Learning From History - Leon Gorman on L.L. Bean

Leon Gorman led L.L. Bean from $2.25 million to $1.2 billion from 1967 to 2001. In a keynote speech in Boston several years ago, he recalled the life of his grandfather, Leon Leonwood Bean, who founded the renowned outdoor gear and apparel company. Gorman believes that the company has prospered in large part because it has maintained its values, perhaps epitomized by the tenet "Treat people with respect, or they will not respect you."

Gorman has written about the company and its growth in the last half-century in L.L. Bean: The Making of an American Icon. This is one of the industry's great books. It painstakingly charts the changes in marketing and merchandising that achieved these dramatic results over 38 years. The book discusses the synergy and the necessary tension between marketing and merchandising. The role that supply chain strategies, including call center, plays in providing exemplary customer service. Staying true to the principles established by his grandfather L.L., sourcing the best outdoor products at the right price, how the college and preppy trends accelerated L.L. Bean's growth, trying to sell to women shoppers without getting caught up in fashion trends, providing a 100%, no-quibble guarantee (there are legendary stories about shoppers returning outdoor gear after extensive wear). It is the ultimate in customer service and kept customers coming back. Bean's huge retail presence in Freeport, ME and the slow charting of retail growth outside the region. Gorman talks about how different these channels are for them.

I met Leon Gorman in the mid-1970s. Mr. Gorman was friends with Mr. Frank O'Reilly, the then president of Brooks Brothers. In a very forward-thinking strategy, Mr. O'Reilly launched the first Brooks Brothers' catalog when BB had less than 20 stores. At that time I worked for Garfinckels, Brooks Brothers, Miller & Roads, Inc., in the corporate data center as the manager of research and development (systems and programming). Our team was invited to Freeport, ME for a week to explore all the aspects of order management software and customer service. Mr. Al Schmidt was in charge of the marketing at that time. Mr. Gorman and his team couldn't have been more gracious and thorough in educating us on the basics. Back then there were no commercially available order management systems. I vividly remember Mr. Gorman walking us through how he guided the selection of product and worked with creative to paginate the catalogs, and his concern for developing new products. We designed and programmed our 370 mainframe system by emulating L.L. Bean.

In the book, Mr. Gorman continually talks about the top guy being thoroughly involved with the merchandising of a direct company, something which is obviously very difficult to do given this rate of growth. Without continual product research and development and sourcing, retail and direct businesses are essentially out of business.

What's interesting about the way the book is written is that many people were interviewed, current and former L.L. Bean managers across the company and consultants as far back as Stanley Fenvessy. Mr. Gorman has his commentary and the other participants give their viewpoints (they are identified by name and position). This illustrates the contrasting viewpoints of various people who charted and achieved the company's long-term growth. But one thing for sure, Leon Gorman was ultimately in charge, and he held himself and the company accountable to achieving the best results for all stakeholders.

This is a great read. Get your team reading it now. Especially for young managers it's a great way to see how all the functions fit together.

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Curt Barry is president of F. Curtis Barry & Company, a national consultancy focusing on warehouse, systems, and inventory management.
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Now You Have Access to Your Data, Now What Do You Do With It?

I recently read a study by the Aberdeen Group regarding how users of BI, KPI and dashboard application benefit compared to their counterparts.  This study validated several of the aspects that we have seen and gave us some new insight as well.  I have added some summary points from the report, however the full document can be downloaded from their website.  However there is one critical point missing from the study.  But first, here are the excerpts from the impressive Aberdeen study - Executive Dashboards: The Key To Unlocking Double Digit Profit Growth.

Best-in-Class Performance

Aberdeen used three key performance criteria to distinguish Best-in-Class companies.  That performance relative to their peers was as follows:

  • A 24% average year-over-year increase in operating profit, compared with a 3% increase for the Industry Average and a 27% decrease for Laggards

  • An 8.3% average year-over-year improvement in customer service, compared with a 2.3% improvement for the Industry Average and a 1.0% increase for Laggards

  • An 8.4% average year-over-year improvement in sales performance, compared with a 2.3% improvement for the Industry Average and a 0.6% decline for Laggards.


Competitive Maturity Assessment

Survey results show that the firms enjoying Best-in-Class performance are:

  • 2.8-times more likely than Laggards to have clearly defined business unit performance metrics

  • 1.7-times more likely than the Industry Average to have a process for prioritizing data for user access

  • 60% more likely than all other companies to leverage performance reporting dashboards


Required Actions

In addition to the specific recommendations in Chapter Three if this report, to achieve Best-in-Class performance, companies must:

  • Create a training program to educate end-users on dashboards

  • Develop the ability to track the utilization of dashboard tools

  • Examine the use of outward-facing customer dashboards


The key to unlocking double digit profit to us is the missing piece from the study and one of the most critical in order for companies to recognize the benefits listed above.  So what's missing - it's what to do with the all the data, metrics and results.  Corporate dashboards, KPI's and BI tools can tell you so much about your business, but if you don't know what to do with the data or how to develop a strategy to improve the business, then you can never benefit from the investment.

The difficulty is that many of these software vendors are very good at developing best in class software but traditionally fall short in being able to assist companies with how to analyze the results, understand what the numbers are saying, and in assisting you with what to do next.

This is a significant reason why we decided to partner with Taurus Software - it's about bringing together not only best in class dashboard, KPI's and business intelligence but also to deliver world class consulting to assist you with not only how to utilize the application but what to do with the results.  This unique approach we feel will benefit each implementation and allow companies to maximize the investment and realize all the benefits.

We encourage you to register and read the full Aberdeen Study http://www.aberdeen.com

Brian Barry is a Senior Consultant with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.

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10 Principles to Sound Business Intelligence and KPI Application Development

Companies these days are looking for every advantage to compete in this economy, and more and more are turning towards unlocking the secrets hidden in all their data.  With so many different applications and databases used in multi channel businesses these days, the task can seem daunting.  Developing sophisticated KPI and business intelligence applications are not always easy or fast, but these principles should help lay the ground work.

1.        Agree to a single version of the truth.  Executives should convey the strategies and objectives to top level managers and then agree on what will be measured and how it will be measured.  Agree to this and agree to the exact data and calculations so that once implemented, there is a single version of the truth that everyone is working from.

2.       Start with the areas that provide the low hanging fruit.  By starting in a single area of the business you can develop an application that will provide a high ROI without spending years developing an application without recognizing any of the benefits.

3.       The application must be user friendly.  This seems overly obvious, but you must remember that executives are typically not user of the various transactional systems - you need to bring them back in to the fold with regards to the data.  Develop quick snapshots and visual representations for the KPI's and measurements so that executives can quickly see the status or health of the business.  Develop drill down capabilities and pivot tables for managers so that they can learn even more when things go awry.

4.       Develop KPI alerts and notifications for when problems arise.  Stronger applications allow for highlighting or spotlighting problems in the KPI's and pivot tables, as well as notifications via emails etc. that can be sent to assigned people or a group of people.

5.       For each of the metrics and KPI's be sure that you can set a goal or a standard so the actual performance can be measured against these.  For instance, if you are not achieving your inventory turns goal you would be notified of the problems.  In the warehouse if your total throughput falls below a user defined variance you would be alerted to a potential problem.  By measuring actual against goals and standards your company will know where to improve processes.

6.       Be sure to include your plans.  You have plans in multiple systems, maybe your order management system, inventory systems, spreadsheets etc.  And you have them for multiple areas - inventory plans, merchandising plans, sales plans, and financial plans.  Be sure to bring all of these in to the application so that you can measure plan to actual.  The same is true with budgets - all of this will make the financial analysis of your business intelligence application more intuitive as well as the other areas.

7.       Agree on the source data.  Critical pieces of data can be found in numerous systems and in multiples places within the same system.  For example, the retail price for an item and its gross sales can often be found multiples times in multiple locations within most order management systems.  Once you have agreed on what will be measured and how it will be calculated, agree to which source application is best to multiple the required data from.

8.       Develop personal pages.  Instead of forcing executives and users to wade through dozens of screens or modules to see the full health of the business, allow them to pick and choose what metrics are important to them and create a personal page with those metrics on them.  For instance, a vice president who overseas both the call center and fulfillment center may only want to see 3-4 metrics from each area at a high level, allow them to create their own page and change it as necessary.  They should still have access to the full blown application with drill down capabilities if they want to know more.

9.       Include all functional areas of the business.  The long term goal should be to develop an application that supports all areas of the business, from merchandising to finance and from the call center to the warehouse.  All areas can benefit from a business intelligence application and KPI measurement.   In doing this, all levels of management will be able to see the overall health of the business and all are on board with the goals and objectives of the management team.

10.    Begin today, these types of applications can have a huge ROI if done right but they do take resources, time and capital to complete.  The longer you wait the longer it could be before you realize what secrets are locked in your data.

Brian Barry is a Senior Consultant with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.
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