L L Beans Customer Service - Case Study Example

? LL Bean Case Study inserts his/her s The paper discusses the high priority requirements for L.L Bean along with the modes of measurement for each. A thorough analysis is then made to quantify the target values for each measurement. Finally, an attempt is made to highlight any further information that is required in order to assess the customer requirements and their measurement. The insights offered by the paper could serve as the basis for further research regarding the supply chain management of L.L Bean and its close association with customer requirements. Also, future research can focus on specific target values based on greater information regarding the actual values prevalent in the measurement procedures of L.L. Bean. Keywords: L.L. Bean; customer requirements; target values; measurement L.L Bean demonstrates a case of a highly customer-centric organization that promises to deliver superior customer service by offering constant customer support and specialty shoes for activities such as hunting. At the crux of L.L Bean’s customer service is its 100% money back guarantee since the company believes in “treating its customers like human beings”. Given the high level of customer service, it is important to analyze the salient customer requirements along with measurement techniques for the same. Finally, target values are being assessed to ensure that the requirements are fulfilled. L. L. Bean’s dedication to superior customer service is reflected in its promise of 100% money back guarantee on all its products at any time. This is combined with the excellent after sales service provided for product returns. Therefore, one of the major customer requirements that L.L Bean is catering to is high quality of the product including the durability and reliability of the product. Furthermore, the company caters to the need of wearing shoes particular for certain situations which has been satisfied by the provision of ‘specialty shoes’, particularly, the Maine hunting shoe that is lightweight and remains dry. Most importantly, however, L.L Bean caters to the customer’s need for ordering without having to visit the store. This is particularly true for customers who may be pressed for time and find it convenient to order via mail through the mail order catalogue. L.L Bean, therefore, offers full catalogues as well as seasonal catalogues for customers interested in knowing the specifications, looks and prices of specialty products as well as their regular line. This is supplemented by the company’s website which offers customers the facility of shopping online without having to visit the retail outlet. The added convenience of having multiple modes of payment further encourages customers to shop online easily. The company also caters to customers’ need to obtain prompt response by providing customer service throughout the year and throughout the day. This also serves the purpose of assisting those customers who may have further queries or desire additional information after reading the mail catalogue. Therefore, assurance is provided to customers. Finally, L.L Bean caters to customers’ requirements of fast delivery and efficient logistics by partnering with third-party logistics which is Federal Express. This is because the company keeps speed as an important order winner as part of its operations management strategy as it knows that slow delivery can lead to customer dissatisfaction. In order to ensure that the final product reaches customers on time, the company’s suppliers must also make timely shipments to the company. Therefore, speed is a crucial customer requirement that the company must cater to. The customer requirement for high quality and durable products can be measured using total quality management and six sigma philosophy. At the simplest level, product quality would be measured using the number of ‘quality’ complaints by customers. As a general rule, the target value must not exceed 3 complaints per month. It must be understood that product quality can be measured using the dimensions of performance, reliability, durability and conformance (Pieplow, 2013) Since specialty products such as hunting boots are being manufactured, they must be designed and tested for their robustness to ensure that they are reliable. This would involve designing the product that survives a broad range of conditions. Testing reliability would involve checking whether the product functions when used for a given period of time (Stevenson, 2010). To this end, a z-test would be used as a measurement tool. The significance level would be 10% and the target values for rejection would be p ? 0.05. Additionally, the House of Quality would be used to ascertain the specific requirements of customers as far as product quality is concerned and then develop target values and evaluation procedures. The inputs for this would be determined through cross-functional coordination of marketing, engineering and manufacturing staff (Hauser & Clausing, 1988). For instance, if the customer desires that the products of L.L Bean, particularly, home furnishings, have high level of reliability and survive for more than 8-10 years the target values of 80% would be used as far as design requirements are concerned. Overall, several measurements could be used to ensure that the product is of high quality. The Six Sigma philosophy could also be used as a measurement of product defects. The target value for Six Sigma is 3.4 defects per million parts (Kelemen, 2003). This would provide rigorous quality control for the high performance products such as hunting shoes as the focus would be on minimizing defects using the features of total quality management. A lean strategy would be required to work in coherence with this strategy as waste would be minimized along with its associated costs (Stevenson, 2010). Acceptance sampling would also be used to determine product quality. An operating characteristic curve would be used to measure the same whereby greater than 3% of defective parts in a lot would be considered as an undesirable region (Stevenson, 2010). The optimum and ideal level of defective products in a lot is 3% which is why efforts would be made to stay at this level. This reinforces the Six Sigma philosophy of 3.4 defects per million parts. Although this is the acceptable quality level, the “percentage of defects that would be acceptable by customers” is targeted at 10%. This rate is also the Lot tolerance percent defective (LTPD). Therefore, the unfavorable region would be any percentage of defects beyond 10% and not 3%. This region is reflective of customer’s risk which reflects the likelihood that customers will accept a lot containing defects beyond the level of LTPD (Stevenson, 2010). As far the customers’ need for lightweight and dry hunting shoes is concerned, L.L Bean could use the House of Quality approach towards measuring it. For the customer requirement of lightweight shoes, a target value of 1.33 would be used for the process capability. Next, L.L. Bean’s strategy of offering ecommerce and mail catalogue to customers can also be measured. The company can measure this strategy by using metrics such as the waiting time. This should not exceed 2 weeks from the time the payment is done online. If this time exceeds 2 weeks then the ‘convenience’ factor would be rendered meaningless. This would require that buffer stock of all items listed online for shopping are constantly maintained at a certain level so that items are mostly in stock. To this end the company should develop a forecasted demand for the season ahead through consultation with all supply chain partners including the sales and production team and customers (Schleifer, 1992). Forecast errors would be calculated for the items and a probability distribution would be drawn. Finally, optimal stock would be determined by calculating the contribution margin of the particular item when it is sold. L.L Bean can measure the responsiveness of customer service using metrics such as the response time for service calls. Currently, the figures available for the number of calls received (which is 15 million) are not sufficient. The response time needs to be measured to check how fast the service personnel are handling customers. Ideally, the response time must not exceed 24 hours via email. As for telephone, the target value is 2 minutes. Measuring speed is important to determine the agility of the supply chain. Considering that untimely delivery by L.L Bean’s suppliers would result in untimely delivery by the company to its customers, the speed of delivery must be looked at from the entire supply chain’s perspective. The need to provide products at the right time can be measured by setting an earliest acceptable date and the latest acceptable date. This is known as the ‘delivery windows’ concept whereby delivery reliability is ensured which is the most important aspect of the delivery process (Guiffrida & Nagi, 2005). For ensuring that the deliveries are on-time and not late, a late order penalty may be imposed by L.L Bean on Federal Express. This is typically a function of the lot size of delivery, the inventory holding cost, penalty cost as well as the lead time (Guiffrida & Nagi, 2005). A penalty of 50% of the cost of the order shall be considered as the target value for the penalty fee. The executives need in-depth information on inventory figures such as the current holding costs, buffer stock and lead times to set internal benchmarks. To further enable benchmarking, competitors’ metrics may also be required in order to set targets in line with those of the industry. In-depth study of the logistics partner used by competitors as well as their logistics strategy of using in-house transportation versus third party logistics will have to be studied to gain insights into success secrets. For accomplishing the company’s mission of offering “fastest delivery”, alternative options such as in-house trucks should be considered. Information would be needed regarding the cost of in-house versus third party logistics. For this purpose, the freight bill of Federal Express must be compared with a feasibility analysis of in-house costs. Furthermore, more information is needed on the current method of production at L.L. Bean as it is unclear whether batch, job or flow production is used. It would be important to consider the use of delayed differentiation as a postponement strategy in order to further drive down costs and deliver value. Such a strategy would enhance in-stock availability of products and ensure flexibility. Additionally, the executives would require information on the current cycle times as well as inventory turnover time to assess how efficient the current inventory management system is. If the systems are already efficient then less stringent measurement controls may be required. Knowledge is also required on the overall corporate strategy of L.L Bean which shall enable the company establish the appropriate strategy for addressing key performance areas as far as customer service is concerned. To conclude, L.L Bean’s customer requirements are centered on speedy delivery, high quality products, 100% money back guarantee, provision of specialty products as well as e-shopping that offers convenience. Various approaches such as total quality management, house of quality and metrics such as response time may be used in this regard. As mentioned, it is important to note that more information is required regarding the current mode of production at L.L Bean along with competitors’ information for the purpose of benchmarking. References Guiffrida, A. L., & Nagi, R. (2005). Cost Characterizations of Supply Chain Delivery Performance. New York: University at Buffalo. Hauser, J. R., & Clausing, D. (1988). The House of Quality. Harvard Business Review, 1-13. Kelemen, M. (2003). Managing Quality. London: Sage Publications. Pieplow, T. (2013). Logistics and Transportation(Custom edition for Athens State University). Mc Graw-Hill. Schleifer, A. (1992). LL Bean Inc: Item Forecasting and Inventory Management. Harvard Business Review, 1-5. Stevenson, W. J. (2010). Operations Management. New York: Mc Graw-Hill. Read More