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SCM at 7 eleven


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This presentation analyses the Supply Chain Management strategy followed at Seven-Eleven , Japan .

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SCM at 7 eleven

  1. 1. Seven eleven japan co<br />Sourabh Jain , 10HM30<br />ShirsenduSahoo , 10HM27<br />
  2. 2. 1) What are the ways in which a convenience store can be responsive and what are the risks associated ?<br />High Density of Stores in a given area .<br />Efficient and rapid collection , process and feedback of POS data .<br />Multiple deliveries to all stores of fast moving items like food .<br />RISK : Cost management , Quality to be maintained , correct data analysis<br />
  3. 3. 2)Is 7-11 trying to micromatch supply and demand with rapid replenishments . What are the risks ?<br />The demand for goods like food stuff is continuous but varies very quickly even within a day . <br />In order to satisfy this fluctuating demand , the distribution system of 7-11 is very responsive and is supported by the IT system .<br />RISK : High costs of operation . If IT system fails , this idea will not work .<br />
  4. 4. 3)What has 7 11 done in its choice of facility location , inventory management , transportation and information infrastructure to support its SCM strategy ?<br />Market Dominance strategy : Establish stores in areas where there are already stores.<br />Total Information System :<br /> Installed in every outlet and linked to HQ , Suppliers and 7-11 distribution centers . <br /> Uses ISDN to collect , process and feed back POS data quickly . <br />Inventory Management : Rapidly moving items were kept in enough quantities while slow moving items would be replaced by new ones . The basis is the TIS .<br />
  5. 5. Distribution System : <br /> Flexible to alter delivery schedules . <br /> Store orders , supplier immediately receives order and sends order by truck to Distribution center .<br />Combined Delivery System : <br /> Delivery of products from different suppliers was directed into a single truck . <br /> All deliveries were done at off peak hours and one truck delivered to many stores in one trip .<br />
  6. 6. 4)Why 7-11 does not follow Direct-Store delivery , Why does it use Distribution centres and what are benefits of this policy ? When is Direct Store Delivery better ?<br />Combined Distribution centers was introduced by 7-11 so that it always had fresh products ie offer short replenishment cycle times . It also allowed for careful tracking of sales .<br />With Direct Store Delivery , the stores don’t need to maintain a distribution system as manufacturers themselves take care of that . So there is cost efficiency , but responsiveness of manufacturers to fluctuating demand is suspect…<br />
  7. 7. 5)Review 7dream . Will it be more successful in US or Japan , why ?<br />7Dream is an e-commerce company of 7-11 which allowed 7-11 store customers to pick up their online purchases at the local convenience store rather than have home delivery .<br />It uses the existing distribution system and hence will not add significantly to 7-11’s costs .<br />Also the stores are easily accessible . <br />
  8. 8. We believe that 7-dream will be more popular in Japan because :<br /> 1) Store density is higher than that in US . So accessibility is better .<br /> 2) Americans do not mind having the product delivered directly to their home . They would not go all the way to a store to pickup some item when for a few dollars , somebody would just deliver it to you ….<br />
  9. 9. 6)Pros and cons of introducing CDC’s in US .Stores are also supplied by wholesalers and DSD by makers . <br />Pros :<br />Ensures Fresh supply of items<br />Operational efficiency<br />Cons :<br />Wholesalers may have issues because of these distribution centers<br />Manufacturers may prefer Direct Store Delivery as they have more control here . <br />
  10. 10. 7)Pros and cons of having a distributor replenish convenience stores vs 7-11 managing its own distribution function ?<br />Pros :<br />Managing the distribution system is entirely the distributor’s headache and not 7-11’s<br />May be cost effective.<br />Cons :<br />Less control over replenishment cycles and / or quality of items<br />May not be as responsive as having own distribution function .<br />