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    Seven-Eleven Japan Co

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    Rohan Raj Mishra
    This presentation discusses the supply chain drivers and associated trade-offs for each. The case has been picked up from Pearson's SCM book authored by Peter Meindl and Sunil Chopra

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    Seven-Eleven Japan Co

    Uploaded by

    Rohan Raj Mishra
    2K views28 pages
    This presentation discusses the supply chain drivers and associated trade-offs for each. The case has been picked up from Pearson's SCM book authored by Peter Meindl and Sunil Chopra

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    © Attribution Non-Commercial (BY-NC)

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    This presentation discusses the supply chain drivers and associated trade-offs for each. The case has been picked up from Pearson's SCM book authored by Peter Meindl and Sunil Chopra

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views28 pages

    Seven-Eleven Japan Co

    Uploaded by

    Rohan Raj Mishra
    This presentation discusses the supply chain drivers and associated trade-offs for each. The case has been picked up from Pearson's SCM book authored by Peter Meindl and Sunil Chopra

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 28

    Supply Chain Drivers

    Analysis for

    Seven-Eleven Japan Co.


    Rohan Raj Mishra
    IIFM
    Outline
    • History & Profile
    • Strategy & Tactic of Seven Eleven
    • Food Items Classification
    • Convenience at the Store
    • Schematic Representation of the
    Supply Chain
    • Supply Chain Framework
    • Supply Chain Drivers Analysis
    • Case Questions Discussion
    •
    History and Profile
    • Founded by Masatoshi Ito post 2nd World War.
    • By 1960, the single store had grown into a $3
    million company.
    • In 1961, realized that superstores were the wave
    of the future.
    • In 1972, approached Southland Corporation .
    • In 1973, Southland agreed to a licensing
    agreement.
    • In 1974, first 7-11 convenience store opened in
    Tokyo.
    • In 1990, Southland Corporation entered into
    bankruptcy protection.
    • In 1991, IYG acquired 70% of Southland’s
    common stock.
    Number of Stores of
    Seven-Eleven in Japan
    Annual Sales in Billion Yen of
    Seven-Eleven in Japan
    So how did 7-eleven
    manage such phenomenal
    growth?
    7-Eleven Japan’s Competitive
    Strategy
    • To provide high-availability of a
    variety of reasonable quality
    products at reasonable prices
    Strategy & Tactic of Seven
    Eleven
    • Strategy of 7-Eleven Japan
    – Market Dominance
    – Cluster of stores (50-60) in small
    geographical area supported by a
    Distribution Centre (DC)
    • Tactic
    – Combination of Own and Franchisee
    Stores
    – In 2004 Franchisee Commissions
    accounted for 68% of Total revenue
    from operations
    – By 2004, the company had presence in
    70 prefectures of Japan
    Continued
    • Advantage of Dominance Strategy
    – High Distribution Efficiency
    – Brand Awareness
    – System efficiency
    – Franchisee Support Services
    – Advertising effectiveness
    – Entry barrier for competitors
    Continued
    • Store Size was 150 square metres
    • Average inventory at store of 3000
    Stock Keeping Units (SKU), with max
    capacity of 5000 SKUs
    • Emphasis on regional merchandizing
    • Goods included:
    – Food Items
    – Beverages
    – Magazines
    – Soaps, Detergents etc.
    – Game, Software
    Food Items Classification
    • Chilled temp item.
    – Sandwiches, sweets, milk
    • Warm temp item.
    – Box lunch, rice balls, fresh bread
    • Frozen item
    – Ice cream, Ice cube etc.
    • Room temp item
    – Canned food, Instant noodles etc.
    Convenience at the Store
    • Payment of Bills
    – Electricity
    – Telephone
    – Gas
    – Insurance Premium
    • Accepting Installments on behalf of credit
    companies
    • Payment for internet shopping
    • ATMs at almost all the stores
    • Meal Delivery service for aging population of
    Japan
    • Ticket Sales, Photocopying
    • Pick up location for parcel delivery.
    • 7dream e-commerce
    • etc.
    Schematic Representation of
    Supply Chain
    Supplier Supplier Supplier Supplier
    (frozen) (Warm) (Room Temp.) (Cold)

    DC

    Stores Stores Stores Stores


    50-60
    stores
    Stores Stores Stores Stores
    Supply Chain Drivers
    Analysis
    Supply Chain Decision-Making
    Framework
    Competitive Strategy

    Supply Chain
    Strategy
    Efficiency Responsiveness
    Supply chain structure

    Logistical Drivers

    Facilities Inventory Transportation

    Information Sourcing Pricing

    Cross Functional Drivers


    Facility
    • Facilities were at 2 levels
    – Distribution Centres (DCs)
    – Stores
    • DCs
    – less in number
    – held no inventory,
    – served stores in its cluster
    – Increased Efficiency as opposed to
    Responsiveness
    • Stores
    – More in number
    – kept inventory on shelf
    – Located in abundance and dominated the
    market
    – Were more responsive than efficient
    Inventory
    • @ DC
    – No inventory
    – Highly efficient
    – Poor at responsiveness
    • @ Stores
    – Kept Daily Stocks
    – Low Inventory
    – Were efficient but not very responsive
    Transportation
    • Transportation was at two levels
    – Vendor to DC (Vendor delivered)
    – DC to Store (Seven-Eleven delivered)
    • Transportation Network Design
    – Each truck would be stocked at the DC
    – One truck would deliver supplies to more
    than one store.
    • Mode of transportation
    – Road (Vans &Trucks were used)
    • Rapid replenishment cycles
    • High Frequency
    • Provided High responsiveness as opposed to
    efficiency
    Information
    • Information System Components
    – Graphical Order Terminal (GOT) @ Stores
    – Scanner Terminals (ST) for inventory
    checking
    – Store computer
    • Processed information from GOT , ST & POS
    • Was connected to the network
    • Tracked inventory levels, placed orders,
    maintained store equipment etc.
    – POS register
    • Information about sale, customer details like
    age, sex, item of sale etc.
    – Data was relayed to Suppliers, Distribution
    Centres and the Headquarters
    automatically.
    – Increased both efficiency and
    Sourcing
    • Outsourced transportation
    – From DC to Stores to Transfleet Ltd.
    • Risk of Fuel Price Fluctuation, Fleet
    Maintenance and Cost of Fleet staff
    was transferred.
    • The company increased profits and
    reduced risk.
    Pricing
    • Seven-Eleven offered reasonably
    priced products.
    • Their market dominance allowed
    ease of access to the customers.
    • Both these factors led to stable
    demand
    • Thus, such pricing decision increased
    the efficiency of the supply chain.
    US Market
    • Existing system
    – Store replenishment through Direct
    Store Delivery from Manufacturers
    – Remaining products delivered by
    Wholesalers
    • Introducing Combined Distribution
    Centre concept
    – 23 CDCs across North America
    – Supported 80% of Store Network
    • Introducing Fresh Foods like in Japan
    –
    Q1
    • Different Approaches for Increasing
    responsiveness
    – Local Capacity
    – Local Inventory
    – Rapid Replinishment
    Q2
    • Risks associated with attempting to
    micro-match Supply & Demand
    – High Cost of Transportation
    – High Order Costs
    Q3
    • Supply Chain Drivers have already
    been discussed
    Q4
    • Benefits of DCs
    – Reduces complexity at store level
    – Organizes Store demand at DC
    – Reduces complexity and costs for
    Vendors to directly deliver at the
    stores
    • When Direct Store Delivery?
    – Variety of products is less
    – Order size is more
    – Delivery Destinations are few.
    Q5
    • 7dream.com- an e-commerce initiative
    • In 2004
    • Country No. of Stores
    • Japan 10615
    US 5798
    •
    • Area of USA is more than 26 times that
    of Japan
    • 7dream concept would be more
    successful in Japan
    Thank You

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