{"id":1808,"date":"2015-12-06T14:34:12","date_gmt":"2015-12-06T19:34:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/l-l-bean-it-pays-to-be-a-contrarian\/"},"modified":"2015-12-06T15:00:40","modified_gmt":"2015-12-06T20:00:40","slug":"l-l-bean-it-pays-to-be-a-contrarian","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/l-l-bean-it-pays-to-be-a-contrarian\/","title":{"rendered":"L.L. Bean: It Pays to be a Contrarian"},"content":{"rendered":"<p><strong>Business Model<\/strong><\/p>\n<p>L.L. Bean is an outdoor gear and apparel merchant whose mission is to inspire youth and families to engage in outdoor recreational activities.\u00a0 With $1.6B in net revenue split among catalog, e-commerce, and brick-and-mortar sales channels all experiencing year-over-year growth, one might say they\u2019ve succeeded.\u00a0 From its modest beginnings in 1912 when founder Leon Leonwood Bean sold his signature, hand-crafted boots out of one room, until present day, L.L. Bean has always stood behind the same value principles: a focus on the customer, continuous product improvement and innovation, and a 100% satisfaction guarantee. \u00a0L.L. Bean has delivered on its customer promise through operations that involve <em>Design Thinking<\/em>, <em>Supply Chain Management<\/em>, and exemplary <em>Customer Service<\/em>.<\/p>\n<p><strong>Operating Model<br \/>\n<\/strong><br \/>\n<em><span style=\"text-decoration: underline\"><strong>Design Thinking<\/strong><\/span><\/em><\/p>\n<p><a href=\"https:\/\/www.youtube.com\/watch?v=mHiltxEmi3k\">https:\/\/www.youtube.com\/watch?v=mHiltxEmi3k<\/a><\/p>\n<p>When it comes to innovation, IDEO has demonstrated that it pays to interact with the heaviest users of products for idea generation purposes.\u00a0 L.L. Bean has taken that concept a step further by partnering with elite athletes like Seth Wescott who not only ideate innovative concepts but also test prototypes in extreme situations that will guarantee functionality and durability for the mass market.\u00a0 L.L. Bean complements this experiential testing with scientific analysis of materials, construction, and design in its own independent lab.<\/p>\n<p><iframe loading=\"lazy\" title=\"L.L.Bean Outdoor Discovery Schools\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/LgEx9_Bm_2Y?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p>As many brick-and-mortar retailers have scrambled in recent years to build out e-commerce platforms, L.L. Bean\u2019s established e-commerce presence has allowed it to go the other way.\u00a0 Sometimes it pays to be a contrarian. \u00a0The \u201cOutdoor Discovery Schools\u201d in the above video are run out of every retail store and are more than just a prime opportunity to increase brand visibility and demonstrate the quality of L.L. Bean products.\u00a0 From a design thinking perspective, the Schools are an ingenious way to organically create customer focus groups.\u00a0 School attendees are more than happy to unwittingly serve as sources of feedback on products while snowshoeing, kayaking, and paddleboarding.<\/p>\n<p><em><span style=\"text-decoration: underline\"><strong>Supply Chain Management<\/strong><\/span><\/em><\/p>\n<p><iframe loading=\"lazy\" title=\"Behind the Scenes at L.L.Bean\u2019s Order Fulfillment Center  | L.L.Bean\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/giFsNV8X9Do?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p>L.L. Bean has a history of leveraging data analytics to streamline its supply chain.\u00a0 In 2007, its distribution network was approaching capacity.\u00a0 Excess seasonal inventory had been crowding shelves.\u00a0 Instead of investing in a new distribution center, they invested in inventory management systems to increase throughput. \u00a0Aligning inventory policy to customer demand meant separating SKUs into \u201ccore\u201d and \u201cnon-core\u201d items.\u00a0 Core items experienced consistent demand regardless of the time of year while non-core items experienced seasonal demand. \u00a0L.L. Bean responded by developing product-specific inventory lifecycles for its seasonal items.<\/p>\n<p>Inventory characteristics also differed by sales channel.\u00a0 As a result, L.L. Bean split its two distribution centers, both in Freeport, Maine, into a retail distribution center and a catalog\/online sales distribution center, optimizing for both.\u00a0 Doing so has empowered the retail channel to own its inventory management through improved forecasting and sourcing product to stores.<\/p>\n<p>Completing the vertical integration of its supply chain, L.L. Bean tightly couples its distribution centers with its manufacturers and suppliers.\u00a0 The company-owned manufacturing facilities are located a stone\u2019s throw from Freeport in Brunswick and Lewiston, Maine.\u00a0 Core items, such as boots and tote bags, are still made in those facilities.\u00a0 Non-core items are received in small, frequent batches from suppliers.\u00a0 Sales transparency with suppliers has obviated the need to engage in the guesswork involved in ordering large quantities of non-core items for an entire season.<\/p>\n<p>A better understanding of product lifecycles, the channel-specific distribution centers, and the just-in-time relationship with suppliers has led to less overstock of seasonal inventory, more of the products customers buy all year long, and a reduction in warehousing costs.<\/p>\n<p><em><span style=\"text-decoration: underline\"><strong>Customer Service<\/strong><\/span><\/em><\/p>\n<p><a href=\"https:\/\/www.youtube.com\/watch?v=6buiEQQ27XA\">https:\/\/www.youtube.com\/watch?v=6buiEQQ27XA<\/a><\/p>\n<p>L.L. Bean\u2019s Customer Satisfaction department operates out of 3 customer service centers in Maine, 24 hours a day, 365 days a year.\u00a0 Problem?\u00a0 Customer representatives are practically on the site of operations to fix it, not in an international call center.<\/p>\n<p>In their words, \u201cour guarantee is based on something as simple as a handshake \u2013 the deal that you\u2019ll be satisfied with your purchase, and if you\u2019re not, we\u2019ll make it right.\u201d\u00a0 If a customer does not have a receipt, L.L. Bean will do its best to locate a record of the purchase.\u00a0 If unsuccessful, L.L. Bean reimburses the customer with a gift card.\u00a0 Even if a product was customized, embroidered, or monogrammed, a customer can still return it at any time.\u00a0 Customers and employees alike know they are in safe hands with L.L. Bean.\u00a0 The company regularly wins awards for customer loyalty and customer service.<\/p>\n<p>&#8212;<\/p>\n<p>This past year, L.L. Bean made a $78.5M investment to both fully fund its defined benefit pension plan and pay 8% bonuses to its 5,000 permanent employees.\u00a0 Though the financial information for this private company is unavailable, these actions speak volumes to L.L. Bean\u2019s profitability and what can be accomplished when business and operating models are aligned.<\/p>\n<p>&nbsp;<\/p>\n<p>Sources:<\/p>\n<p><a href=\"http:\/\/www.townandcountrymag.com\/style\/fashion-trends\/news\/a2851\/10-things-you-didnt-know-about-ll-bean\/\">http:\/\/www.townandcountrymag.com\/style\/fashion-trends\/news\/a2851\/10-things-you-didnt-know-about-ll-bean\/<\/a><\/p>\n<p><a href=\"http:\/\/www.bizjournals.com\/columbus\/news\/2015\/11\/20\/l-l-bean-opens-at-easton-on-its-march-to-100-new.html\">http:\/\/www.bizjournals.com\/columbus\/news\/2015\/11\/20\/l-l-bean-opens-at-easton-on-its-march-to-100-new.html<\/a><\/p>\n<p><a href=\"http:\/\/globenewswire.com\/news-release\/2015\/08\/03\/757188\/10144276\/en\/Adventures-are-in-Store-for-Kansas-City-L-L-Bean-to-Open-its-First-Kansas-Store-at-Town-Center-Crossing-Leawood-Kansas.html\">http:\/\/globenewswire.com\/news-release\/2015\/08\/03\/757188\/10144276\/en\/Adventures-are-in-Store-for-Kansas-City-L-L-Bean-to-Open-its-First-Kansas-Store-at-Town-Center-Crossing-Leawood-Kansas.html<\/a><\/p>\n<p><a href=\"http:\/\/www.llbean.com\/customerService\/aboutLLBean\/company_information.html\">http:\/\/www.llbean.com\/customerService\/aboutLLBean\/company_information.html<\/a><\/p>\n<p><a href=\"https:\/\/www.bostonglobe.com\/business\/2015\/03\/11\/bean-plans-triple-its-stores\/pQhhiXxTi1rBm8iQDhD3EL\/story.html\">https:\/\/www.bostonglobe.com\/business\/2015\/03\/11\/bean-plans-triple-its-stores\/pQhhiXxTi1rBm8iQDhD3EL\/story.html<\/a><\/p>\n<p><a href=\"http:\/\/www.supplychainquarterly.com\/topics\/Strategy\/201104llbean\/\">http:\/\/www.supplychainquarterly.com\/topics\/Strategy\/201104llbean\/<\/a><\/p>\n<p><a href=\"http:\/\/www.llbean.com\/llb\/shop\/510624?bvCategory=510624&amp;nav=ftlink\">http:\/\/www.llbean.com\/llb\/shop\/510624?bvCategory=510624&amp;nav=ftlink<\/a><\/p>\n<p><a href=\"http:\/\/bangordailynews.com\/2014\/03\/07\/business\/l-l-bean-posts-record-profits-plans-biggest-expansion-in-company-history\/\">http:\/\/bangordailynews.com\/2014\/03\/07\/business\/l-l-bean-posts-record-profits-plans-biggest-expansion-in-company-history\/<\/a><\/p>\n<p><a href=\"https:\/\/www.llbean.com\/customerService\/aboutLLBean\/images\/FactSheet_2015.pdf\">https:\/\/www.llbean.com\/customerService\/aboutLLBean\/images\/FactSheet_2015.pdf<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What happens when IDEO Design Thinking meets a Vertically Integrated Supply Chain meets a No-Holds-Barred Customer Satisfaction Policy?  Simple.  Meet L.L. Bean.<\/p>\n","protected":false},"author":940,"featured_media":1824,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-1808","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>L.L. 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