The phone rings in Freeport, Maine. A lot.
In 1996, for example, it rang 14 million times. In one particularly busy week, it rang more than 1 million times. On average it rings 50,000 times each day.
And one day last year — December 9, to be precise — it rang 179,112 times.
Why does the phone ring so much in Freeport? Because Freeport is home to $1.2 billion L.L. Bean, the nation’s largest outdoor catalog company. Bean’s customer service lines are open 24 hours a day, 365 days a year, and are staffed by as many as 3,100 representatives, who take 80% of the company’s orders over the phone. It’s precisely because the phone rings so often that Bean recently opened its $38 million Order Fulfillment Center (OFC) with the kind of hoopla that other retailers generally reserve for the dedication of a flagship department store or the ribbon-cutting at an uptown boutique.
To most people, logistics is boring and order fulfillment is dull. At L.L. Bean, logistics and order fulfillment are the heart of the business. What looks to the uninitiated like a gigantic 650,000-square-foot warehouse with three-and-a-half miles of conveyor belts, storage for 4 million items, 25 shipping docks, and a built-in Federal Express distribution system, is, to the catalog cognoscenti, a critical source of competitive advantage — combining unsurpassed customer service, increased productivity, enhanced flexibility, and improved quality-of-worklife for Bean employees.
The facility that L.L. Bean built after two-and-a-half years of global benchmarking, environmentally-sensitive design, and don’t-spill-a-drop implementation is not just a world-class order-fulfillment center; it is also an authentic Bean original, as true to the company’s values and way of doing business as the rugged, reliable, and down-to-earth clothes and outdoor gear it prides itself on. Combining cutting-edge technology and team-based work practices, the OFC is a working model of a sociotechnical system, where the design of the work supports the community of workers. Says Lou Zambello, Bean’s senior vice president for operations, “The technology here is very simple. The innovative part is adapting it to create a new sociotechnical norm in the new facility. What we did before was like individual swimming in a relay race. Now we do synchronized swimming.”
Inside the office the world belongs to pickers and packers – the Bean employees who, with typical Maine directness, do pretty much what their job titles say they do: the pickers pick the goods off the shelves; the packers take the picked goods and pack them to be sent to customers.
The distribution system, which flourished over decades as Bean grew, is straightforward if not simple; Bean had gotten so good at it that throughout the 1980s and 1990s, the old distribution center was a mandatory stop on most corporate benchmarking tours: Nike, Disney, Gillette, Chrysler all checked out the Bean fulfillment system; the New York Times classified section studied Bean’s approach to customer service.
The old system operated on a batch basis. Orders would come into Bean’s telephone operators, who would enter them into the computer. The computer would issue the orders as a batch every 12 hours, forwarding them to the OFC. Pickers would pull carts, or “pick trucks,” from bin to bin, assembling an entire order and stowing each order in a cubicle or slot in the truck. The pick trucks could handle only 25 orders; once they were filled the pickers would deliver the completed orders to packers who would wrap each order for delivery.
The system worked — up to a point. But skyrocketing volume (Bean shipped 12 million packages in 1996), increasing speed (150,000 orders arrive per day in peak season), growing variety (including monogramming, embroidery, and tailoring), and emerging global complexity (Bean’s $210 million-plus in international orders come from 150 different countries), stretched the batch system to the breaking point. The 15-year-old facility was increasingly more costly to operate, required Bean to hire surges of inexperienced temps at peak season, and even created limits to what Bean could sell to its customers. “We had to go to our marketing division and say that without a new facility we simply could not handle any new product offerings,” says Jim Helming, senior manager of operations. “Our product line expanded to the point where we could no longer accommodate all of the products. We literally had people tripping over one another.”
So in the summer of 1994 Bean established Distribution Center ’96 to reinvent the company’s distribution and order-fulfillment operation. The project involved hundreds of Bean employees who participated on core teams, each of which conducted task-specific research on different parts of the operation. Another team traveled to Europe to benchmark the leading order-fulfillment operations; in particular, Bean focused on German and Scandinavian companies that use advanced technology and are still able to comply with stringent European labor laws — companies that fit technology to the needs of their people. Once the team members had identified best practices, Bean built mock-ups of the new pick truck and packing stations so that pickers and packers could practice and critique the new operation.
The system that Bean built ultimately took the old operation apart and put it back together in a completely new way. Bean replaced the batch method with Wave Pick Technology: rather than hold orders for 12 hours, the computer now forwards them straight to the OFC, where team leaders track the facility’s level of activity on computer monitors and decide which employees can handle the new work load. The new system breaks each order into its component parts — a pair of pajamas, a backpack, a chamois shirt, a fishing rod — and assigns different parts to different pickers, with each picker working in a distinct area of the OFC. Pickers place each item on a conveyor belt; bar code scanners automatically sort orders and off-load the merchandise to packing stations — allowing for greater flexibility and productivity. A FedEx station built into the OFC has helped Bean approach its goal of turning around 100% of its orders within 24 hours — a monumental improvement from five years ago, when customers routinely received their orders within two weeks. Today it’s likely that only 2 hours elapse between an order coming in over the phone to the time it’s ready for FedEx to deliver it.