Ll Bean Case Essay

L.L.Bean is the industry leader in providing to its customers, outdoor equipment and apparel. With growing competition and a stagnant economy, the company must continually work to maintain sales, profits, and customer loyalty. L.L.Bean does this by focusing on the competitive forces prevailing throughout the business environment. These forces include new market entreats, the power of the buyer and the supplier, the growing threat of substitute products, and their competition.

A supply chain solution to ordering would be to invest in purchasing software set up on a network for KFF management and store managers to access at anytime. This software would allow all stores to place orders cohesively. Each store manager can see how much product is being sold in each store and compare sales. If there is an overstock in one store, managers can move inventory to another store by looking at the data on the network. Kathy can implement a Just-in-Time (JIT) system. This is the concept behind creating the firm 's product in the least amount of time (Gomez-Mejia & Balkin, 2002). Kathy and the management team will develop a smooth and integrated production process. Possibly in the future KFF can use the same type of JIT inventory systems as Wal-Mart. The inventory reorders are generated as products are scanned at check out. As soon as an items hits a certain number in stock, the information is sent to the supplier for reorder

Bean is an application of a probability distribution based on prior year demand errors. The errors are applied to each item, both “never out” and “new” items for the current catalog. There is no consideration of the impact of applying this distribution is calculated with prior year “new” item data and applying it to current year “new” items, should be a major issue of concern for management. The demand forecast method should be able to help control inventory levels, Stuart Dunkin (2013) states, “An inventory replenishment system that is based on a demand forecast (demand driven) can reduce the risk of lost sales while improving service.” L.L. Bean’s current inventory control does not control the risk of lost sales, Rol Fessenden, L.L. Bean’s Manager of Inventory Systems, recognizes the current difficulty they have with predicting customer demand, and that the high demand items they are unable to get more inventory for, “. . . leave us just turning customers away” (Schleifer,

• There is a grey area in the case to know how LL Bean really assesses the number of actual for products generating a demand higher than the forecast. An overestimation of lost sales can create a bias loop since it will impact the next year order commitment by generating mechanically higher commitment orders. As per the mean (8% above 1) and the distribution that is skewed to the left, it could be inferred that there is a systematic overestimation of lost sales which may explain that there are not different common pattern across items and buyers.

It takes a smaller amount of time for the inventory to turnover which is great!

Over two centuries, the Fries family of northern Kentucky and southern Ohio built a dynasty of sorts in the flavor industry. Alex Fries, a German immigrant with a background in chemistry, settled in Cincinnati during the early nineteenth century and a few years later established a flavor company. Throughout the nineteenth and twentieth centuries, Fries and his descendants owned, operated, or oversaw several flavor companies, the last of which was F&C International. In the early 1990s, F & C’s chief executive, Jon Fries, orchestrated a large-scale financial fraud that proved the undoing of the company and the family’s proud history

The Just-in-Time Distribution was created to solve many difficulties that Barilla and their customers were facing. Barilla increasingly felt the effects of fluctuating demand. Orders for Barilla dry products often swung widely from week to week. With this demand variability, it strained Barilla’s manufacturing and logistics operations. Even though JITD was created to solve the problems they were having, many stakeholders did not agree with the program. Some manufacturing and logistics personnel would rather ask distributors or retailers to carry additional inventory to reduce the fluctuation in distributors’ orders even though with their current inventory levels, many distributors’ service levels to the retailers were unacceptable. Others

One of CanGo’s major strengths is that roughly 80 percent of their sales come from Just-In-Time (JIT) inventory (“Financial Information,” n.d.). Having such a high percentage of their sales coming from JIT inventory allows CanGo to keep their overhead expenses low while still ensuring their products are still available. One of the ways that this lowers their overhead is by reducing the warehouse space needed. Since most of the inventory arrives just in time to be shipped, there is no need to have a place to store it. Keeping their JIT inventory at roughly 80 percent also helps CanGo to serve their customers faster and more efficiently by giving them more control over the manufacturing process. This control makes it easier to quickly respond to any changes in the customer’s needs (Conrad, n.d.).

With the process being shortened, what is in demand can be procured in less time and sold to the customers that demand it.

• Eliminate costs related to additional buyers that will not be needed in a more production centered operation

The manufacturing cost can be lower as the rearrangement of the production line to meet urgent order can be minimize or even eliminated.

Expedite order processing speed, improve order processing quality and reduce the cost of order processing.

In this new economic climate were every company and organization is looking for ways to save money and to improve on their bottom line. Companies and organizations are looking at the companies for the top to the bottom and the companies and organizations that are in the manufacturing world are looking at how to be more efficient in using their dollars wiser and more productive. Since the manufacturing arena is a customer based service they have been trying to make their service more customer facing and more customer friendly. In that they are finding was to not make items or products and hoping that the customer will accept what they have already manufactured but are going to a more customer friendly we will make it to your order. This has intern given the customer a product that is made to their order and it has given the organizations less inventory on hand which in turn cuts their cost through storage and warehousing the items. This process gives the manufacture the ability to make the item or product and ship it straight to the customer thus cutting down on holding and warehousing a product until some customer wants instead it is out the door as soon as it is made. This process has been name the as the “ Just In Time” Process (Songini, 2000).

Management should always know how much inventory they have so that they know how much they can promise (Ware & Fogarty, 1990). Realco has over promised for the first three weeks, but having the extra inventory and current production levels the orders can still be filled. In my opinion, I believe that the Realco Organization should update their forecasting. An organization can only make a certain amount of items each day whereas, the forecasting of promised shipments could be easily adjusted.

To allow replenishment orders to be processed more quickly and cheaply, automatically stocking product more closely to consumer demand.