7-11 Japan Case Study

SEVEN ELEVEN

JAPAN CO

Founded by Masatoshi Ito, post world war ll By 1960 the single store had grown into a $3 million Co. In 1961 realized that superstores were the wave of the

future In 1972 approached the Southland corporation about the

possibility of opening 7eleven convenience store In 1974 first 7eleven convenience store opened in Tokyo

COMPANY OVERVIEW

MissionAt 7-Eleven, we are on a mission to make life a little easier for our guests.VisionOur Vision Is to Be the Best Retailer of Convenience.

MISSION AND VISION

AROUND THE WORLD

FOOD ITEMS CLASSIFICATION

FOO

D IT

EMS

CLAS

SIFI

CATI

ON Chilled Temp Sandwiches, Sweets,

milk

Warm Temp Lunch Box, Rice Balls, Fresh Bread

Frozen Temp ice-cream, ice-cube etc

Room Temp Canned food, instant noodles

MORE FOOD ITEMS

• Fresh food

Sandwich Salad Fruits

Of the Shelf

Candy Chips Snacks Frozen

PRODUCT AND SERVICES

Beverages

• Big gulp is a soft drink that is produced by Coca-Cola

• Slurpee is known to be contemporary, cool and fun. The colorful chilled beverage is strongly associated with lightly carbonated fruit flavors.

Play

Electronics Gaming Movie Rent

PRODUCT AND SERVICES

Services

• Photocopy

• Fax

• Mobile reloads

• Internet Games reloads

• ATM; AmBank ATMs are at selected 7-Eleven stores nationwide.

Equipped with MEPS more banking facilities to come.

Prepaid DebitCards Play,Gift,Music Cards

NUMBER OF STORES

SALES

What made them so successful????

OBVIOUSLY THEIR SCM!!!!

To provide high-availability of a variety of reasonable quality products at reasonable price. Cluster of stores (50-60) in small geographical area supported by a Distribution Centre (DC) Commitment to customers and friendly service. Greater familiarity with customers . Outsourcing policy and ability to manage suppliers relationship. First mover advantage Customer checkout process . Clerk records the customer’s gender, (estimated) age and

purchased items. These Point of Sales (POS) data are transmitted to database at the headquarters.

Daily use of the data Headquarters aggregate the data by region, products and time and pass to suppliers and

stores by next morning. Store managers deduce trend information. Preventing entry by competitors. Combination of Own and Franchisee Stores. gross profits shares (45% SEJ; 55% store)

SUPPLY CHAIN MANAGEMENT

STRATEGY APPROACH

High Distribution EfficiencyBrand Awareness System efficiency Franchisee Support ServicesAdvertising effectivenessEntry barrier for competitors

Market Dominance

SCHEMATIC VIEW OF SUPPLY CHAIN

Supplier(Frozen)

Supplier(Warm)

Supplier(RoomTemp)

Supplier(Cold)

Stores Stores Stores Stores

Stores Stores Stores Stores

DistributionCentre

ASSIGNMENT QUESTIONS

Q.1 A convenience store chain can be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenient store supply chain can be responsive? What are some risks in each case?

Responsiveness

Rapid Replenishment

Increase Inventory

Increase Capacity

ASSIGNMENT QUESTIONSQ.2 Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What are some risks associated its supply choice?

High

Transportation Cost

Excess Inventory

Rapid Replenishment

ASSIGNMENT QUESTIONSQ.3 What has Seven-Eleven done in its choice of facility location, inventory management, transportation and information infrastructure to develop capabilities that support its supply chain strategy in Japan?

• Seven-Eleven places its stores in “clusters” that are supported by a single distribution center.Facility

• POS Register• Deliveries to match demand by time of day

Inventory Management

• Clustering Stores And Distribution centers• Combines Delivery Service

Transportation And Distribution

• ISDN System• Scanner TerminalsInformation

ASSIGNMENT QUESTIONSQ.4 7eleven does not allow direct store delivery in Japan but has all products flow through its distribution center. What benefit does 7eleven derive from this policy? When is direct store delivery more appropriate?

Distribution Centers

Flexibility

Coordination

Low Managing Relationships

Responsiveness

ASSIGNMENT QUESTIONSQ.5 What do you think about the 7dream concept for 7eleven Japan? From a supply chain perspective, is it likely to be more successful in Japan or the United States? Why?

E-Commerce CompanyOffer Online Purchase

Payments

Popular In Japan Because Of Higher Density Of Convenience Stores

In US people prefer to receive online purchases

at their homes

7dream.com

ASSIGNMENT QUESTIONSQ.6 7eleven is attempting to duplicate the supply chain structure that has succeeded in Japan in the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that stores are also replenished by wholesalers and DSD by manufacturers.

Consolidation of deliveries

Cost effectiveness

Match customer demand with high responsiveness

Lower efficiency than in Japan

Wholesaler prefer traditional DSD method in USA

ASSIGNMENT QUESTIONSQ.7 The United States has food service distribution that also replenish convenience stores. What are the pros and cons to having a distributor replenish convenience stores versus a company like 7eleven managing its own distribution function?

They don’t have to invest in DCs or trucks to perform this task

May be cost effective

Lack of control on replenishment cycle

Low responsive

Number of relation increases