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Supply Chain – Seven Eleven Case Essay

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? 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 are high cost of transportation which includes gas, vehicle, staff, also the cost of receiving continues incomes of products at the store, the risk of having obsolete inventory and lack of extra space. 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? By creating a distribution center and making all suppliers deliver there instead of the store, in the Seven-Eleven distribution center they classified their products in the four standard categories, by doing that they save costs in delivery recipient and transportation. Also by manufacturing a great amount of products they reduce costs and also the can control their own supply chain and the replenishment of their stores.

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? By having this policy Seven-Eleven Japan reduced their number of trucks from 70 to 11 to each store daily. This reduces dramatically the delivery costs. But direct delivery can be useful too, you can get deliver in any type of situation, like if you’re running out of stock. Also can be use as a promotional matter, because if the products get first to the store they will get a better place in it, so the customer will see it and you sales will grow. But also by combining these two methods (CDC) you’ll get a better profit by using both methods.

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? This concept seems to be successful in Japan because Japanese people prefers to go out and go to their convenience store and also receive their shipment deliver there for easy access. I think that the 7dream will be more successful in Japan than in the United States, the most important reason for this is that in the U.S. people are used to receive their shipments in their home or offices.

6. Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan 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 wholesales and DSD by manufactures. The pros of this approach are almost none, because the duplication of the Japan mode is almost impossible in the U.S. stores are much larger in number and in distance than in Japan. Making their own distribution centers does not allow U.S. Seven-Eleven to get the same level of transportation aggregation as it gets in Japan.

7. The Unites 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 functions? The pros of having distributor replenish is that you have a variety of products that a single chain can’t produce all alone, but having their own distribution center is also a big pro, because you don’t have to worry about external factor from your suppliers. The cons of having distributor replenish to your stores can have disadvantage too, because you will always be depending of external sources to replenish your store.


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