Case Study of Seven-Eleven Japan Company

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Supply Chain Management
Case study of Seven-Eleven Japan Company

A. Background
Seven-Eleven, a famous convenience store, was established in 1973 and had its first store in Tokyo in May 1974. It was found by Masatoshi Ito while he thought that superstores were the wave of the future after a trip to the United States.

The company was first listed on the Tokyo Stock Exchange in October 1979. During 1985-2009, the numbers of store and its annual sales experienced tremendous growth that the number of stores increased to 12753 and annual sales increased to 2785 billion yen. At the moment, Seven-Eleven Japan was the world’s largest chain in term of retail outlets.

The idea of convenience store was very popular immediately through the record of averaging almost 35 visits to a Seven-Eleven annually for every person in Japan.

B. Problems
Seven-Eleven was not the only one brand in the convenience store industry anymore. Japan’s convenience store sector gradually consolidated, with larger players growing and smaller operators shutting down. Therefore, Seven-Eleven need to make strategy to deal with the competitors.

Moreover, Seven-Eleven had a problem of limited geographic presence. Stores tended to be dense within prefectures where they were present. As the annual report stated that it looked for demand where Seven-Eleven stores already exist rather than filling in the entire map of Japan.

For the distribution system, the system worked on trust and did not require the delivery person to be present when the store personnel scanned in the delivery.

C. Questions
1. What has Seven-Eleven done in its choices of facility locations, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?

i. Facility
Seven-Eleven focus facility locations as high efficiency. Seven-Eleven Japan based on its fundamental network expansion policy on a market dominance strategy to increase efficiency to customers. Seven-Eleven built a cluster with around 50 to 60 stores and each cluster supported by one distribution center. Such clustering gave Seven-Eleven Japan a high-density market presence and allowed it to operate an efficient distribution system. It can lower the handling cost from inventory, and increase capabilities to support its supply chain strategy in Japan.

ii. Inventory
Seven-Eleven focus inventory management as high efficiency with good responsive. Since Seven-Eleven has a distribution system. It has 293 dedicated distribution centers carried no inventory that merely transfer inventory from supplier trucks to Seven-eleven distribution trucks. It shows high efficiency in inventory operations. Also, Seven-Eleven replenishes its stores with food for breakfast, lunch, and dinner, the available product variety changes by time of day. Seven-eleven responds very quickly to orders, with the replenishment cycle time fewer than 12 hours. It shows good responsive in inventory operations.

iii. Transportation
Seven-Eleven focus inventory management as high responsiveness with good efficiency. The combined delivery system was tightly linked the entire supply chain for all product categories and the main objective is to carefully track sales of items and offer short replenishment cycle times. The supplier received orders from different stores, and then sent all the orders to the distribution center. Seven-Eleven employed trucks to transfer the inventory from distribution center to specific stores. It can minimize the trucks as well as transportation cost. It shows high responsiveness and good efficiency in transportation. 

iv. Information
Seven-Eleven focus information infrastructure as high responsiveness with good efficiency. Seven-Eleven Japan attributed a significant part of its success to a comprehensive store information system installed in every outlet and linked both to suppliers and the Seven-Eleven...
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