Ll Bean
Re: L.L. Bean, Inc.
Overview
When working in the catalog industry and a customer calls in and wants to order a red sweater and you are out of red sweaters, the company might have just lost the sale if the customer does not want a substitute colored sweater. This is the part of the continuous problem that L.L. Bean, Inc. has with item forecasting and inventory management. Working in a catalog business really helps companies to capture demand, but the problem most companies have is matching demand with supply. Every sale that is generated for L.L. Bean is by customers that want a particular item and if that item is not available, they lose the sale. Customer behavior is hard to predict which affects the demand level of all the products. The double whammy for L.L. Bean is that annual costs associated with lost sales and backorders are about $11 million and costs associated with having the wrong inventory is an additional $10 million.
Evolution
L.L. Bean, Inc was established in 1912 by Leon Leonwood Bean when he invented the Maine Hunting Shoe, which was a combination of lightweight leather uppers and rubber bottoms. He was able to obtain a list of non-resident Maine hunting license holders and he proceeded to set up a mail order circular for the license holders. When he passed in 1967, the company had 200 employees, a distributed catalog to over 600,000 people, and sales of $4.75 million. L.L. Bean’s golden rule is “Sell good merchandise at a reasonable profit, treat your customers like human beings, and they’ll always come back for more.” By 1990 catalog sales had jumped to $528 million and L.L. Bean had a retail store in Freeport that brought in an additional $71 million. The major competitors are Land’s End, Eddie Bauer, Talbot’s, and Orvis but L.L. Bean was still the highest in overall satisfaction in 1991. They have decided to stay away from the retail-based operations that some of their competitors have gotten into because L.L. Bean
Overview
When working in the catalog industry and a customer calls in and wants to order a red sweater and you are out of red sweaters, the company might have just lost the sale if the customer does not want a substitute colored sweater. This is the part of the continuous problem that L.L. Bean, Inc. has with item forecasting and inventory management. Working in a catalog business really helps companies to capture demand, but the problem most companies have is matching demand with supply. Every sale that is generated for L.L. Bean is by customers that want a particular item and if that item is not available, they lose the sale. Customer behavior is hard to predict which affects the demand level of all the products. The double whammy for L.L. Bean is that annual costs associated with lost sales and backorders are about $11 million and costs associated with having the wrong inventory is an additional $10 million.
Evolution
L.L. Bean, Inc was established in 1912 by Leon Leonwood Bean when he invented the Maine Hunting Shoe, which was a combination of lightweight leather uppers and rubber bottoms. He was able to obtain a list of non-resident Maine hunting license holders and he proceeded to set up a mail order circular for the license holders. When he passed in 1967, the company had 200 employees, a distributed catalog to over 600,000 people, and sales of $4.75 million. L.L. Bean’s golden rule is “Sell good merchandise at a reasonable profit, treat your customers like human beings, and they’ll always come back for more.” By 1990 catalog sales had jumped to $528 million and L.L. Bean had a retail store in Freeport that brought in an additional $71 million. The major competitors are Land’s End, Eddie Bauer, Talbot’s, and Orvis but L.L. Bean was still the highest in overall satisfaction in 1991. They have decided to stay away from the retail-based operations that some of their competitors have gotten into because L.L. Bean