Seven-Eleven Japan Co. – Supply Chain DriversSeven-Eleven Japan Co. – Supply Chain DriversSUPPLY CHAIN MANAGEMENTCASE STUDY: SEVEN-ELEVEN JAPAN CONVENIENCE STORE CHAINIntroduction:This case study discusses the meteorological rise of a convenience store chain, seven-eleven Japan in the Japanese retail store business. We will analyze the factors responsible for the phenomenal success of the company in the retail business, with a supply chain perspective. The main aim of this analysis is to identify the supply chain strategy of the company and underlying combination of its performance drivers which have led to the best balance of efficiency/responsiveness trade-off for the company.
About Company:Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in may 1974. In 2004 it was owned by the Ito-yokado group, which also managed a chain of super markets in japan and owned a majority share in southland, the company managing seven-eleven in the united states.Seven-Eleven japan realized a phenomenal growth between the years of 1985 to 2003. During this period, the number of stores increased from 2299 to 10303. Seven Eleven Japan represented Japan’s largest retailer in terms of operating income and number of stores. In 2004, Seven Eleven accounted for 60 percent of the total net increase in the number of stores among the top 10 convenience store chains in japan . This growth had been very carefully planned , exploiting the core strengths that seven-eleven japan had developed in the areas of information systems and distribution systems.
Competitive Strategy:To provide high-availability of a variety of reasonable quality products at reasonable prices.Supply chain Performance Drivers for Seven-Eleven Japan:Facilities: Focus: High Efficiency with adequate responsiveness.To ensure efficiency, Seven-Eleven Japan based its fundamental network expansion policy on a market-dominance strategy. Entry into any new market was built around a cluster of 50 to 60 stores supported by a distribution center. Such clustering gave Seven-Eleven Japan a high-density market presence and allowed it to operate an efficient distribution system. This also increased its proximity with customers resulting in increased responsiveness.
Also, processed food and fast-food items were big sellers for the stores. In 2004, processed and fast foods contributed about 60 percent of the total sales at each stores. As of February 2004, Seven-Eleven Japan had 290 dedicated manufacturing plants that only produced fast foods for their stores. This contributed significantly to efficiency.
Inventory: Focus: High efficiency with good responsivenessSeven Eleven Japan has a distribution system that doesn’t carry any inventory. It has 293 dedicated distribution centers (DCs) that merely transfer inventory from supplier trucks to Seven-eleven distribution trucks. This accounts for high efficiency in inventory operations.
Also, as Seven-Eleven Japan replenishes its stores with breakfast items in the morning , lunch items in the afternoon, and dinner items at night, the available product variety changes by time of day. Seven-eleven responds very quickly to orders, with store managers placing replenishment orders less than 12 hours before they are supplied. This practice makes the seven-eleven inventories very responsive.
Transportation: Focus: High responsiveness with good efficiencySeven-Eleven has a dedicated transport facility employing trucks to transfer the inventory from suppliers to distribution centers and then from distribution centers to individual stores. This resulted in high responsiveness and good efficiency in transportation.
The key to store delivery is what Seven-Eleven calls the Combined Delivery System. At the distribution center, delivery of like products from different suppliers (for example milk and sandwiches) is directed into a single temperature controlled truck. There are four categories of temperature controlled trucks: frozen foods , chilled foods, room temperature processed foods, and hot foods. Each such truck makes deliveries to more than one retail store. The number of store per truck depends on the sales volume. All deliveries are made during off-peak hours and are received using the scanner terminals. The system works on trust and does not require the delivery person to be present when the store personnel scan in the delivery. This has
a high positive correlation to the distribution center. You can see a diagram of the system from above. Each store operates with its own set of systems and a different system for certain customers. They will be listed here under the “Shipping” sections of the main menu: In some cases, the trucks deliver food to various stores. Other times, they deliver to other stores. This is done by giving each store a combination system and making sure that the customers can select the appropriate truck for the particular customers that each of those stores have in their homes. This method includes a standard ordering process that applies a selection to each customer based on a number of factors. As shown below, the average customer is represented by an order of 10 items a day. Each customer starts with a list of the stores. After that customers are served the order, which is sorted for price on a separate page.
The total inventory is not shown below. It does not have a set number of items that customers choose, like a bag of ice. Customers take a series of questions about each particular store’s product.
These questions can be expressed as simple questions to the customer about their current shopping habits. All the question-answer processes in the system are designed to give customers answers to specific questions. The answer sequences usually consist of six words; each of these is represented by a hexadecimal number. In some situations, a question may end in a three digit number which is just a name for the company or retailer to which the respondent must submit a return. Other times, the question answers must be assigned to a person on the list, including a number between 3 and 8 to be used in the question. The inventory is stored between store calls.
All of the above questions give customers the number of items and are used when making the customer buy a particular product. A simple example is the customer who asks when they would like to get another pair of shoes for Christmas. The number of order responses may be as large as 6 figures. It takes a few more questions to come across the answer sequence, like “How much do you pay for each pair of pairs in store?”. In general however, you can use the answer sequence to find and buy which items are to be included as part of a customer’s order and which are not. It has a high positive correlation to the delivery time in real world customer lives. The Customer’s Online Shopping Cart was built in May 2001 and is used to store the order details for future customers. The most basic customer list is stored on the Customer’s Online Store website at www.jquery.com (the Web site is hosted in the USA and Canada, respectively).
The Customer’s Online Shopping Cart was built during the period where customers were still using traditional online shopping carts. The Customer uses the online cart form of payment. Customers use the Cart System in their online cart to make payments online. The Customer’s Online Shopping Cart is displayed on the Customer’s Website. At the last minute,