7 Eleven - Essay

Topics: Supply chain management, Retailing, Convenience store Pages: 12 (4344 words) Published: July 19, 2012
1. A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some of different ways that a convenience store supply chain can be responsive? What are some risks in each case?

Based on the practices of Seven-Eleven Japan, the authors have compiled a few techniques which they believe can reasonably increase the responsiveness of the supply chain, as well as their corresponding risks: * Rapid replenishment of goods

This is a fairly basic approach to responsiveness, but one which must not be underemphasized. The rapid replenishment of goods in the supply chain is key to achieving a flexible selection of products for the customers, since the store is not constrained to bulk orders which they need to finish or dispose of even though the demand for it is no longer strong. This is particularly very important for the nature of convenience stores, since shelf space is vital to them. Convenience stores are not very big as compared to their supermarket counterparts; hence, they cannot carry bulk inventories nor can they afford wasted space. If a convenience store wished to accommodate a wide variety of products which cater to the needs of their customers, then they have no other choice but to order in small quantities and resupply often.

There are some risks that come, however, with a rapid replenishment strategy. Convenience stores always run a greater risk of stock-outs due to a number of reasons. Of course, there is always the possibility that suppliers are not able to deliver on-time due to unforeseen circumstances. However, even with suppliers being on-time, an inefficient distribution system will also prolong the stay of products within the supply chain which could inevitably lead to delays in landing time. Lastly, there is also the risk of wrong product forecasts. Of course, some forecasts within the span of the business are bound to be incorrect at some point, but with a rapid replenishment system in place, convenience stores will feel more severe consequences for such mistakes since they do not have the luxury of a padded safety stock inventory to save them in such instances. * Considering seasonality of products in merchandising mix

This is responsiveness on a more advanced level – convenience stores may actually modify their merchandising mix depending on the seasonality of their products. For example, frozen and chilled products may comprise more of the store inventory during the hot months of summer, but warm rice meals may be more in-demand during the cold and rainy months. Again, considering that convenience stores are fairly smaller than their supermarket competitions, they need to utilize their shelf spaces wisely – and this strategy not only does that, but it also gives the customers what they want when they want it.

A risk associated with this system is that the burden of additional labor and planning is required on the store itself. Of course, implementing such a strategy will entail much planning and consolidating of historical data, and this will often fall into the hands of each local store’s management. The risk is present when the management lacks the ability to forecast properly, as this will only lead to either a lot of unmet demand (if timing is wrong) or a lot of excess inventory or stock-outs (if quantity is wrong). * Considering consumption patterns throughout the day in merchandising mix

Aside from taking seasonality into consideration, consumption patterns may also be investigated when creating the merchandising mix. Seven-eleven for example, offers breakfast items during the morning but offer a completely different set of viands for when people are already coming home from work in the afternoon. This makes the convenience store very responsive to the needs of the people, even on an hourly basis – something which the authors believe contributes to the mentality of customers that convenience stores are...
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