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Case study on 7 eleven store


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Chopra and Meindl Case

Published in: Business
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Case study on 7 eleven store

  2. 2. 1. INCREASING RESPONSIVENESS OF A CONVENIENCE STORE CHAIN 1) Appropriate technology deployment : Technologies like RFID can be employed to create a responsive supplier Risk : costs coupled with demand uncertainty 2) Demand planning: trend projections and forecasting by analyzing past sales, trends and seasonality Risk: high error / quality of data 3) Proper distribution and warehouse model: 7-eleven has dedicated warehouse for every 50 store Risk : high capital investment 4) Rapid replenishment : this allows for low levels of inventory by following JIT Risk: high replenishment cost
  3. 3. 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? • 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 • High cost of transportation • Risk of Stock out • Shifting of customers
  4. 4. 3. 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? • All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation • Highly Responsive operation • Saturation of areas with stores • Seven-eleven requires all suppliers to deliver to the DC where products are sorted by temperature. This reduces the outbound transportation cost • Services like electricity bill payment and seven bank has provided customers a one-stop store for all their needs.
  5. 5. 4. SEVEN-ELEVEN DOES NOT ALLOW DIRECT STORE DELIVERY IN JAPAN, WITH ALL PRODUCTS FLOWING THROUGH ITS DISTRIBUTION CENTER. WHAT BENEFIT DOES SEVEN-ELEVEN DERIVE FROM THIS POLICY? WHEN IS DIRECT STORE DELIVERY MORE APPROPRIATE? BENEFITS • Reduced complexity at store level • Segregation of food products at the DC based on temperature • Reduced cost of receiving at stores due to less frequent visits • Each outbound truck made deliveries to multiple retail stores Direct store delivery is most appropriate when - • Stores are large • Varieties of product is less • Need special handling requirements like alcoholic beverages, televisions etc. • Nearly-full truck load quantities are coming from a supplier to a store
  6. 6. 5. WHAT DO YOU THINK ABOUT THE 7DREAM CONCEPT FOR SEVEN-ELEVEN JAPAN? FROM A SUPPLY CHAIN PERSPECTIVE, IS IT LIKELY TO BE MORE SUCCESSFUL IN JAPAN OR THE UNITED STATES? WHY? • Local convenience store is popular in Japan • Lower cost alternative to having a package carrier deliver the product at home Might be more successful in japan because- • The existing distribution network of seven-eleven • Frequency of visits by customers. The high visit frequency ensures that packages are not occupying valuable store shelf space for a long time • Frequent visits ensure that the marginal cost to the customer of picking up at a Japanese seven-eleven is small
  7. 7. 6. SEVEN-ELEVEN IS ATTEMPTING TO DUPLICATE THEIR SUCCESSFUL JAPANESE SUPPLY CHAIN STRUCTURE IN THE UNITED STATES WITH THE INTRODUCTION OF CDCS. WHAT ARE THE PROS AND CONS OF THIS APPROACH? KEEP IN MIND THAT STORES ARE ALSO REPLENISHED BY WHOLESALERS AND DSD BY MANUFACTURERS. • Reduced inventory storage • Faster delivery of perishable goods. • Larger distance between stores • Seven-eleven stores are getting both direct store deliveries as well as wholesaler deliveries • Setting up its own Distribution channels does not allow seven-eleven to get the same level of transportation aggregation as it gets in japan
  8. 8. 7. THE UNITED STATES HAS FOOD SERVICE DISTRIBUTORS LIKE MCLANE THAT ALSO REPLENISH CONVENIENCE STORES. WHAT ARE THE PROS AND CONS TO HAVING A DISTRIBUTOR REPLENISH CONVENIENCE STORES VERSUS A COMPANY LIKE SEVEN-ELEVEN MANAGING ITS OWN DISTRIBUTION FUNCTION? Pros • Distributor is able to aggregate deliveries across many competing stores • Reduction in cost of storing, maintenance and distribution of inventory Cons • All deliveries done through a distributor. Thus seven-eleven has less control • Subsidies has to be provided in order to compete with the competitors with smaller supply chain.
  9. 9. THANK YOU