SEVEN-ELEVEN JAPAN CO Q1) A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case? Ans) There are following ways to make convenience stores responsiveness. • To maintain high inventory level • By removing implied demand uncertaininty. • By quick replenishment of products or time management. • High Information system can also make convenience store responsive and decrease the other driver cost too e. g. ransportation cost, holding cost etc. • Facilitate the customer by location and increase in capacity. • By making strategic fit in vertical and horizontal strategies of convenience stores that can make more responsive and support to achieve the competitive strategy. Risks: If the convenience store maintains high level of inventory, it increases the holding cost that make convenience store less efficient. The inventory can be wasted, because of uncertaininty of demand. In high level o f inventory there is very low margin of error in forecasting, so it can increase wasted and also increase the supply chain cost.
When the products are quick replenish in different location, it increase the transportation cost and capacity also increase the holding cost. The fixed cost of information system is very high. Q2) Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro match supply and demand using rapid replenishment. What are some risks associated with this choice? Ans) There are many risk involve by using rapid replenishment strategy, that are followings: It increases the inventory holding cost. High no of convenience store increase the transportation cost.
As seven-eleven has many convenience stores, so their vehicle has to circulate many times to be quick and responsive which cause transportation cost. In the context of zone strategic fit, it tells if the responsiveness is high its demand will be uncertain. Q3) what has Seven-Eleven done in its choice of facility location, inventory management, transportation infrastructure to develop capabilities that support its supply chain strategy in Japan? Ans) As their strategy is responsiveness ,in which they response very quick to customers.
They make the combination of drivers in that perspective, which make them more responsiveness. Seven-eleven focuses on opening new stores at cluster area and increase in capacity from 125 square meters to 150 square meters, which shows the responsiveness, and they are also utilizing the location and capacity. As they are using responsiveness strategy so they have to maintain high level of inventory that increase the uncertainty and make it more responsiveness. As their processed food and fast food items are the big sellers for the tores, so their nature demand responsiveness , so for this purpose they have to maintain high level of inventory. Total information system installed in every outlet and linked to HQ, suppliers and seven-eleven distribution centers. After receiving the order from store, they make themselves ready for supply and after getting the supplies from supplier they put the same product in that vehicle which require the same temperature which help them to transfer the product as quick they want and which cause the time saving too.
The system which are making them more responsive are listed below: • Graphic order terminal • Scanner terminal • Store terminal(ISDN) • POS register. This information system is giving the information as fast they want, which includes time saving, and the data is direct coming from store which is giving the correct data that what they need and when they need. Q4) Seven-Eleven does not allow direct store delivery in Japan but has all products flow through its distribution center. What benefit does Seven-Eleven derive from this policy?
When is direct store delivery more appropriate? Ans) Seven-eleven does not allow direct store delivery in Japan, because they are serving in cluster area where 50 to 60 stores had already existed. They have so many no of stores and they can’t handle it without middle man. Distribution centers allow the companies to be flexible in the alternation of delivery as per the demand of customer. When there are less no of stores. Distribution is also not so much needed when the people are more prices conscious.
When the order is large, in this the middle man is not so necessary, to reduce per unit cost. Q5) what do you think about the 7dream concept for Seven-Eleven Japan? From a supply chain perspective, is it likely to be more successful in Japan or the United States? Why? Ans) 7dream. com was an e-commerce concept in which they want to convenience & easily accessible to customer at every place where customer wants and it’s also purpose is to eliminate the distribution cost. The MIS should be strong for operating the site for delivery.
It is successful in Japan, because the no of stores in Japan is more as compare to USA. Because of so many stores in Japan it is easy to success in e-commerce business as compare to USA. The customers of Japan visit more to convenience stores as compare to Japan. Q6) Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan in the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that stores are also replenished by wholesalers and DSD by manufacturers.
Ans) Seven-eleven is attempting to duplicate the supply chain structure that has succeeded in Japan in the United States with the introduction of CDCs, but in the initial stage several stores were shut down, because the distribution system in US was completely different from that of Japan, they are using the DSD system to delivering the product. By introducing the Fresh food they had to introduce this CDCs system. Pros: • Freshness of food that is the priority of the customer. CDCs system are very effective, because the data has been retrieved till night at 10:00 pm, so they know what the customer wants and when, so it increase their quality. Cons: • It increases the cost because it requires labors and transportation. • Due to increase in supply chain cost, it reduces the profit margin of each function in supply chain. Q7) The United States has food service distributions that also replenish convenience stores. What pros and cons to having a distributor replenish convenience stores versus a company like Seven-Eleven managing its own distribution function? Ans)
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