Seven Eleven Japan

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A convenience store chain can improve responsiveness to this uncertainty using one of the following strategies, especially for fresh and fast foods:

Local Capacity. The convenience store chain can provide local cooking capacity at the stores and assemble foods almost on demand. Inventory would be stored as raw material. This is seen at the U.S. fast-food restaurant franchise Subway where dinner and lunch sandwiches are assembled on demand. The main risk with this approach is that capacity is decentralized, leading to poorer utilization.

Local Inventory. Another approach is to have all inventory available at the store at all times. This allows for the centralization of cooking capacity. The main risk is obsolete inventory and the need for extra space.

Rapid Replenishment. Another approach is to set up rapid replenishment and supply the stores with what they need when they need it. This allows for centralization of cooking capacity and low levels of inventory, but increases the cost of replenishment and receiving.

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The main risk for Seven-Eleven is the potentially high cost of transportation and receiving at stores.

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Seven-Eleven does not allow direct store delivery in Japan but has all products flow through its distribution center to reduce the number of vehicles required for daily delivery service to each store, even though the delivery frequency of each item was quite high. At the distribution center, delivery of like products from different suppliers was directed into a single temperature controlled truck. Each truck made deliveries to multiple retail stores. None of the distribution centers carried any inventory; they merely transferred inventory from supplier trucks to Seven-Eleven distribution trucks. This dramatically reduced delivery costs and enabled rapid deliver of a variety of fresh foods.

Direct store delivery is more appropriate when the store only purchases from a few manufacturers/suppliers, and when the items are high-value and low demand. (For instance, when the suppliers carry a variety of items that the store demands, and these items account for a significant portion of the store’s total requirement.) In addition, when warehousing space is limited in the supply chain, direct store delivery can eliminate the need for distribution centers

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The 7dream concept is not a good idea because the store will be acting as a post-office pick up store, and will have carry many products that require large storage area. The store will need to have a totally separate and independent information tracking system for this service in order to coordinate between the customers’ information, the parcel delivery companies’ information, and the ordered items. The store will also be responsible for any lost items and mistakes made during the process.

The concept is likely to be more successful in Japan than the United States because Seven-Eleven Japan has far more customers and stores than that in the United Stated. In 2004, Seven-Eleven Japan represented Japan’s largest retailer in terms of operating income and number of...

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Growth was a major factor in the reputation of Seven-Eleven, as the United States soon became the second largest market behind Asia in its quest for becoming the largest chain store in any category. With such a large market emerging, Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan and introduce it to the United States with the beginning of combined distribution centers (CDCs).

With the ambition of introducing “fresh” products to its stores, creating CDCs was a step towards success as the theory of