Interface Esa

1043 Words5 Pages
Interface’s ESA Case Study EMS 503 Prasad Naik Background Interface Flooring Systems, Inc. was founded by Ray Anderson in 1973 as a joint venture between Carpets International Plc., a British company, and a group of American investors. He set up operations in LaGrange, Georgia, and embarked on a mission to adapt European technology to produce America’s first free-lay carpet tiles. In early 1990,Interface goes green and step up goal to reduce their negative impact on Environment. During 1995 executives of Interface to take step ahead and introduced The “Evergreen Services Agreement”(ESA). It provided for the following: (1) carpet and installation; (2) carpet maintenance; (3) selective replacement of tiles; and (4) carpet removal at…show more content…
Also they saved around 10 millions dollar in waste elimination activities. They also reduce their dependence on Non renewable energy and shit to using renewable sources like wind and solar. These results and Interface’s commitment to the environment brought much press coverage to the company in the mid to late 1990s. In 1999, Fortune developed a six-page spread on Anderson in which he was dubbed both “The Green CEO” and “The king of carpet tile.” Evergreen Services Agreement (ESA) ESA was intended to “close the loop,” thereby keeping used carpet materials away from landfills. The financial benefits of service provision were high margins, stable revenue streams, and long-term customer relationships. Additionally Interface believed it could create a sustainable cost advantage with ESA, given the practice of selective replacement. Because 20% of the carpet received 80% of the wear replacing only the worn tiles would reduce carpet consumption by 80%,a fivefold savings in material costs over the life of the lease. Challenges The major challenge was to educate the customer about the service, as it was new concept. The second challenge was that all the negations failed at purchase level and customer end up buying the product than leasing it. Customer also found it difficult to transfer funds from capital to operating expenses. .” And some customers objected to the lease’s lack of flexibility; these customers did not want to be locked into a long-term
Open Document