Scribd
Upload
760 views12 pages

Supply Chain Management - Seven Eleven Case Study

1. For larger retail stores with high daily transaction volumes, maintaining very low inventory levels would not be feasible due to the greater demand variability and supply needs. 2. When catering to culture-specific food preferences in different regions, anticipating demand for niche or non-standardized products poses more challenges to forecasting accuracy. 3. During new product introductions, higher uncertainty around customer acceptance makes it difficult to match supply precisely to demand in real-time, as in 7/11's model. Maintaining appropriate inventory buffers may be necessary.

Uploaded by

Vishal Lavanyan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
760 views12 pages

Supply Chain Management - Seven Eleven Case Study

1. For larger retail stores with high daily transaction volumes, maintaining very low inventory levels would not be feasible due to the greater demand variability and supply needs. 2. When catering to culture-specific food preferences in different regions, anticipating demand for niche or non-standardized products poses more challenges to forecasting accuracy. 3. During new product introductions, higher uncertainty around customer acceptance makes it difficult to match supply precisely to demand in real-time, as in 7/11's model. Maintaining appropriate inventory buffers may be necessary.

Uploaded by

Vishal Lavanyan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 12

SUPPLY CHAIN MANAGEMENT - SEVEN ELEVEN CASE STUDY

CASE FACTS
1. Established in 1973 by Mr. Masatoshi Ito.
2. 1973- 1991- It was managed by Southland corporation and later shifted to the Ito-
Yokado Group.
3. In 2004, Convenience store in Japan and in US contributed to 48.% total revenue of IYG
4. Seven Eleven Japan contributed around 87.6% of the operating income received from
convenience store.
5. In 2004, the average daily sales at four major convenience store chains excluding Seven-
Eleven was 484,000 Yen where as seven Eleven had daily sales of 647,000 yen.
6. Their core strengths were information system and distribution systems.
7. They worked on a franchise model and followed a market dominance strategy.
8. All store had standard size of 125 m^2 which was increased to 150 m^2 in 2004.
9. It kept an SKU of 5000. A normal store kept an SKU of 3000.
10. Food items were classified in 4 broad categories depending upon storage and
transportation temperature-warm items, room temperature items, chilled items and
frozen items.
11.In 2004, processed foods and fast foods contributed to 60% of total stores at each store.
It had 290 manufacturing plants to produce fast food items and 293 Dc’s.
12.POS analysis data was provided each day to each store- removal of product with no
demand, forecasting, identification of slow and non moving items.
13.At DC, delivery of like products were stacked in one vehicle an transportation was done
by Transfleet.
14. In US distribution was through direct store delivery, wholesalers and CDC’s. Inventory
turnover of 17 as compared to that of 50 in Japan.
How 7/11 managed to work with less inventory

To understand how the company worked with less inventory, we will have to
understand how the distribution of the company works.

There were 2 main reasons because of which 7/11 could work efficiently and
delivery to so many stores with the very less inventory system that they followed.

• The Integrated Store Information System

• The 7/11 Distribution System


The Integrated Store Information System
• Total Information System installed in every outlet and linked to headquarters, suppliers,
and distribution centers.
• Seven-Eleven introduced POS cash registers and terminal control equipment
• The personal computers were jointly developed with NEC
• Computers were linked with POS and connected to the HQ
• This helped them gather sales data and analyze it on a daily basis. This helped in
analyzing the stock and also process orders to their suppliers. Hence forecasting became
very efficient and useful.
• This enabled the company to follow the rapid replenishment technique by micro-
matching Supply and Demand
Distribution System
The company used the cross-docking
technique for its distribution

Cross docking is the process where


the inbound stock from suppliers is
unloaded and directly loaded to
distribution trucks with almost no
time difference between them

This technique helped them operate


with very less inventory as the Total
information system further helped
them forecast stock accurately and
process orders from suppliers
accordingly
Transportation of Seven Eleven

• The transportation was provided by Transfleet Ltd., company set up by Mitsui and Co.
for exclusive use of seven- eleven Japan
• Items were distributed through 293 dedicated distribution centers (DCs) that ensured
rapid, reliable delivery.
• None of these DCs carried any inventory; they merely transferred inventory from
supplier trucks to Seven-Eleven distribution trucks
• They used “combined delivery system”, in which single temperature-controlled trucks
deliver one category of food to multiple stores.
• They also make deliveries during off- peak hours
• They used scanner terminal to save time
TRANSPORTATION OF SEVEN ELEVEN
Market Dominance Strategy

• Seven-Eleven’s Market Dominance Strategy Cluster of 50-60 stores was


supported by a distribution center (DC). Such clustering gave Seven-Eleven
Japan a high-density market presence and allowed it to operate an efficient
distribution system.

• By pursuing an area-dominant strategy, Seven-Eleven gains such benefits as


higher brand/store recognition in the area, more frequent customer visits,
and efficiency in physical distribution.

• It also enhanced efficiency of services to support franchisee stores, and


more effective advertisement and sales promotion activities.
Market Dominance Strategy

• As a result of efficient physical distribution, namely due to an area-dominant strategy


and the communal use of physical distribution channels by suppliers, Seven-Eleven can
schedule deliveries at precisely controlled temperatures.

• Strict temperature control means that Seven-Eleven's food items do not need to use
preservatives or synthetic coloring additives, which enhances the attractiveness of the
company's merchandise.

• Furthermore, the creation of a physical distribution network that allows for strict
temperature control has enabled the development of original merchandise, such as
beer, to be delivered directly from the factory and chilled foods such as freshly boiled
noodles that can be warmed and served in a few minutes at home.

• All of these are unique to Seven-Eleven and cannot be copied by other competitors.
In which Type of Scenario 7/11 type of Supply Chain will not
work?

Bigger stores, High Culture Oriented High implied demand


volume trade Foods uncertainty
Bigger stores, High volume High implied demand
Culture Oriented Foods
trade uncertainty

• 7/11 is basically a retail store • For newly introduced


• In bigger stores such as that offers food and products, there is a difficulty
Walmart and D-mart , where beverages. Therefore, the of anticipating demand, the
there will be high volume products found in 7/11 store reason is non-standardization
trade on a day to day basis , Japan will not be preferred by of process, regional-culture
the 7/11 type of Supply customers of Asia, Europe or variety and seasonal demand
Chain will not work. USA, due to cultural clash and thus, there is higher demand
varying consumption pattern. uncertainty for them.

You might also like