7 ELEVEN CASE STUDY

Allu Narendranath-1602024Ashish Barui-1602051

Anuj Agarwal-1602037A. Raghucharan-1602032

Hemanth Chitraju-1602063

CONVENIENCE STORE:•Nekkei Ryuutsuu Shinbun categorizes the convenience stores following three conditions as a convenience store.•Sales Composition ratio of Perishable goods is less than 30% of total Sales.•Business hours per day should be more than 16 Hours.•Majority of department area should be less than 200 sq. mts.

7 ELEVEN ANALYSIS:

INCREASING RESPONSIVENESS OF CONVENIENCE STORE:WIDE RANGE OF PRODUCTS

2. RAPID REPLENISHMENT POLICY:•7 Eleven adopts combined distribution system for greater efficiency, which allows products from different suppliers and manufacturers to be delivered to stores on the same truck. •The distribution system is handled by a 3PL company known as Transfleet Ltd.Risks:•Increase in costs due to increase in staff, transportation and various other costs.

OMNI CHANNEL NETWORK:

•With customers as a starting point, the Omni-Channel Strategy combines the convenience of Internet sales and the peace of mind of real stores and integrates a wide range of business infrastructure. •The strategy has been positioned as the driver of growth for the Seven & i Group.

3. HIGH SERVICE LEVEL:

•To transport and process fresh vegetables that have just been harvested, SEJ introduced cold chain distribution in 2005. •Under this system, vegetables that have just been harvested are put into cold storage on the spot and kept at a consistently managed temperature in their journey in the delivery vehicle, through the sorting center, and from the production facility to the store, where they are displayed for customers in fresh condition.

MICRO MATCHING SUPPLY AND DEMAND: IT MANAGEMENT

Risks: Higher cost of operation, If IT system fails this idea will not work.

SEVEN ELEVEN PROFILE

FACILITY LOCATION: MARKET CONCENTRATION

STRATEGY

•High density concentrated store openings•Market entry was built around a cluster of 50-60 stores supported by a DC•SEJ network included both company-owned stores and third-party owned franchises•Improved distribution, brand awareness, franchise support services•Provided a competitive edge by deterring competition

INVENTORY MANAGEMEN

T:

Distribution Centers:•DCs doesn’t carry any inventory; they were used just for transferring the goods from supplier trucks to stores.•Carrying no inventory resulted in high efficiency

Convenience Stores: •Stores only carried daily stocks•Replenished by daily delivery trucks•Highly efficient but poor responsiveness

TRANSPORTATION:

•Transportation was at two levels: From suppliers to DC and from DCs to stores•Store orders were immediately transmitted to supplier as well as DC •Store orders were separated by supplier so the DC could easily assign it to the appropriate store truck•Suppliers sends the orders by truck to DC

TRANSPORTATION: DELIVERY FROM DC TO STORES•Key to store delivery was Combined Delivery System•Like products(warm, chilled, frozen ) from different suppliers were loaded into a single temperature controlled truck•Each truck made deliveries to multiple stores during off-peak hours

INFORMATION INFRASTRUCTURE:

•Seven Eleven promotes integration between hardware and networks to realize group synergies and upgrade administrative functions.•To realize “item-by-item management”, one of the world’s largest information system was built to link stores, DCs and business partners

INFORMATION INFRASTRUCTURE: ITEM-BY-ITEM •Seven Eleven Introduced a unique method called Tanpin Kanri (item-by-item) to cope up with rapidly changing customer needs•It improves the accuracy of next order by controlling and verifying trend of each data based on hypotheses•This method of order placement strongly increases daily sales while meeting customer demand.

ADVANTAGES: COMBINED

DELIVERY SYSTEM

•Lower Transportation Costs•Economic mode of transport with half truckloads•Multiple shipments can be aggregated into a single shipment as per store orders•Best suited for seven eleven supply systems which mainly consists of fast moving items•Less information infrastructure needed than direct delivery system•Better response time when compared to direct store delivery •Aggregation of orders possible as per store orders•Very less to No holding costs at Combined DCs

WHEN TO GO FOR DIRECT DELIVERY ?

•To minimize inventory costs•To provide high level of product availability•Best suited for slow moving items•To implement postponement strategy• High Level of Product Variety

5. 7DREAM• Established in February 2000, an e-commerce company• Goal - To exploit the existing distribution system• Stores were easily accessible to most Japanese• Stores served as drop-off and collection points for Japanese

Customers• 92% of its customers preferred to pick up the online purchases at

local convenience stores• The frequency of the Japanese customers visiting the stores is

high• Since distribution network is more dense in Japan when compared

to the US network, it is more likely to be successful in Japan

QUESTION 6Pros: •Responsive supply chain using the exchange of information •Increases Efficiency of the Supply chain, thereby meeting supply and demand•Decreases the number of deliveries Cons:•The number of retail outlet in Japan exceed far more than the U.S. , and thus may effect the responsiveness of the system•Maintaining both DSDs and CDCs will be hard and need high level of coordination.•The purpose of CDCs is as a cross docking platform, which if used as a distribution system due to wholesaler, the advantage will be lost.

QUESTION 7Pros: • Monetary Advantage: They don’t have to invest in DCs or trucks to perform this task.Cons:•Increase in number of relationships may cause problem to management. •Responsiveness should be worked upon.•Inconsistency in Service level between stores. •Inconsistent Customer Service.