Case: 7-Eleven Japan Co.
Table of Contents
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 different ways that a convenience store supply chain can be responsive? What are some risks in each case?
A convenience store can be more responsive by doing exactly what Seven-Eleven Japan is doing; many locations, rapid replenishment, appropriate technology deployment, and an equally responsive supplier (vertical integration for many of their SKUs). The risks associated with this system are the costs coupled with demand uncertainty. If demand patterns change dramatically, or the customer base changes, then Seven-Eleven is left with an operation that is not needed. Offering variety of services in the case of this case study Seven Eleven offered attractive services to customers such as ski lift voucher pass, payment of mail order purchases, internet shopping, a meal service delivery, automatic teller machines installation in each store, pick up online services, electronic money service that allow customers to prepay and use a card or cell phone to make payments etc. on the other hand, a short coming might result due to the failure of one or more information system due to failure or break down.
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 with this choice?
What has 7-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?
7-Eleven implemented a Total Information System through which the company could efficiently share its information thus making its supply chain responsive. The system was installed within each store, headquarters, suppliers and vendors. And also the system linked all the stores with each other. The Total Information System comprises of POS registers, Integrated Services Digital Network (ISDN), Graphic order terminal, scanner terminal and store computers. The data related to the sales as well as the purchaser is collected through the POS register for analysis. For efficient management of the inventory, the graphic order terminal, scanner terminal and store computers are used thus assists in improving both the efficiency and responsiveness.
The store owner or the manager makes use of the graphic order terminal to place orders so as to replenish inventory in order of their arrangement on the store shelf. The owner had access to analysis of waste, 10 day and 10 week sales trends SKU, sales trends of new products, sales analysis by day and time etc that help him in forecasting demand. On the other hand, the Scanner terminal receives products from a distribution center and therefore monitors inventory by checking whether the order received matches with the original order placed. The store computer helps in tracking store inventory.
Trucks are used to transport goods to the stores. 7-Eleven makes use of a flexible distribution system which means that it can alter the delivery schedules according to the varying customer demand. Also, the suppliers send orders via trucks to the distribution centers. The latter cross docks inventory from supplier truck to distribution trucks. Moreover, to maintain the quality of the products, the distribution trucks are temperature controlled of four categories for different types of products such as frozen/ chilled foods, processed foods etc.
The facility location of 7-Eleven comprises of two types namely, the distribution centers and retail stores. 7-Eleven follows a market...
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