Supply Chain Management - Seven-Eleven Japan Co

Supply Chain Management

Case Study 1 Seven-Eleven Japan Co.

Background

Seven-Eleven is a famous convenience store. And it is set up its first store in Tokyo in May 1974, it was found by Masatoshi Ito, the company was first listed on the Tokyo Stock Exchange in October 1979 It had increased its share of the convenience shore market since it opened. It success is greatly contributed to its careful planning, and its information system as well as distribution system.

Q1 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 risk in each case?

Q3. 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?

Facility location

Seven-Eleven Japan based on its fundamental network expansion policy to increase efficiency to customers. Seven-Eleven opened the majority of its new stores in areas with existing cluster of stores. There are so many stores in a particular area. Around 50 to 60 stores are supported by only one distribution centre(DC), and this DC keep no inventory. This strategy can lower the inventory handling cost, and to develop capabilities that support its supply chain strategy in Japan.

Inventory management

Seven-Eleven offer its stores a choice from a set of 5000 stock keeping units. Each store carried on an average about 3000 stock keeping units depending on the local customer demand. There are four categories of food including chilled-temperature items; warm-temperature items; frozen items; and room temperature items. Each category is severed with its special needs in order to keep it fresh. Since, Seven-Eleven responds very quickly to order, with store mangers placing replenishment orders less than 12 hours before they are supplied. This practice makes Seven-Eleven Supply chain very responsive. Hence reduce the inventory holding cost.

Seven-Eleven uses scanner terminal to read bar codes and record inventory. It is an advanced level of inventory management. This allowed a store manager to forecast sales corresponding to each order accurately.

Transportation

The supplier of each shop won't delivery inventory to appropriate shop directly, instead of delivering them to the distribution center, the distribution center then distribute inventory to appropriate store. This can minimize the trucks as well as transportation cost

Information infrastructure

Seven-Eleven