Supply Chain Management

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Supply Chain Management
Introduction

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Outline
 What is supply chain management?
 A supply chain strategy framework
 Components of a SCM
 Major obstacles and common problems
 Seven Eleven Japan

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Traditional View: Supply Chains in
the Economy (1990, 1996)
 Freight Transportation $352, $455 B
– Transportation manager in charge
– Transportation software
 Inventory Expense $221, $311 B
– Inventory manager in charge
– Inventory software
 Administrative Expense $27, $31 B
 Logistics related activity 11%, 10.5% of GNP
 $898 B spent domestically for SC activities in 1998.
 $1,160 B of inventory in the US economy in the early 2000s.
Transportation and inventory managers

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Traditional View: Cost breakdown of a
manufactured good
 Profit 10%
 Supply Chain Cost 20%
 Marketing Cost 25%
 Manufacturing Cost 45%
Profit
Supply Chain
Cost
Marketing
Cost
Manufacturing
Cost
Effort spent for supply chain activities are invisible to the customers.

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What can Supply Chain Management do?
 Estimated that the grocery industry could save $30 billion (10% of operating
cost) by using effective logistics and supply chain strategies
– A typical box of cereal spends 104 days from factory to sale
– A typical car spends 15 days from factory to dealership
– Faster turnaround of the goods is better?
 Laura Ashley (retailer of women and children clothes) turns its inventory 10
times a year five times faster than 3 years ago
– inventory is emptied 10 times a year, or an item spends about 12/10 months in the
inventory.
– To be responsive, it relocated its main warehouse next to FedEx hub in Memphis, TE.
 National Semiconductor used air transportation and closed 6 warehouses, 34%
increase in sales and 47% decrease in delivery lead time.

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Magnitude of Supply Chain Management
 Compaq estimates it lost $0.5 B to $1 B in sales in 1995
because laptops were not available when and where
needed
 P&G (Proctor&Gamble) estimates it saved retail
customers $65 M (in 18 months) by collaboration
resulting in a better match of supply and demand
 When the 1 gig processor was introduced by AMD
(Advanced Micro Devices), the price of the 800 meg
processor dropped by 30%

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Importance of SCM understood by some
 AMR Research:
– "The biggest issue enterprises face today is intelligent visibility of their
supply chains-both upstream and down"
 Forrester Research:
– "Companies need to sense and proactively respond to unanticipated variations
in supply and demand by adopting emerging technologies such as intelligent
agents. To boost their operational agility, firms need to transform their static
supply chains into adaptive supply networks”
 Gartner Group:
– “By 2004, 90% of enterprises that fail to apply supply-chain management
technology and processes to increase their agility will lose their status as
preferred suppliers”
» Open ended statement. Agility can be increased continuously.

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Top 25
Supply Chains
AMR research http://www.amrresearch.com
publishes reports on supply chains
and other issues.
The Top 25 supply chains report comes
out in Novembers.
The table on the right-hand side is from
The Second Annual Supply Chain
Top 25 prepared by Kevin Riley and
Released in November 2005.

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SCM Generated Value
Minimizing supply chain costs
while keeping a reasonable service level
customer satisfaction/quality/on time delivery, etc.
This is how SCM contributes to the bottom line
SCM is not strictly a cost reduction paradigm!

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A picture is better than 1000 words!
How many words would be better than 3 pictures?
- A supply chain consists of
- aims to Match Supply and Demand,
profitably for products and services
SUPPLY SIDE DEMAND SIDE
The right
Product
Higher
Profits
The right
Time
The right
Customer
The right
Quantity
The right
Store
The right
Price
=
+
+ +
+ +
- achieves
Supplier Manufacturer Distributor Retailer Customer
Upstream
Downstream

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Detergent supply chain:
Customer wants
detergent
Albertson’s
Supermarket
Third
party DC
P&G or other
manufacturer
Plastic cup
Producer
Chemical
manufacturer
(e.g. Oil Company)
Tenneco
Packaging
Paper
Manufacturer
Timber
Industry
Chemical
manufacturer
(e.g. Oil Company)

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Flows in a Supply Chain
Customer
Material
Information
Funds
The flows resemble a chain reaction.
Supplier

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SCM in a Supply Network
 Supply Chain Management (SCM) is concerned with the management and control of
the flows of material, information, and finances in supply chains.
Supply
Demand
Products and Services
Cash
Supply Side OEM Demand Side
THAILAND INDIA MEXICO TEXAS US
N-Tier Suppliers Suppliers Logistics Distributors Retailers
Information
 The task of SCM is to design, plan, and execute the activities at the different stages
so as to provide the desired levels of service to supply chain customers profitably

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Importance of Supply Chain Management
 In 2000, the US companies spent $1 trillion (10% of GNP) on supply-related
activities (movement, storage, and control of products across supply chains).
Source: State of Logistics Report
 Eliminating inefficiencies in supply chains can save millions of $.
Tier 1
Supplier
Manufacturer Distributor Retailer Customer
Inefficient
logistics
High
stockouts
Ineffective
promotions
Frequent Supply shortages
High landed costs to
the shelf
High inventories
through the chain
Low order fill
rates
Glitch-Wrong Material,
Machine is Down –
effect snowballs

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Supply
Sources:
plants
vendors
ports
Regional
Warehouses:
stocking
points
Field
Warehouses:
stocking
points
Customers,
demand
centers
sinks
Purchase
Inventory
Transportation
Inventory
A Generic Supply Chain

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Cycle View of Supply Chains
Customer Order
Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Any cycle
0. Customer arrival
1. Customer triggers an order
2. Supplier fulfils the order
3. Customer receives the order

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Push vs Pull System
 What instigates the movement of the work in the system?
 In Push systems, work release is based on downstream demand
forecasts
– Keeps inventory to meet actual demand
– Acts proactively
» e.g. Making generic job application resumes today (e.g.: exempli gratia)
 In Pull systems, work release is based on actual demand or the
actual status of the downstream customers
– May cause long delivery lead times
– Acts reactively
» e.g. Making a specific resume for a company after talking to the recruiter

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Push/Pull View of Supply Chains
Procurement,
Manufacturing and
Replenishment cycles
Customer Order
Cycle
Customer
Order Arrives
Push-Pull boundary
PUSH PROCESSES PULL PROCESSES

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Examples of Supply Chains
Dell / Compaq
– Dell buys some components for a product from its suppliers
after that product is purchased by a customer. Extreme case of a
pull process
 Zara, Spain’s answer to Italy’s Benetton
– Sells apparel with a short design-to-sale cycle, avoids markdowns.
 Toyota / GM / Volkswagen, in the course notes
 McMaster Carr / W.W. Grainger, sell auto parts
 Amazon / Barnes and Noble
 Frozen food industry/Fast food industry/5 star restaurants
 Internet shopping: Webvan / Peapod

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SCM Strategy

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Mission-Strategy-Tactics-Decisions
 Mission, Mission statement
– The reason for existence of an organization
 Strategy
– A plan for achieving organizational goals
 Tactics
– The actions taken to accomplish strategies
 Operational decisions
– Day to day decisions to support tactics

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Life Strategy for Ted
Ted is an undergrad. He would like to have a career in business, have
a good job, and earn enough income to live comfortably
Mission: Live a good life
Goal: Successful career, good income
Strategy: Obtain a master’s degree
Tactics: Select a college and a concentration
Operations: Register, buy books, take
courses, study, graduate, get a job

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Linking SC and Business Strategy
New
Product
Development
Marketing
and
Sales
Operations Distribution Service
Finance, Accounting, Information Technology, Human Resources
Competitive (Business) Strategy
Product Development Strategy
-Portfolio of products
-Timing of product introductions
Marketing Strategy
-Frequent discounts
-Coupons
Supply Chain Strategy

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Strategies:
Product Development
It relates to Technologies for future
operations (via patents) and Set
of products/services
 Be the technology leader
IBM workstations
 Offer many products
Dell computers
 Offer products for locals
Tata’s Nano at $2500=100000 rupees
Production at Singur, West Bengal, India;
l x w x h=3.1 x 1.5 x 1.6 meters;
Top speed: 105km/hr;
Engine volume 623 cc;
Mileage 50 miles/gallon;
Annual sales target 200,000.

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Strategies
 Marketing and sales strategy relates to positioning, pricing and
promotion of products/services
– e.g. Never offer more than 40% discount
– e.g. EDLP = every day low price
» At Wal-Mart
– e.g. Demand smoothing via coupons
» BestBuy
 Supply chain management strategy relates to procurement,
transportation, storage and delivery
– e.g. Never use more than 1 supplier for every input
– e.g. Never expedite orders just because they are late
– e.g. Always use domestic suppliers within the sales season not in advance.

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Fitting the SC to the customer or vice versa?
 Understand the customer Wishes
 Understand the Capabilities of your SC
 Match the Wishes with the Capabilities
 Challenge: How to meet extensive Wishes
with limited Capabilities?

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Achieving Strategic Fit: Consistent SCM
and Competitive strategies
 Fit SC to the customer
 Understanding the Customer
– Range of demand, pizza hut stable
– Production lot size, seasonal products
– Response time, organ transplantation
– Service level, product availability
– Product variety
– Innovation
– Accommodating
poor quality
Implied (Demand)
Uncertainty for SC
Implied trouble
for SC

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Contributors to Implied Demand Uncertainty
Low High
Price Responsiveness
Customer Need
Implied Demand Uncertainty
Commodities
Detergent
Long lead time steel
Customized products
High Fashion Clothing
Emergency steel,
for maintenance/replacement
Short lead times, product variety,
distribution channel variety, high rate of innovation and
high customer service levels all increase
the Implied Demand Uncertainty

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Understanding the Supply Chain:
Cost-Responsiveness Tradeoff
High Low
Low
High
Responsiveness (in time, high service level and product variety)
Cost in $
Efficiency frontier
Inefficient
Fix responsiveness Impossible
Inefficiency Region
Why decreasing slope (concave) for the efficiency frontier?

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Achieving Strategic Fit: Wishes vs. Capabilities
Implied
uncertainty
spectrum
Responsive
(high cost)
supply chain
Efficient
(low cost)
supply chain
Certain
demand
Uncertain
demand
Responsivenes
spectrum
Lunch buffet
<Low margin>
Gourmet dinner
<High margin>

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Loosing the strategic fit: Webvan
 Webvan started a merger with HomeGrocer in Sept 2000 and
completed in May 2001.
 Declared bankruptcy in July 2001. Why?
– “Webvan was so behemoth that could deliver anything to anyone anywhere
that it lost sight of a more mundane task: pleasing grocery customers day
after day”.
– Short to midterm cash mismanagement. Venture capital of $1.2 B run out.
– Merger costs: duplicated work force, integration of technology, realignment
of facilities.
 Peapod has the same business model but more focused in terms of
service and locations. It actually survives with its parent company
Royal Ahold’s (Dutch Retailer) cash.
– Delivers now at a fee of $6.95 within a day.

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Top 10 Retailers Reported in 2008 – First 4
Source www.deloitte.com/dtt/cda/doc/content/dtt_2008globalpowersofretailing.pdf

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Top 10 Retailers Reported in 2008 – First 5-10

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Big retailers’ Strategy
 Wal-Mart: Efficiency
 Target: More quality and service
 Carrefour: International, ambiance
 K-Mart: Confused.
– Squeezed between Target and Wal-Mart
– Reliance on coupon sales
– Do coupons stabilize or destabilize a Supply chain?
 K-Mart and Sears merged in November 2004.
Now called Sears Holdings.
» K-Mart gets cash
» Sears gets presence outside malls

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Other Factors
 Multiple products in a SC. Multiple customers for a given product
– Separate supply chains or Tailored supply chains
» e.g. Barnes and Noble: Retailing and/or e-tailing
– Product and/or customer classes
» e.g. UTD library loans books for 6 months (2 weeks) to faculty (students)
» Customer segmentation by pricing
 Competitors: more, faster and global
» UTD online programs compete globally
 Product life cycle (shortening)
– SCM strategy moves toward efficiency and low implied uncertainty as products age
» e.g. Air travel is becoming more efficient
 e.g. Southwest airlines lead the drive for efficiency
 e.g. Airbus announced A380 accommodating 555-800 people on Jan 17, 2005.
» e.g. Flat screen TV producer of AU Optronics of Taiwan was looking for ways to make its
SC more efficient in June 2004.
– Replacement sales
» Selling to replace broken units.
 e.g. AC replacement is about 50% of the market.
– Macroeconomic factors for visibility
» Forecasting Home Depot sales from S&P 500 price index.
 Positive correlation is detected.

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Achieving Strategic Fit over a Lifecycle
Responsive
(high cost)
supply chain
Efficient
(low cost)
supply chain
Certain
demand
Uncertain
demand

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Integration
 Integration is the central theme in SCM
 Building synergies by integrating business functions,
departments and companies

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Strategic Scope
Suppliers Manufacturer Distributor Retailer Customer
Competitive
Strategy
Product Dev.
Strategy
Supply Chain
Strategy
Marketing
Strategy

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Supply Chain Drivers and Obstacles

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Drivers of Supply Chain Performance
Efficiency Responsiveness
Inventory Transportation Facilities
Information
Supply chain structure
Logistical
Drivers
How to achieve
Sourcing Pricing
Cross-
Functional
Drivers

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1. Inventory
 Convenience: Cycle inventory
– No customer buys eggs one by one
 Unstable demand: Seasonal inventory
– Bathing suits
– Xmas toys and computer sales
 Randomness: Safety inventory
– 20% more syllabi than the class size were available in the
first class
– Compaq’s loss in 95
 Pipeline inventory
– Work in process or transit

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Little’s law
Long run averages = Expected values
I = R . T
I=Pipeline inventory;
R=output per time=throughput;
T=delay time=flow time
Flow time? Thruput? Pipeline (work in process) Inventory?
10/minute
Spend 1 minute

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2. Transportation
 Air
 Truck
 Rail
 Ship
 Pipeline
 Electronic

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3. Facilities
 Production
– Flexible vs. Dedicated
– Flexibility costs
» Production: Remember BMW: “a sports car disguised as a sedan”
» Service: Can your instructor teach music as well as SCM?
» Sports: A playmaker who shoots well is rare.
 Inventory-like operations: Receiving, Prepackaging,
Storing, Picking, Packaging, Sorting, Accumulating,
Shipping
– Job Lot Storage: Need more space. Reticle storage in fabs.
– Crossdocking: Wal-Mart

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4. Information
 Role in the supply chain
– The connection between the various stages in the supply chain
– Crucial to daily operation of each stage in a supply chain
» E.g., production scheduling, inventory levels
 Role in the competitive strategy
– Allows supply chain to become more efficient and more
responsive at the same time (reduces the need for a trade-off)
– Information technology
» Andersen Windows
 Wood window manufacturer, whose customers can choose from a library of
50,000 designs or create their own. Customer orders automatically sent to
the factory.

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Characteristics of the Good Information
Information Global
Scope
Coordinated
Decisions
Supply Chain
Success
Strategy Analytical Models $$$
Information
 Accurate?
 Accessible?
 Up-to-date?
 In the Correct form?
» If not, database restricted ability. How difficult is it to import data into SAP?

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Quality of Information
 Information drives the decisions:
– Good information means good decisions
 IT helps: MRP, ERP, SAP, EDI
 Relevant information?
 How to use information?

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Information Technology in a Supply
Chain: Legacy Systems
Supplier Customer
Retailer
Distributor
Manufacturer
Strategic
Planning
Operational

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Information Technology in a Supply Chain:
ERP Systems
Supplier Customer
Retailer
Distributor
Manufacturer
Strategic
Planning
Operational
ERP
Potential
ERP
Potential
ERP

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Information Technology in a Supply Chain:
Analytical Applications
Supplier Customer
Retailer
Distributor
Manufacturer
Strategic
Planning
Operational
Supplier
Apps
SCM
MES
Dem Plan
Transport execution &
WMS
APS Transport & Inventory
Planning
CRM/SFA

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ERP Systems
 Wider focus
 Push (MRP) versus Pull (demand information transmitted
quickly throughout the supply chain)
 Real-time information
 Coordination and Information sharing
 Transactional IT
 Expensive and difficult to implement
– About 25% of ERP installations are cancelled within a year
– About 70% of ERP installations go over the budget

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IT Push
0
100
200
300
400
500
1965 1973 1981 1989 1997
IT investment($B)

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Supply Chain Software Push
See Top 100 under /articles.html
Source Kanakamedala,
Ramsdell, Srivatsan (2003).
McKinsey Quarterly, No 1.

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5. Sourcing
 Role in the supply chain
– Set of processes required to purchase goods and services in a supply chain
– Supplier selection, single vs. multiple suppliers, contract negotiation
 Role in the competitive strategy
– Sourcing is crucial. It affects efficiency and responsiveness in a supply chain
– In-house vs. outsource decisions- improving efficiency and responsiveness
» TI: More than half of the revenue spent for sourcing.
» Cisco sources: Low-end products (e.g. home routers) from China.
 Components of sourcing decisions
– In-house versus outsource decisions
– Supplier evaluation and selection
– Procurement process:
» Every department of a firm buy from suppliers independently, or all together.
 EDS to reduce the number of officers with purchasing authorization.

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6. Pricing
 Role in the supply chain
– Pricing determines the amount to charge customers in a supply chain
– Pricing strategies can be used to match demand and supply
» Price elasticity: Do you know yours?
 Role in the competitive strategy
– Use pricing strategies to improve efficiency and responsiveness
– Low price and low product availability; vary prices by response times
» Amazon: Faster delivery is more expensive
 Components of pricing decisions
– Pricing and economies of scale
– Everyday low pricing versus high-low pricing
– Fixed price versus menu pricing, depending on the product and services
» Packaging, delivery location, time, customer pick up
» Bundling products; products and services

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Considerations for Supply Chain Drivers
Driver Efficiency Responsiveness
Inventory Cost of holding Availability
Transportation Consolidation Speed
Facilities Consolidation /
Dedicated
Proximity /
Flexibility
Information Low cost/slow/no
duplication
High cost/
streamlined/reliable
Sourcing Low cost sources Responsive sources
Pricing Constant price Low-high price

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Major Obstacles to Achieving Fit
 SC is big:
– Variety of products/services
– Spoiled customer
– Multiple owners (Procurement, Production, Inventory,
Marketing) / multiple objectives
– Globalization
Local optimization and lack of global fit

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 Dealing with Multiple Owners / Local Optimization
– Information Coordination
» Information sharing / Shyness / Legal and ethical issues
– Contractual Coordination
» Mechanisms to align local objectives with global ones
– Coordination with (real) options
» Rare in the practice
– Without coordination, misleading reliance on metrics:
» Average safety inventory, Average incoming shipment size, Average
purchase price of raw materials, Revenue
Major Obstacles to Achieving Fit

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Major obstacles to achieving fit
 Instability and Randomness:
– Increasing product variety
– Shrinking product life cycles
– Customer fragmentation: Push for customization, segmentation
– Fragmentation of Supply Chain ownership: Globalization
Increasing implied uncertainty

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Common problems
 Lack of relevant SCM metrics: How to measure
responsiveness?
» How to measure efficiency, costs, worker performance, etc?
 Poor inventory status information
» Theft: Major problem for furniture retailers.
» Transaction errors: Retailers with inaccurate inventory records
for 65% of SKUs
» Information delays, dated information, incompatible info. systems
» Misplaced inventory: 16% of items cannot be found at a major retailer
» Spoilage: active ingredients in the products are losing their properties
» Product quality and yield
» Lack of visibility in SCs
 Do you know the inventory your distribution centers hold?
 Do you know the inventory your fellow retailer holds?

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Common problems
 Poor delivery status information
» Not knowing the order status
 Poor IT design
» Unreliable, duplicate data
» Security problems: too much or too little
 Ignoring uncertainties
– “The flight from uncertainty and ambiguity is so motivated that we often
create pseudocertainty.”
– Nitin Nohra, HBR February 2006 issue, p.40.
 Internal customer discrimination
» Giving lower priority to internal customers than external customers
 Poor integration
 Elusive inventory costs
» Accounting systems do not capture opportunity costs
 SC-insensitive product design

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Summary
 Supply Chain Introduction
 Competitiveness / Business strategy / SCM strategy
 Components
» Inventory, Transportation, Facilities, Information, Sourcing, Pricing
 Challenges

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Seven Eleven Japan (SEJ)
A Case Study

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Factual Information on Seven Eleven Japan (SEJ)
 Largest convenience store in Japan with market value of $95 B. The third largest
retail company in the world after Wal-Mart and Home Depot.
 Established in 1974.
 In 2000, total sales $18,000 M, profit $620 M.
 Average inventory turnover time 7-8.5 days.
 Stock value increased by 3000 times from 1974 to 2000.
 In 1985, there were 2000 stores in Japan, increasing by 400-500 per year.
 Return on equity 14% over 2000-2004.
 A SEJ store is about the half the size of a US 7-eleven store,
that is about 110 m2.
 Sales:
– Products
» 32.9% Processed food: drinks, noodles, bread and snacks
» 31.6% Fast food: rice ball, box lunch and hamburgers
» 12.0% Fresh food: diary products
» 25.3% Non-food: magazines, ladies stockings and batteries.
– Services: Utility bill paying, installment payments for credit companies, ATMs, photocopying

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More on SEJ
More factual info:
 Average sales about twice of an average US store
 SKU’s offered in store: Over 3,000 (change by time of day, day of week, season)
 Virtually no storage space
 No food cooking at the stores
Japanese Images of Seven Eleven:
 Convenient
 Cheerful and lively stores
 Many ready made dinner items I buy
 Famous for its great boxed lunch and dinner
 - On weekends, when I was single, I went to buy lunch and dinner
SC strategy:
Micro matching of supply and demand (by location, time of day, day of week, season)

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Seven Eleven - Number of Stores
0
1000
2000
3000
4000
5000
6000
85 86 87 88 89 90 91 92 93 94
Number of Stores
1999: 8,027
2004: 10,356

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Seven Eleven - Net Sales (B Yen)
Sales 1,963 B Yen in 2000
0
200
400
600
800
1000
1200
1400
85 86 87 88 89 90 91 92 93 94
Net Sales

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Seven Eleven - Pre tax Profit (B Yen)
0
10
20
30
40
50
60
70
80
90
100
85 86 87 88 89 90 91 92 93 94
Profit

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Seven Eleven - Inventory turnover (days)
0
2
4
6
8
10
12
14
85 86 87 88 89 90 91 92 93 94
Inventory

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Information Strategy
Quick access to up to date information (as opposed to data):
 In 1991, SEJ implemented Integrated Service Digital Network to link stores, headquarter,
DCs and suppliers
 Customer checkout process
– Clerk records the customer’s gender, (estimated) age and purchased items. These Point of Sales
(POS) data are transmitted to database at the headquarters.
» Store hardware: Store computer, POS registers linked to store computer, Graphic Order
Terminals, Scanner terminals for receiving
 Daily use of the data
– Headquarters aggregate the data by region, products and time and pass to suppliers and stores by
next morning. Store managers deduce trend information.
 Weekly use of the data
– Monday morning, the CEO chairs a weekly strategy formulation meeting attended by 100
corporate managers.
– Tuesday morning, strategies are communicated to Operation Field Counselors who arrive in
Tokyo on Monday night.
– Tuesday afternoon, regional elements (e.g. weather, sport events) are factored into the strategy.
Tuesday nights, field counselors return back to their regions.

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Information Analysis of POS Data
 Analysis of
– Sales for product categories over time
– SKU (stock keeping unit)
– Waste or disposal
– 10 day (or week) sales trend by SKU
 Sales trends for new product
– In the early 1990s, half-prepared fresh noodle sales were going up,
new fresh noodle products were quickly developed
 Sales trend by time and day
– Different sales patterns for different sizes of milk at different times of the day results in
rearrangement of the milks in the fridge. Extreme store micromanagement.
» Let us speculate: Flavored milks are put in front of the pure milks in the evening (or the morning?).
 List of slow moving items
– About half of 3000 SKUs are replaced by new ones every year

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Facilities Strategy
 Limited storage space at stores which have only 125-150 m2 space
– Frequent and small deliveries to stores
 Deliveries arrive from over 200 plants.
 Products are grouped by the cooling needs
– Combined delivery system: frozen foods, chilled foods, room temperature and hot foods.
– Such product groups are cross-docked at distribution centers (DC). Food DCs store no
inventory.
– A single truck brings a group of products and visits several stores within a geographical region
– Aggregation: No supplier (not even coke!) delivers direct
 The number of truck deliveries per day is reduced by a factor of 7 from 1974 to 2000.
Still, at least 3 fresh food deliveries per day. Goods are received faster with the use of
scanners.
 Have many outlets, at convenient locations, close to where customers can walk
 Focus on some territories, not all: When they locate in a place they blanket (a.k.a.
clustering) the area with stores; stores open in clusters with corresponding DC’s.
– 844 stores in the Tokyo region; Seven Eleven had stores in 32 out of 47 prefectures in 2004. No
stores in Kobe.
– Success rate of franchise application <= 1/100

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The Present and the Future
 Is food preparation a good idea at 7-eleven locations?
– e.g. Compare microwave heating vs. salad preparation.
 Why SEJ does not allow direct delivery from suppliers to retailers?
 Point out which of the following strategies can also be used in US (or Taiwan)
– Information strategy
– Facilities strategy
 Discuss the differences between the Japanese and US (or Taiwanese) consumers with
regard to
– Frequency and amount of grocery purchase
– Use of credit cards vs. cash for purchase
– 7-eleven inventory turnover rate is 50 in Japan and 19 in the USA.
 7-eleven growing rapidly in the US so it aims to be a web depot in both the US and Japan.
Does this make sense from a supply chain perspective?
– Cost vs. Responsiveness
– Business strategy
 What is the risk of micro-matching strategy?
 No direct deliveries to SEJ, what is the potential risk of this strategy if used in the USA?

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Deloitte 2008 Global Retailers Survey
Excerpts from
www.deloitte.com/dtt/cda/doc/content/dtt_2008globalpowersofretailing.pdf
Downloaded on Jan 30, 2008.