...SUPPLY CHAIN MANAGEMENT 7-11 JAPAN History 7-Eleven is part of an international chain of convenience stores, operating under Seven-Eleven Japan Co. Ltd, which in turn is owned by Seven & I Holdings Co. of Japan. Eleven, primarily operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores, with more than 46,000 outlets. Timeline 1973: York Seven Co., Ltd., established 1974: First store opened (Toyosu Store, Koto-ku and Tokyo) 1975: 24-hour operations (Toramaru Store, Koriyama, Fukushima Prefecture) begun 1976: Total number of stores reached 100. Integration of suppliers and joint delivery started. 1978: Corporate name changed to Seven-Eleven Japan Co., Ltd 1980: Total number of stores reaches 1000 1982: POS and EOB ordering systems introduced. 1985: Introduction of interactive registers capable of transmitting information to and from the headquarters and stores. 1997: Introduction of fifth generation Total Information System 2000: Establishment of e-commerce Company, 7dream.com 2001: Establishment of IYBank Co., Ltd., through joint investment with Ito- Yokado Co., Ltd. Installation of IYBank ATMs in stores. 2004: Establishment of SEVEN-ELEVEN (BEIJING) CO., LTD as a joint venture. Competitive strategy: The strategy followed by 7-11 was to provide high-availability of a variety of reasonable quality products at reasonable prices. Strategy of 7-Eleven Japan Market Dominance was the main objective of 7-11. This was done...
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...SUPPLY CHAIN MANAGEMENT SEVEN-ELEVEN JAPAN CASE STUDY 1 1. 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? It is very important for a convenience store to be responsive, as they should be as convenient as possible, in order to fulfill their customers needs and preferences. Seven Eleven Japan is exactly fulfilling these criteria and therefore is a great example of a responsive convenient store. They have a lot of stores situated in convenient locations, they carefully track their items offering short replenishment cycles (less than 12 hours), they use highly sufficient and appropriate technologies to enhance forecasting and they have a responsive distribution and supply chain, that is vertically integrated in many of their SKUs. The main risks associated with high responsiveness are higher costs and greater uncertainty. Improving responsiveness (in general) could also include local capacity, inventory and enhancing replenishment, however this could lead to higher uncertainty and higher costs (especially for fresh and fast food), due to increasing capacity and store size to hold inventory (5000 SKUs in Seven Eleven Case). 2. Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What...
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...Sunil Chopra TEACHING NOTE: SEVEN-ELEVEN JAPAN CO. The goal of this case is to illustrate how a firm can be successful by structuring its supply chain to support its supply chain strategy. Once Seven-Eleven Japan decided to provide responsiveness by rapid replenishment, it then structured its facilities, inventory, information, and distribution to support this choice. The case also brings up the question of whether the same approach can work in the United States, especially given the greater distances and lower store density. Questions 1. 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? As responsiveness increases, the convenience store chain is exposed to greater uncertainty. 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...
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...To look up at Seven-Eleven Japan as a business and supply chain management model is the ability to gather data about its customers and transform it into “information”. As seen, the company’s key success is the integration among partners as well as share information through highly evolved data-rich supply chain system. Altogether they help facilitate a coordinated supply chain. That is to say, Seven-Eleven Japan knows who is buying which product and at what time, the company knows it because the system is really efficient. Now the system knows who, where and what is sold at any time of the day, thus the supply chain is really responsive and offer the goods where it is needed. This enables Seven-Eleven Japan to be ahead of all others about information system and supply chain management. However, on the other hand, the company takes some risks in doing this, because the Japanese population can be bored or moved. Seven-Eleven has to be careful about the needs every day, and has to react very quickly to all kind of problems the company has to face. Every single person is important in statistics; the company really cares on customer demands. Though the main risk for the company is the potentially high cost concerning the transportation. In order to support its supply chain, Seven-Eleven has remodelled the transportation in their supply chain. The number of trucks was really high, and they could use fewer trucks to do all the transportation work. They have different kind of trucks...
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...Supply Chain Management Case study: 7-eleven Japan Co. Name: Chow Lai Ting Student number: 113226 Section 5 Background Seven-Eleven Japan was established in 1973 with its first store opened in Tokyo. It is considered an outstanding and well-known enterprise in Japan. The rapid growth of Seven-Eleven is also remarkable. In 1985 to 2007, its number of store had drastically increased from 2,299 to 12,034. The annual sales increased from 386 billion to 91.5 billion. Additionally, the company’s return on equity averaged around 14 percent between 2000 and 2004. Seven-eleven is not only the largest convenient store but also the largest retailer with its number of store and operation income in Japan. The reason why Seven-eleven is such successful is its competitive strategy, which is providing a high-availability of product that the customer find it convenient to shop. Thanks to its market dominant strategy and franchise system adapted, and its drivers make the best balance to the trade-off between efficiency and responsiveness, Seven-eleven has considerably become the most successful retail store. Problems The problem of Seven-eleven supply chain is that it replies too much on the transportation to make replenishment every day. The store would not have enough inventories if there is any accidents happen since the storage unit in store is very little. The risks associated with the system that Seven-eleven uses are costly with demand uncertainty. When the demand patterns...
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...Seven Eleven Case Study Questions 3, 4 and 6 Question 3 What has Seven Eleven done in its choice of facility location, inventory management, transportation and information infrastructure to develop capabilities to support its supply chain strategy in Japan? In order to support it’s supply chain strategy in Japan, Seven Eleven has developed a number of capabilities to ease the movement of inventory to and from its distribution center and around it’s entire supply chain network. One method in particular that Seven Eleven has implicated is its cluster location strategy. This is where an average of 50 to 60 stores along side a distribution center are located within a region of demand in Japan. This approach provides Seven Eleven with a centralized strategy to its supply chain; meaning an effective distribution network is formed across the company as the stores and distribution center are located within close proximity to each other allowing for a reduction in transportation times and cost. Another strategy Seven Eleven has implicated to support its supply chain strategy is its effective use of a combined delivery system. This enables the company to distribute products in a more efficiently manner across the supply chain network, as products that fall into similar temperature categories can be transported together and to several store at one given time. Seven Eleven’s investment in inventory management and information Infrastructure has also aided improvements to...
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...Questions 1. 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? A convenience store can be more responsive by doing exactly what Seven-Eleven Japan is doing; many locations, rapid replenishment, appropriate technology deployment, and an equally responsive supplier (vertical integration for many of their SKUs). The risks associated with this system are the costs coupled with demand uncertainty. If demand patterns change dramatically, or the customer base changes, then Seven-Eleven is left with an operation that is not needed. In Seven-Eleven Japan’s case, multiple operations might be shuttered if an apartment building or large employer shuts down or relocates. 2. 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? Micro-matching supply and demand using rapid replenishment assumes that each store will repeat the same demand pattern on a daily basis. The tour bus phenomenon, where a group of unanticipated customers comes to the store and buys all of a type of product will cause difficulty for regular customers. During such an event, the store will likely stock out and customers may visit the next Seven-Eleven site down the block to make their...
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...Supply Chain Management Case Study 1 Seven-Eleven Japan Co. Background Seven-Eleven is a famous convenience store. And it is set up its first store in Tokyo in May 1974, it was found by Masatoshi Ito, the company was first listed on the Tokyo Stock Exchange in October 1979 It had increased its share of the convenience shore market since it opened. It success is greatly contributed to its careful planning, and its information system as well as distribution system. 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 risk in each case? Q3. What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan? Facility location Seven-Eleven Japan based on its fundamental network expansion policy to increase efficiency to customers. Seven-Eleven opened the majority of its new stores in areas with existing cluster of stores. There are so many stores in a particular area. Around 50 to 60 stores are supported by only one distribution centre(DC), and this DC keep no inventory. This strategy can lower the inventory handling cost, and to develop capabilities that support its supply chain strategy in Japan. Inventory management Seven-Eleven offer its stores a choice from...
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...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? Some of the ways that a convenience store chain can response are: * Focusing in the total cost of the supporting a chain, that includes all the elements of cost that go into a purchase like order quantities, deliveries, warehousing, support systems, among others. The risk of this approach is not giving the appropriate amount of profit to the products and services, because focusing in the amount of costs this kind of business will generate. * Controlling the number of deliveries from other companies (vendors) to your store. The risk here is by controlling the number of vendors you are taking the risk of been out of stock and not fulfilling the demand. * Creating a distribution center is one of the best ways to reduce costs, and also control their own supply chain. The risk of this method is that initiating a distribution center is expensive, if your chain has not made the idealize amount of profits this approach is very risky, because this method requires structure, employees, machines, among other expenses. 2. 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 its supply choice? The risks with this supply choice...
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...Case Study #4 (7/11 Japan) 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? -A convenience store can be responsive in a few different ways in order to meet customer needs and wants. The store can conduct customer surveys in order to get a direct response on what the store is lacking or what customers prefer. They could do a store analysis also which would show them customer purchase patterns so they can pinpoint the hot items and when they should be in stock. In both cases the risk is that you could get the wrong information and stock your store wrong, or you could end up only tailoring to one customer’s needs, which might not be the same needs as the majority of your customers. 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? -Rapid replenishment as a strategy for supply and demand runs a few risk which are: customers will discontinue use of a product, the product will remain on the shelf until the shelf life is exceeded or you might not have what the customer needs/wants at the time of need because you are consistently replenishing other products from other customers. By the time the product that the customer wanted arrives in the store...
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...1 i CASE STUDY ~ SEVEN-ELEVEN JAPAN CO. Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing SevenEleven in the United States. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2003. During that period, the number of stores increased from 2,299 to 10,303; annual sales increased from 386 billion to 2,343 billion yen; and net income increased from 9 billion to 91.5 billion yen. Additionally, the company's return on equity (ROE) averaged around 14 percent between 2000 and 2004. In 2004, Seven-Eleven Japan represented Japan's largest retailer in terms of operating income and number of stores. Customer visits to Seven-Eleven outlets totaled 3.6 billion that year, averaging almost 30 visits to a SevenEleven annually for every person in Japan. COMPANY HISTORY AND PROFILE Both Ito-Yokado and Seven-Eleven Japan were founded by Masatoshi Ito. He started his retail empire after World . War II, when he joined his mother and elder brother and began to work in a small clothing store in Tokyo. By 1960 he was in sole control, and the single store had grown into a $3 million company. After a trip to the United States in 1961, Ito became convinced that superstores...
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...CASE: SEVEN ELEVEN JAPAN Executive Summary I Executive Summary The goal of this case is to analyze how a firm can be successful by structuring its supply chain to support its supply chain strategy. Once Seven-Eleven Japan decided to provide responsiveness by rapid replenishment, it then structured its facilities, inventory, information, and distribution to support this choice. The case also brings up the question of whether the same approach can work in the United States, especially given the greater distances and lower store density. Table of Contents II I Table of Contents Executive Summary ................................................................................................................. I II List of Abbreviations......................................................................................................... III 1 Seven-Eleven Japan Co........................................................................................................ 1 1.1 History and Profile ........................................................................................................... 1 1.2 Framework of further discussions .................................................................................... 1 2 Discussion ............................................................................................................................ 1 2.1 Supply Chain Responsiveness ..................................................................
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...Seven-Eleven Japan Co. Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing Seven-Eleven in the United States. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2003. During that period, the number of stores increased from 2,299 to 10,303, annual sales increased from 386 billion to 2,343 billion yen, and net income increased from 9 billion to 91.5 billion yen. The Seven-Eleven Japan Franchise System Seven-Eleven Japan developed an extensive franchise network and performs a key role in the daily operations of this network. The Seven-Eleven Japan network includes both company-owned stores and third-party-owned franchises. In 2004 franchise commissions accounted for over 68 percent of revenue from operations. To ensure efficiency, Seven-Eleven Japan based its fundamental network expansion policy on a market-dominance strategy. Entry into any new market was built around a cluster of 50 to 60 stores supported by a distribution centre. Such clustering gave Seven-Eleven Japan a high density market presence and allowed it to operate an efficient distribution system. Seven-Eleven Japan, in its 1994 annual report, listed the following six advantages of the market-dominance strategy: ...
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...SEVEN-ELEVEN JAPAN CO. CASE ANALYSIS What is the future outlook for Seven Eleven Stores in USA? Seven-Eleven is part of an international chain of convenient stores. 7-Eleven, primarily operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores, with more than 46,000 outlets. The Seven-Eleven business model consists of five key elements: * A differentiated merchandising strategy; * Utilization of 7-Eleven’s retail information system & Managed distribution; * Providing a convenient shopping environment; and * A unique franchise model. Let us have a brief look over 7-Eleven stores in US and Japan: Seven-Eleven Japan: * High density market presence with 50-60 stores supported by distribution centre. * Limited geographical presence * Emphasized regional merchandizing * Processed and fast foods contributed to most of its sales * Products like food and beverages, magazines and consumer items such as soaps and detergents * Services offered like payment of electricity bills, telephone, gas bills, meal delivery services, 7 dream e-commerce, electronic money offering and many * Advanced information technology helped store to analyse store data every day morning and helps in having valuable shelf life * Information system installed in every outlet and linked to HQ, Suppliers and 7-eleven distribution centres. Uses ISDN to collect, process and feedback POS data quickly * Delivery frequency...
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...Seven-Eleven Japan was first established in 1973. They set up their first store in Koto-ku, Tokyo, in 1974 and the company was first listed on the Tokyo Stock Exchange in the month of October, in 1979. In 2004, it was owned by the Ito-Yokado group which alongside the Seven-Eleven stores, managed a chain of supermarkets in Japan and owned a majority share in southland-the company managing Seven-Eleven in the United States. The founder of both Ito-Yokado and Seven-Eleven Japan, Masatoshi Ito, started his retail empire after World War II when he joined his mother and brother and began to work in a small clothing store in Tokyo. He was in complete control by 1960, and the single store had grown into a $3 million company. In 1961, after a trip to the United States, Ito came to the conclusion that superstores were “the wave of the future,” and so the empire began. Ito’s chains of superstores in Tokyo were instantly popular and soon became the core of Ito-Yokado’s retail operations. After Ito’s initial request in 1972, about the prospect of opening Seven-Eleven convenience stores in Japan was rejected, further approach’s by the entrepreneur, saw Southland, the US company, agreeing to a licensing agreement one year later. However, this agreement came to a price: in exchange for 0.6 per cent of total sales, Southland was to give Ito exclusive rights throughout Japan. With this placed in action, the first Seven-Eleven convenience store opened in Tokyo in May 1974. Following this...
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