Why Has 7-Eleven Chosen off-Site Preparation of Fresh Foods and Subsequent Delivery to Stores?

2.Why has 7-Eleven chosen off-site preparation of fresh foods and subsequent delivery to stores?

Since fresh foods constitutes of significant portion of 7-Eleven sales, decision to prepare them off site guarantees better products quality, reduces transportation costs and ensures effective product delivery to retailers through its very efficient delivery system that benefits both high service level as well as efficient delivery in terms of time and quality. Far more reasons for 7-Eleven to choose the off-site preparation of products are as follows:

• Quality of the product
• Increases speed and quality of delivery
• Low transportation costs
• Optimizes resource utilization
• Low inventory maintenance costs
• Reduction of lead times
• Efficient transportation
• Supply made upon request
• Best match of supply and demand

3. Why does 7-Eleven discourage direct store delivery from vendors and make an effort to move all the products through combined DCs?

Aiming at delivering fresh and quality products, 7-Eleven discouraged direct store delivery from vendors (DCD) and utilized all its products delivery through combined distribution center (CDC). Due to the variety of stories with different particular orders, combined distribution system allowed products from different vendors to be loaded on the same truck for delivery to stores and thus enabled 7- Eleven to substantially reduce inventory, labor as well as transportation costs. Moreover, combined system ensured reduction of order sized for each of the product and shorter replenishment cycle time for quick response. 7-Eleven benefited from combined distribution system by:

• Costs efficiency;
• High flexibility and efficiency
• Economies of scale for the outbound transportation
• More efficient overall supply chain:

• By reduction of number of vehicles for daily delivery (from 70-11)
• By reduction of delivery costs

• Rapid delivery of variety of fresh foods
• Fresh and high quality products
• Temperature – separation of foods
• Product differentiation
• High fill rate with high flexibility and efficiency