity that comes out of that. I mean, crisis always does spur action, right? The birth, I think, of what they consider in some ways the birth of the sustainability movement was after the oil crisis, right?

[00:08:27.970] – Garr Punnett

Yes.

[00:08:28.530] – Andy Delisi

That’s when it all started, when it was a different mentality of not measuring carbon. It was we don’t have enough of this stuff, right, so let’s save it.

[00:08:36.920] – Garr Punnett

Right?

[00:08:37.270] – Andy Delisi

Yeah. And that’s when they started making buildings more energy efficient to try and just.

[00:08:44.630] – Garr Punnett

It’S a great point yeah.

[00:08:48.700] – Andy Delisi

Eerily similar to what we’re going through, but that’s what spawned this birth of sustainability. But the funny thing is that when it’s a crisis, you’re not always thinking about it. Holistically. So what happened when they started jumping into fixing these buildings to minimize heat loss and heat gain and make them tight? Basically everyone got sick building syndrome, right, for years. Buildings got worse in some ways and there’s a lot of growth period in figuring out and then, well, building comes along in the last five years and that’s what I worry sometimes about, especially.

[00:09:31.390] – Garr Punnett

Shuffling that pendulum swing. Yes.

[00:09:33.990] – Andy Delisi

Okay. We know people are going to be doing swing, office space, people are getting rid of space. It’s happening. But a lot of people are still building out new space. But they might not need the same space in two years or a year or three years. And so that shuffling is going to keep happening. And how we respond to that and how companies respond to that now hopefully isn’t short sighted. Hopefully we can think of it as a whole and create solutions that are going to stand the test of time.

[00:10:03.500] – Garr Punnett

Basically draw out a little playbook, I would say, for the project. So those that are thinking of their space, what to do with it in the future, or maybe there’s an immediate need coming up. Now, could you draw like a little bit of what you see most often and what you can do immediately to help start preparing yourself for the right moves that you should be making that have a little bit more forethought to them? And then if you would mind, speak a little bit more generally on what is this as an industry, how should we be thinking about the stuff that we are owning? What should we be setting up or building into our Tenders or our RFP or whatever might be at a larger organization in which they can start to say, hey, this is no longer a this might be generous, but a five to seven year depreciation cycle on this furniture, but instead we want to think of the furniture we’re about to buy on a 20 year depreciation cycle. What does that mean to you all in the industry, short term, long term then.

[00:11:04.730] – Andy Delisi

Well, it’s tricky. So it’s almost like the model itself has to change to really generate the most significant impact. The model being that people are talking of furniture as a service type model. Right, right. That is a great model. It’s just executing it is very difficult. Mostly because and this is where guys like you can come in, right? Mostly because, let’s say we sell our product as a service and whoever is, I guess managing that product on the client side, they might not be there in a year, two years, three years. We might not have a platform or software where we’re able to transition to easily manage it and then take back and repair and reuse. And so it’s almost like the ease of furniture as a service. No one’s jumping on from a furniture manufacturer, vendor side of things. Right. The model has to change. Right. But other than that, the best thing that you can do now short term is that a lot of people are reconfiguring space. 90% of the projects are reconfiguring space because they have too many desks and not enough collaboration. Right.

[00:12:27.950] – Garr Punnett

Because that’s probably what they’re finding the most, which is if people are going to come in, it’s going to be mostly about working with others when they do come in.

[00:12:36.090] – Andy Delisi

I think it should be you’re going to want to have different areas of your work space for sure. But are we cramming as many people as we can to sit on forefoot benching stations? Probably not. But again I don’t know. No one knows. We’re all taking a guess right now. And so the best thing you can do is if you’re reconfiguring, if you’re decommissioning, building out new, going through the process of basically rethinking your space well then think even though it might be short term you need it quickly. Think long term about a partner or a solution that is going to grow with you. And that’s really where we find value for our clients is that we do offer everything under one roof. Where we do sustainable decommissions, we do buybacks, we do trade ins, we do upgrades, we do reconfiguring, we sell new as well because you can’t currently get everything as a remanufactured product. If more projects started requiring as a tender lot more volume of well then the innovation would happen I think a little bit more quickly than it currently is. And that’s the exciting part is that we want to make it work again.

[00:13:50.900] – Andy Delisi

It’s a no brainer of why every project should have at least a percentage of reuse remanufacturing on it. And if that starts happening across North America other vendors and partners are going to take note and that’s just going to move the dial that much further. In terms of more circular solutions. We don’t want to be the only guy that does this. We’d love it if everyone started integrating programs and this really caught on because there’s so much potential in it.

[00:14:23.760] – Garr Punnett

Yeah. Can you speak to the new stuff that you all have to have to what I’m trying to better understand is what type of stuff lasts. What type of items are you seeing the most of in a refurbishment or re manufacturing capacity and then what stuff does need to be integrated in as new? Are we talking components, whole goods like chairs? What’s the mix roughly to give people a picture of what they’re expecting or the present is now and what the future could look like as we push this.

[00:15:02.890] – Andy Delisi

Okay. So remanufacturing works primarily best. I’m going to say the way we do it is based on the strength of great manufacturing.

[00:15:15.170] – Garr Punnett

Right.

[00:15:15.750] – Andy Delisi

So fast furniture is a problem. It’s cheap, it’s not made well and therefore if someone’s going to try and reuse or even look at remanufacturing it there’s no way you’re going to be offering a warranty on that because it’s going to fall apart. It’s not made to last. And therefore what we look for in products that we remanufacture and refurbish is the gray day manufacturers. That’s how we’re able to offer OEM warranties on our product that we stand by. And that’s the big differentiator between like.

[00:15:54.220] – Garr Punnett

A used furniture OEMs being original equipment manufacturers yes, no, all good. I think that’s so important that that’s what you’re essentially able to replicate but refurb and remain for your clients. I interrupted though you were about that. You had another thought.

[00:16:09.930] – Andy Delisi

Well that’s a big thing to understand when it comes to remanufacturing is that we need great manufacturing as well.

[00:16:19.570] – Garr Punnett

Yeah.

[00:16:20.020] – Andy Delisi

Right. Not everyone is going to invest in that’s why we can’t do everything as a remanufactured option. Right. Currently it’s just not going to work. But the best thing a company can do if you’re not doing a percentage of reuse or remain is making sure that you buy quality product that can be given multiple uses at the end of its life. And not just that components get recycled or most of the time it’s discarded in landfill.

[00:16:51.930] – Garr Punnett

What are you all excited about in the industry now that you’re seeing you said tenders are getting a little bit more prescriptive when it comes to remanufacturing that’s needed to sort of service the role or the job. What else is there in terms of what’s growing fewer fast furniture vendors? Yeah, okay.

[00:17:15.850] – Andy Delisi

Unfortunately not yet. I’m not seeing that. And that goes across the board with commercial and obviously residential is another big problem, right? And it’s in everything, it’s in fashion. We’ve got to get ourselves out of that mindset.

[00:17:33.310] – Garr Punnett

Quite pervasive. Yes.

[00:17:36.610] – Andy Delisi

But quality product costs money, right? And the other hard thing that’s happening is that people aren’t necessarily willing to spend an extreme amount of money right, when they don’t know what their workspace is supposed to do for them in the next couple of years.

[00:17:56.710] – Garr Punnett

That’s kind of interesting that the thought of, well, the value maybe wasn’t clear. I think those who appreciate it understand the value of some of the top manufacturers. But it’s really interesting that the value is now even more in question when they don’t know what the value of the space means, the workforce, right? And so now it’s like, oh, this would have been so easy for someone to sign on the dotted line for that couple thousand dollars chair plus workstation, right? And now it’s a little bit different when the whole systems in question what’s being done essentially to reassure or to say.

[00:18:42.550] – Andy Delisi

Hey.

[00:18:42.940] – Garr Punnett

This is still of quality because you’re not just investing in the opportunity for quality. For your workforce. For the employees. But now you’re also investing in the secondary market where you might be able to recoup or is that a part of the conversation where it’s like.

[00:19:00.140] – Andy Delisi

Hey.

[00:19:00.370] – Garr Punnett

This is what you’re accounting for. You might get this back either on the secondary market or through a refurbishment remanufacturing capability where that’s going to save you five years down the line.

[00:19:11.260] – Andy Delisi

That’s what I think the main manufacturers, that’s how they promote their business.

[00:19:16.000] – Garr Punnett

That’s how they promote it. Okay?

[00:19:17.270] – Andy Delisi

But it’s impossible in some ways for them to ensure that, right? So you can say something has an end of life strategy of what they’re going to do when it’s finished, but they don’t have anything to do with that for the most part. And that’s the whole furniture as a service, unless they took it back themselves. Well, then they’re just dependent on someone like us to come around and know the client and take it.

[00:19:45.100] – Garr Punnett

And I think that’s actually if you could get into that, because that’s super helpful for any listener to understand is all of these industries have many stakeholders in them. Furniture just being not any more complicated than many other distribution dealership type models. But could you go through that a little bit and explain what that chain looks like, where it starts from an original manufacturer, and then who touches it along the way until you all might come in and say, hey, we can actually help do this from a refurb and remain capability.

[00:20:14.970] – Andy Delisi

Okay. So it’s important to know that in commercial office furniture, it’s for the most part a dealership model. So there’s what they’re called mainline manufacturers. Hayworth steel case. Herman Miller technique. Herman Miller. They’re called Miller Knoll. Sorry, I should know after he is.

[00:20:39.150] – Garr Punnett

Just for the listener then that was a classic acquisition where now before we get into that, did that make Miller Knoll now one of the biggest steel case?

[00:20:54.010] – Andy Delisi

Now Millernole Hayworth, then I don’t know the one.

[00:20:57.520] – Garr Punnett

Okay, then it’s just like kind of okay, got it. So dealership model.

[00:21:01.130] – Andy Delisi

So they’re the manufacturers, and they don’t sell direct to a client. They sell through dealers. And dealers typically align with one of those main ones, and you can’t sell another one. So if you’re a steel case dealer, you can’t sell Herman Miller, you can sell a number of other open line manufacturers that you can offer your clients. But so step two is through the dealers is where I’m going with that. So the manufacturers make the product and they can say whatever they want for their end of life, and they’ll certify the product and go through all that. But then it goes directly to a dealer. The dealer is the one who’s buying it, and then the dealer is the one selling it to that client. And the dealer, for the most part, for the most part, manufacturers do keep in touch with certain large clients, but the dealer is the one who manages the relationship with the client. And so when it comes time to get rid of product or to move on to the next office or whatever refresh or change is happening, that dealer is going to find out about it. And typically dealers, you’re always trying to sell something new.

[00:22:11.390] – Andy Delisi

That’s just business.

[00:22:15.010] – Garr Punnett

Growth.

[00:22:18.610] – Andy Delisi

You got an old space or you’re moving. And that’s the worst part, is that sometimes moving is more costly to relocate than to just get rid of stuff. Wow. Yeah, right. So a lot of the times it’s just discarded. And I can’t speak for everyone, but I don’t think there’s a point that at the end of the road there what’s the end of life?

[00:22:41.880] – Garr Punnett

Right?

[00:22:42.360] – Andy Delisi

It’s just you’re deep into a project at that point and the contractor added something in the line where it says it will be removed. It’s just too cheap to throw things out.

[00:22:52.650] – Garr Punnett

Yeah.

[00:22:53.590] – Andy Delisi

It’s not enough of a cost to make people go, whoa, that’s expensive. We cannot pay those types of fees to throw out a floor of furniture. Right. It would blow your mind how cheap it is.

[00:23:08.650] – Garr Punnett

Yeah.

[00:23:10.150] – Andy Delisi

And that’s a problem not just with furniture, with everything.

[00:23:12.760] – Garr Punnett

With everything.

[00:23:13.530] – Andy Delisi

It’s too cheap to throw things away. And so if it’s too cheap and currently more inefficient to start looking and finding ulterior ways that you can, you’re not going to be motivated to do it.

[00:23:32.090] – Garr Punnett

It’s the path of least resistance for waste and material flow.

[00:23:37.050] – Andy Delisi

And that’s what’s so exciting about if you change that. And obviously people want, I think, to do something better for the environment, better holistically for themselves and the planet. They want to do it. They just want someone to make it easy for them. They want someone to make it fun. They want someone to make it fresh. Right, right. And if remanufacturing and reuse and the circular economy that we’re always talking about achieves that for them, well, then that’s it. That’s what needs to happen. And the innovation on how to work with the products will figure itself out after that, I think.

[00:24:16.040] – Garr Punnett

Well, I think that’s what we would like to pursue, keep pursuing here. You gave some great words of parting wisdom there, I think, on the system. What more people can be thinking around again, the products or even just the waste in general or what it means to throw something out? Any other last thoughts coming out of Neocon design? What are you seeing maybe too? What would you want to leave everyone with?

[00:24:44.340] – Andy Delisi

Well, obviously everyone is trying to create it’s funny. Every product the trend is agility, right? Everything needs to be flexible. It needs to be if this was the wrong product this year that you bought for your workplace, well, you can change it next year and you don’t have to throw it out. So it’s like they’re thinking about it in that same sense, right, of like, this is a product that hopefully will grow with you as we figure out what the heck the workplace of the future is. Right?

[00:25:10.770] – Garr Punnett

And that was a flexibility, modularity type conversation where it’s like rearranging at all times.

[00:25:16.480] – Andy Delisi

Yeah. Most furniture is module, but now it’s modular, but now it’s more of the actual desks and workspaces are kind of moving and you can reconfigure a room very easily, whereas before you’re like an electrician to rewire. Yeah.

[00:25:38.190] – Garr Punnett

A whole floor.

[00:25:39.010] – Andy Delisi

Yeah. That’s what I noticed as a trend at Neocon this year. And I think that’s a great thing. I think that means that people are thinking about, okay, we need to make sure that our products that we’re putting in our spaces are able to adapt and grow with us as we figure out this new way to work. If we take that one step further and say, okay, we’re creating products are going to adapt and grow with how we work, let’s also make sure they adapt and grow for the planet. Let’s make sure that we’re investing in products and solutions that are not fast furniture, that are not made to fall apart in three to five years that can evolve with us, that can evolve and that really do have an end of life that is feasible to achieve. Right? And I think if we’re able to make that the norm, then it will be an exciting couple of years to figure out this new way of work. Right. Everyone wants to know what it is. We don’t know. No one knows. And that’s great. And I think that that’s going to provide a lot of opportunity to do things differently.

[00:27:01.690] – Garr Punnett

Thanks for joining.

[00:27:02.950] – Andy Delisi

Pleasure to be here.

[00:27:03.760] – Garr Punnett

Thanks everybody, for listening and watching.

[00:27:05.520] – Andy Delisi

See you next week.