Case: 7-Eleven Japan Co. Essay

Question 1:

A convenience shop concatenation efforts to be antiphonal and supply clients what they need. when they need it. where they need it. What are some different ways that a convenience shop supply concatenation can be antiphonal? What are some hazards in each instance?

A convenience shop can be more antiphonal by making precisely what Seven-Eleven Japan is making ; many locations. rapid refilling. appropriate engineering deployment. and an every bit antiphonal provider ( perpendicular integrating for many of their SKUs ) . The hazards associated with this system are the costs coupled with demand uncertainness. If demand forms change dramatically. or the client base alterations. so Seven-Eleven is left with an operation that is non needed. Offering assortment of services in the instance of this instance analyze Seven Eleven offered attractive services to clients such as ski lift verifier base on balls. payment of mail order purchases. cyberspace shopping. a meal service bringing. automatic Teller machines installing in each shop. pick up online services. electronic money service that allow clients to prepay and utilize a card or cell phone to do payments etc. on the other manus. a short coming might ensue due to the failure of one or more information system due to failure or interrupt down.

Question 2:

Seven-Eleven’s supply concatenation scheme in Japan can be described as trying to micro-match supply and demand utilizing rapid refilling. What are some hazards associated with this pick?

Question 3:

What has 7-Eleven done in its pick of installation location. stock list direction. transit. and information substructure to develop capablenesss that support its supply concatenation scheme in Japan?

Information substructure:

7-Eleven implemented a Entire Information System through which the company could expeditiously portion its information therefore doing its supply concatenation responsive. The system was installed within each shop. central offices. providers and sellers. And besides the system linked all the shops with each other. The Entire Information System comprises of POS registries. Integrated Services Digital Network ( ISDN ) . Graphic order terminus. scanner terminal and shop computing machines. The information related to the gross revenues every bit good as the buyer is collected through the POS registry for analysis. For efficient direction of the stock list. the in writing order terminus. scanner terminal and shop computing machines are used therefore aids in bettering both the efficiency and reactivity.

Inventory direction:

The shop proprietor or the director makes usage of the in writing order terminus to topographic point orders so as to refill stock list in order of their agreement on the shop shelf. The proprietor had entree to analysis of waste. 10 twenty-four hours and 10 hebdomad gross revenues trends SKU. gross revenues tendencies of new merchandises. gross revenues analysis by twenty-four hours and clip etc that help him in calculating demand. On the other manus. the Scanner terminal receives merchandises from a distribution centre and therefore proctors stock list by look intoing whether the order received lucifers with the original order placed. The shop computing machine helps in tracking shop stock list.

Transportation system:

Trucks are used to transport goods to the shops. 7-Eleven makes usage of a flexible distribution system which means that it can change the bringing schedules harmonizing to the changing client demand. Besides. the providers send orders via trucks to the distribution centres. The latter cross docks stock list from supplier truck to distribution trucks. Furthermore. to keep the quality of the merchandises. the distribution trucks are temperature controlled of four classs for different types of merchandises such as frozen/ chilled nutrients. processed nutrients etc.

Facility location:

The installation location of 7-Eleven comprises of two types viz. . the distribution centres and retail shops. 7-Eleven follows a market or country laterality scheme through which it forms bunchs of shops in the country where already a 7- 11 shop exists instead than holding a smattering of shops dispersed over a broad geographical country. Among the bunchs there’s a distribution centre which is surrounded by 7-Eleven shops. Approximately. there are 50-60 shops in each bunch.

Question 4:

7-Eleven does non let direct shop bringing in Japan but has all merchandises flow through its distribution centre. What benefit does 7-Eleven derive from this policy? When is direct shop bringing more appropriate?

7-Eleven has the policy of presenting its merchandises to the retail shops via the distribution centres. Through these distribution centres. the refilling rhythms are reduced and a proper gross revenues record can be maintained and monitored. Through the Point of Sale registries. signals can be transmitted to both the distribution Centre and the provider hence orders can be organized consequently. Besides. orders are sent straight to the distribution Centre so that they can be allotted to the appropriate vehicle. A combined bringing system is used by 7- Eleven. in which four groups of temperature-controlled trucks are used to direct fresh merchandises. The trucks are sent several times a twenty-four hours during extremum hours in order to avoid holds.

Besides. assurance is maintained between the supply concatenation spouses and an extra individual is non needed while the burden is being received and checked. The procedure reduces bringing clip. However this system might necessitate a figure of day-to-day bringings. but the figure of trucks needed is much lesser therefore it reduces the bringing cost and facilitates a more prompt fresh nutrient bringing. And therefore the stock is continuously replenished. This web procedure ensures flexibleness in the sense that it can change the bringing agendas due to any demand fluctuations. There is a twelve-hour bound upon the restocking of nutrient points.

The disadvantages nevertheless include that the retail shops will hold small control when the restocking takes topographic point. Besides. a figure of shops rely on merely one combined distribution Centre. Besides. if the system goes down while the bringing is at CDC. so all the shops can be affected and timely bringings might non be possible. Hence accurate prognosiss are needed. Direct bringing system might be a utile technique as the shops follow discrepancy forms. If the demand additions and a shop require a greater figure of bringings so the demand can be met more expeditiously as the bringings can be made straight to the shops.

Question 5:

What do you believe about the 7dream construct for 7-Eleven Japan? From a supply concatenation position. is it likely to be more successful in Japan or the United States? Why?

In February 2000. 7-Eleven established 7dream. com. an ecommerce company. the end of which was to work the bing distribution system and the fact that shops were easy accessible to most Nipponese Shops served as slump and aggregation points for the clients and proven successful as 92 % of their clients preferred to merely pick up their goods from the local convenience shop which they ordered online instead than hold them delivered to their places. This was apprehensible given the frequence with which Nipponese clients visit their local convenience shop. 7dream hoped to construct on this penchant along with the synergisms from the bing distribution system as the company required an effectual and efficient supply concatenation to provide to the demand of the clients who ordered online and supply the company with a clip frame for bringing.

From a supply concatenation position. it is believed that the 7dream construct is likely to be more successful in Japan than in the United States. The ground for stating so is that. the Nipponese market is much smaller as compared to that of United State. In 2008. there were 12. 071 shops in Japan where as the shops were about half the figure in U. S that is 6. 262. The denseness of shops in Japan was therefore greater as the country of Japan is much smaller as compared to that of the U. S. and hence. in Japan the company had a greater client range as 7–Eleven shops are easy accessible throughout Japan.

The ecommerce company itself could likely be a greater success in U. S. nevertheless ; it would be a better thought if the orders are straight sent place instead than hold them delivered to the nearest 7-Eleven shop. In this manner. the company can tap in to a bigger market that is the U. S. market but acquire the goods delivered to the customer’s doorsill would be a better thought. Besides. the shops in the U. S. were replenished utilizing direct shop bringing ( DSD ) by some makers. with the staying merchandises delivered by jobbers. DSD accounted for about half the entire volume. with the remainder coming from the jobbers. This meant that direct bringing is a more popular construct in the U. S.

Keeping into consideration the current scheme of the 7dream construct. it is more likely to be successful in Japan than in the United States. However. if the scheme is molded harmonizing to the U. S. market. it can go a greater success.

Question 6:

7-Eleven is trying to double the supply concatenation construction that has succeeded in Japan in the United States with the debut of CDC’s. What are the pros and cons of this attack? Keep in head that shops are besides replenished by jobbers and DSD by makers.

After 7 Eleven acquired Southland Corporation they tried to better their operations in America. The chief betterment was an debut of a new constituent in the supply concatenation wholly fresh to the US market. This constituent. the Combined Distribution Centers ( CDCs ) . was nevertheless used in Japan at that clip. Initially the shops in US used the Direct Store Delivery ( DSD ) in which shops were replenished by makers accounting for half of the goods volume and the remainder half was done by whole Sellerss. CDC delivered perishable merchandises like staff of life. sandwiches and the remainder of the bakeshop merchandises. Professionals

Using CDC all perishable -food points would be delivered by a individual distributer which would increase overall efficiency. Having fresh-food points at 7-Eleven convenience shops helped in users acquiring assortment of fresh nutrient from convenient locations. Uncertainty of bringing times was minimized by systematic bringing system. The stock list costs were low as fresh nutrient points can non be inventoried. With day-to-day refilling of fresh-food points. the stock would be fresh and it reduced consumer concerns of stale points to a big extent. Centralization gave a greater control to the direction and more procedures were now under the supervising of the company hence bettering efficiency.


There could hold been a difference in quality delivered through CDC and DSD. DSD was a tried system so company might be unwilling to switch to the new system as there is ever a reluctance to alter. In US shops fresh merchandises may non sell really good.

Training would be required for all the supply concatenation members as the new system tends to be more clip sensitive. Manufacturers might non be willing to travel with the thought of CDC’s as they might lose on their comparative dollar grosss and with the loss in grosss they might besides cut down control. As the new system would be really clip specific. the supply concatenation might non be really antiphonal and if updates are required the company might lose on its gross revenues.

Question 7:

The United States has nutrient service distributers that besides replenish convenience shops. What are the pros and cons to holding a distributer replenish convenience shops versus a company like 7-Eleven pull offing its ain distribution map?

With the outsourcing determination in head an organisation ever tries to outsource activities that lie beyond their nucleus competences and their scarce resources are wasted in executing undertakings that they are non specialized at. With outsourcing the organisation tries to concentrate on activities that they can make best. The advantage is that pull offing the distribution is the exclusive concern of the distributer and with his specialised expertness it might be more cost effectual. However outsourcing does hold its reverberations as good. The control over the quality of points and the refilling clip might non be every bit effectual as making the distribution yourself.

With the outsourcing of distribution the communicating spread can impact the refilling distribution. However taking the promotions in communicating and engineering this statement may be rendered null. Convenience shops are successfully pass oning with their distributers and do uninterrupted storage of informations and information transmittal from 3PL WMS to internal systems for real-time visibleness of stock in manus and client service. Furthermore outsourcing determinations affect both the efficiency and reactivity of the supply concatenation. A retail shop can accomplish improved efficiency by holding a distributer refill its stock. but he does non set his bosom and consequence they can hold on their long term purposes.