Mark Cronin
MBA 600 – Production & Operations Management
Final Project Report - June 2, 2003

Supply-Chain Management

Executive Summary – By adopting five new proposed initiatives, the L.L.Bean Factory Store Division can

provide brand appropriate product to customers and it can also improve its in-stock position and

inventory turns while reducing costs in the Supply-Chain and management of corporate

inventory. If we leverage a Special Purchase strategy and negotiate with existing vendors to sell

us all their manufacturing defects of existing L.L.Bean products at an agreed upon reduced rate,

we can provide better costs for the full price products and higher cost recoveries for deleted

merchandise.
Close-outs – Products available through outside vendors to help fill temporary assortment gaps

that are caused by sell-through or discontinued merchandise and second quality return

availability. The Chief Merchandising Officers review all selections to insure brand consistency.

Merchandising for the Factory Store Division is currently managed and organized by

channel. One Merchandiser focuses on the Direct Channels (Mail Order & E-Commerce).

Another Merchandiser focuses on the merchandising and allocation of product to the Factory

Stores and Off-Site Sale Events.

Proposed State - Balance of Sales – Because the size of programs being deleted by the full price

brands is decreasing, we need to budget properly and reduce the number of Mailed

Sale Catalogs and increase the number of Factory Stores and Sale Web Pages. By reducing the

circulated space of sale products available through mail order and increasing the overall amount

of floor space in Factory Stores and product pages on the sale web site, we will shift sales toward

the less expensive sales channels. This shift makes sense since forecasting sales of full price

products has become more accurate. The amount of available deleted product in a given program

needs to be sizable enough to warrant the expense of exposure in a mailed catalog. The

Corporate Strategy this