L.L. Bean, Inc Case Summary

L.L. Bean, Inc.

L.L. Bean was a major catalogue manufacturer and retailer in the outdoor sporting specialty field. It was established in 1912 by Leon Leonwood Bean. Their golden rule was: "Sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more". They had six million active customers, and by 1991, twenty-two different catalogues were mailed. 80% of all their orders came in by telephone. 

They mainly reached the client using direct marketing using catalogues. This marketing approach had been successful because they captured demand by sending catalogues to their current and potential customers. They have different catalogues that are sent based on the classification of the customer. A regular buyer would get a full catalogue, ranging from 116 to 152 pages. While a potential customer would get sent a smaller prospect catalogue. In addition there would be some overlap in the circulation due to some specialty catalogues containing items that are also in the full catalogue.

 In the catalogue business, it is difficult to try to match demand and supply. About 6000 items appeared in each catalogue. Demand at the item level is hard to predict because it is affected not only by competition, the economy, weather, but also by customer behaviour. Basically, LL Bean people forecasted using rules of thumb. Product people with buyers for each demand centre meet together and after discussion and arguments, they developed preliminary item forecast by catalogue. 

LL Bean placed the most domestic orders to vendors some time before the delivery of the items. This time depend on the production lead time of the vendors which was eight to twelve weeks. These times were important for LL Bean because after observing some early-season demand, they could place a second order to vendors in order to meet late-season demand. 

L.L. Bean uses several different calculations in order to determine the number of units of a...