Seven Eleven Case Study

[pic 1][pic 2][pic 3][pic 4]

[pic 5]

1. Different ways that a convenience store supply chain can be responsive and the risks:

Rapid replenishment can improve the supply of the stores what they need and when they need it, however, it increased the cost of replenishment and receiving. As well, using the most suited information technology, e.g. the best EDI, ERP, SCM and RFID. And increasing the number of stores can help as well. Risks include hardware and software failure, spam, viruses and malicious attacks etc.

Local Capacity at the convenience store can provide local cooking capacity and the food can be assembled on demand. US fast food restaurant Subway has the local capacity where dinner and lunch sandwiches are assembled on demand. The risk involved is that the capacity is decentralized, and the utilization is poorer.

Local inventory can be another approach thereby making all the inventory available all the time. The risk involved would be the inventory becoming obsolete and also the need for extra storage space for the inventory.

2. Risks associated with micro-matching supply and demand using rapid replenishment:

The risks with the supply choice are:

- Excessive cost of transportation which includes gas, vehicle, staff.

- The risk of having obsolete inventory.

- Lack of extra space.

3. Seven-Eleven choice of facility location, inventory management, and transportation and information infrastructure:

All choices made by Seven-Eleven are lowering its transportation and receiving costs. For example, the strategy of opening at least 50-60 stores in an area is able to lower the cost of replenishment. Setting up centralized manufacturing facilities can achieve the capacity aggregation and lower inbound transportation cost from the manufacturer to the distribution center. The IT infrastructure utilized by seven eleven helps sort the order at the distribution center and receiving the order at the store. They introduced such information technology as Graphic Terminals which allowed the associates and managers to place orders at the touch of a button. The focal point of the strategy is to combine transportation and receiving to make both the process cheaper. Out of 5000 SKUs, the stores have an option to place orders for 3000 SKUs based on the demand and geographic requirements. 

4. Benefits of Seven-eleven products flowing through its distribution center:

Seven-Eleven introduced distribution centers to provide fresh product and short replenishment cycle times. The store manager used a graphic order terminal to place an order, it was shortly transmitted to the supplier as well as the distribution center thereby keeping track of the sales. The supplier receives order from all Seven-Eleven stores and started production to complete the orders. Then, the supplier the orders by truck to the distribution centers. Four categories of temperature controlled trucks helped them to deliver food efficiently by packing food together to be delivered to multiple stores. The major advantage that Seven-Eleven achieved was the reduction in the number of delivery vehicles even though the delivery frequency was more. This reduced the delivery costs delivery of variety of fresh goods. Direct Store delivery is efficient when the company wants to achieve cost efficiency by transporting bulk orders and the segregation of goods gives negligible results.

5. 7dream concept and is it likely to be more successful in Japan or the United States:

 7dream is an e-commerce company of Seven-Eleven Japan which allowed Seven-Eleven store customers to pick up their online purchases at the local convenience store rather than have home delivery. It also allowed customers to use the Seven-Eleven stores as a drop off point for any ecommerce chain. From a supply chain perspective, it is more successful in Japan because the customers frequently visit stores of their convenience to pick up their online purchases. Even though there are minor drawbacks of utilizing more storage space, this would bring in more customers. The Seven-Eleven stores in Japan are placed in high density urban areas but in the US, that is not the case. In the U.S, people prefer the products delivered directly to their home as most of them live in the suburbs and would hate to drive to the store to get their purchase.