Tag: LL bean

OM in the News: Reverse Logistics Takes Over Now that the Shopping is Done

The holiday season brings a series of challenges to the supply chain industry — especially as e-commerce continues to grow. Companies have to efficiently ensure that customers’ packages will arrive in a timely matter, putting added stress on the warehouse and transportation sector. But the peak season doesn’t end once the holidays are over. In fact, reverse logistics makes the busy season last even longer as more people return unwanted holiday gifts. Here are 3 observations from Supply & Demand Chain Executive (Jan, 11, 2019):

1. Delivering hassle-free returns is critical to retaining customers, and consumers are looking to shop with brands that quickly provide refunds. Retailers must leverage tracking for returns and offer progress reports on the transaction, which requires an efficient supply chain.

2. Overly consumer friendly return policies encourage a costly rate of returns.  L.L. Bean ended its lifetime return policy this year because it led to “abusive” returns, costing the company $250 million in losses over the last 5 years. When particular items are consistently being sent back, inaccurate product descriptions or sizing can overburden reverse networks. While the push to use less packaging materials can reduce a company’s carbon footprint and costs, a delicate balance must also be achieved. If packaging fails to adequately protect merchandise during transit, it is more likely to arrive damaged, prompting items to be returned more frequently.

3. Some retailers are leveraging dedicated reverse networks to handle returns, grading out products to be entered back either into regular sales or second channel distribution. Designing facilities specifically for reverse logistics allows companies to process returns more efficiently and effectively.

A strategically designed reverse network allows retailers to shrink the time frame from the start of the return to when a customer receives a refund. Organizations that empower their brick-and-mortar stores to process online returns can reduce the stress of returns for customers and decrease the amount of time returned merchandise is in the reverse chain.

Classroom discussion questions:

  1. Why is reverse logistics important?
  2. Define a “closed loop supply chain.” (See Ch.11)

OM in the News: The Economics of L.L. Bean’s Boots

In Brunswick, L.L. Bean operates a 170,000-square-foot factory where the boot is assembled from start to finish.
In Brunswick, L.L. Bean operates a 170,000-square-foot factory where the boot is assembled from start to finish.

For over a hundred years, the company Leon Leonwood Bean founded has been making rubber boots and outdoor clothes in Maine. “L.L. Bean’s offerings have traditionally not been synonymous with cool,” writes The Atlantic (Oct. 19, 2015). But then something happened in 2011: The outdoorsy aesthetic that L.L. Bean had been selling for 100 years became trendy. That’s when the duck-boot shortage first began, and “Bean Boot heartbreak” spread as countless consumers found that retailers didn’t have what they wanted. The answer to why the signature Bean Boot has sold out every year since 2011 lies in the decisions the company has made that are different than other American manufacturers in the past few decades.

The rubber bottom of the Bean Boot is made by a machine, but after that it’s handmade by 200 people who split their time between 3 shifts. All in all, making the boot takes about 85 minutes worth of labor. Bean describes it as “a mix of old and new technology.” While the boots aren’t made exactly as they used to be, the assembly process and sewing are all done by hand.

There are two main reasons, then, the Bean Boot can’t keep up with demand. The first is the company’s decision to keep making the boot in Maine, rather than exporting operations out to China, where the majority of shoes sold to Americans are made. Fifty years ago, 98% of shoes for Americans were made in the U.S. Now, China makes 12.5 billion pairs of shoes–about 90% of shoes made worldwide. To preserve its brand, L.L. Bean keeps operations local, which lets sourcing for leather and steel remain local. The second reason that the boot keeps selling out is that it’s not as easy to find shoe makers here as it used to be when Maine was the epicenter of the U.S. shoe industry. So scaling up has become more difficult than in the past, when L.L. Bean could simply find workers in the area.

Classroom discussion questions:

  1. Why did L.L. Bean stay in Maine?
  2. Describe the process of making the Bean Boot.