Seven Eleven Case Study

1. 7 ELEVEN CASE
STUDY
Allu Narendranath-1602024
Ashish Barui-1602051
Anuj Agarwal-1602037
A. Raghucharan-1602032
Hemanth Chitraju-1602063

2. CONVENIENCE STORE:
•Nekkei Ryuutsuu Shinbun categorizes the convenience
stores following three conditions as a convenience store.
•Sales Composition ratio of Perishable goods is less than
30% of total Sales.
•Business hours per day should be more than 16 Hours.
•Majority of department area should be less than 200 sq.
mts.

3. 7 ELEVEN
ANALYSIS:

4. INCREASING
RESPONSIVENESS OF
CONVENIENCE STORE:
WIDE RANGE OF
PRODUCTS

5. 2. RAPID
REPLENISHMENT
POLICY:
•7 Eleven adopts combined
distribution system for
greater efficiency, which
allows products from
different suppliers and
manufacturers to be
delivered to stores on the
same truck.
•The distribution system is
handled by a 3PL company
known as Transfleet Ltd.
Risks:
•Increase in costs due to
increase in staff,
transportation and various
other costs.

6. OMNI CHANNEL
NETWORK:
•With customers as a
starting point, the
Omni-Channel Strategy
combines the
convenience of Internet
sales and the peace of
mind of real stores and
integrates a wide range
of business
infrastructure.
•The strategy has been
positioned as the driver
of growth for the Seven
& i Group.

7. 3. HIGH SERVICE
LEVEL:
•To transport and process fresh
vegetables that have just been
harvested, SEJ introduced cold
chain distribution in 2005.
•Under this system, vegetables that
have just been harvested are put
into cold storage on the spot and
kept at a consistently managed
temperature in their journey in the
delivery vehicle, through the
sorting center, and from the
production facility to the store,
where they are displayed for
customers in fresh condition.

8. MICRO MATCHING SUPPLY AND DEMAND: IT
MANAGEMENT
Risks: Higher cost of operation, If IT system fails this idea will not work.

10. FACILITY LOCATION:
MARKET
CONCENTRATION
STRATEGY
•High density
concentrated store
openings
•Market entry was built
around a cluster of 50-
60 stores supported by
a DC
•SEJ network included
both company-owned
stores and third-party
owned franchises
•Improved distribution,
brand awareness,
franchise support
services
•Provided a competitive
edge by deterring
competition

11. INVENTORY
MANAGEMENT:
Distribution Centers:
•DCs doesn’t carry any inventory;
they were used just for
transferring the goods from
supplier trucks to stores.
•Carrying no inventory resulted in
high efficiency
Convenience Stores:
•Stores only carried daily stocks
•Replenished by daily delivery
trucks
•Highly efficient but poor
responsiveness

12. TRANSPORTATION:
•Transportation was at
two levels: From
suppliers to DC and
from DCs to stores
•Store orders were
immediately
transmitted to supplier
as well as DC
•Store orders were
separated by supplier
so the DC could easily
assign it to the
appropriate store truck
•Suppliers sends the
orders by truck to DC

13. TRANSPORTATION:
DELIVERY FROM
DC TO STORES
•Key to store delivery was
Combined Delivery
System
•Like products(warm,
chilled, frozen ) from
different suppliers were
loaded into a single
temperature controlled
truck
•Each truck made
deliveries to multiple
stores during off-peak
hours

14. INFORMATION
INFRASTRUCTURE:
•Seven Eleven promotes
integration between
hardware and networks
to realize group
synergies and upgrade
administrative
functions.
•To realize “item-by-
item management”, one
of the world’s largest
information system was
built to link stores, DCs
and business partners

15. INFORMATION
INFRASTRUCT
URE: ITEM-BY-
ITEM
•Seven Eleven Introduced a
unique method called Tanpin
Kanri (item-by-item) to cope
up with rapidly changing
customer needs
•It improves the accuracy of
next order by controlling
and verifying trend of each
data based on hypotheses
•This method of order
placement strongly increases
daily sales while meeting
customer demand.

16. ADVANTAGES:
COMBINED
DELIVERY
SYSTEM
•Lower Transportation Costs
•Economic mode of transport with half
truckloads
•Multiple shipments can be aggregated
into a single shipment as per store
orders
•Best suited for seven eleven supply
systems which mainly consists of fast
moving items
•Less information infrastructure needed
than direct delivery system
•Better response time when compared to
direct store delivery
•Aggregation of orders possible as per
store orders
•Very less to No holding costs at
Combined DCs

17. WHEN TO GO
FOR DIRECT
DELIVERY ?
•To minimize inventory costs
•To provide high level of product
availability
•Best suited for slow moving items
•To implement postponement strategy
• High Level of Product Variety

18. 5. 7DREAM
• Established in February 2000, an e-commerce company
• Goal - To exploit the existing distribution system
• Stores were easily accessible to most Japanese
• Stores served as drop-off and collection points for Japanese
Customers
• 92% of its customers preferred to pick up the online
purchases at local convenience stores
• The frequency of the Japanese customers visiting the stores
is high
• Since distribution network is more dense in Japan when
compared to the US network, it is more likely to be
successful in Japan

19. QUESTION 6
Pros:
•Responsive supply chain using the exchange of information
•Increases Efficiency of the Supply chain, thereby meeting supply and
demand
•Decreases the number of deliveries
Cons:
•The number of retail outlet in Japan exceed far more than the U.S. , and
thus may effect the responsiveness of the system
•Maintaining both DSDs and CDCs will be hard and need high level of
coordination.
•The purpose of CDCs is as a cross docking platform, which if used as a
distribution system due to wholesaler, the advantage will be lost.

20. QUESTION 7
Pros:
• Monetary Advantage: They don’t have to invest in DCs or
trucks to perform this task.
Cons:
•Increase in number of relationships may cause problem to
management.
•Responsiveness should be worked upon.
•Inconsistency in Service level between stores.
•Inconsistent Customer Service.