1. Describe the type of supply chain used by 7-Eleven. For example are they agile, adaptable, aligned?

7-Eleven is the largest operator and franchisor of convenience stores in the world, with more than 46,000 outlets and currently selling 500 million litres of petrol, $500 million of merchandise and serving almost 80 million customers worldwide. With figures like this, you have to wonder how they did it? Aside from the fact that the store operates 24 hours a day, 365 days a year and hence adhere to the ‘convenience store’ label, 7-Eleven addressed some key aspects that often other organisations overlook. “We must be open to change to remain successful,” said7-Eleven CEO Joe DePinto (and recent “Undercover Boss”) at the conclusion of his Tuesday morning keynote address at the IFA 2011 Annual Convention. Noticing a need to change, 7-Eleven turned their whole outlook around, focusing on the franchisees instead of focusing on the headquarters of the organisation. After all, the franchisees are the ones that work at ground level with customers on a day to day basis, establishing relationships and recognising customer needs. 7-Elevens response to a changing marketplace yielded significant benefits and further more allowed the implementation of technology and supply chain integration to increase functionality.

An efficient supply chain maximises planning, organising and helps distribute a flow of the organisations product to end customers. This is done through implementing innovative ideas and technology as a part of effective business-to-business networks.

In regard to 7-Elevens supply chain, there were definitely some major factors implemented that wreaked great results. In 2002 7-Eleven signed a 7 year contract with EDS throughout the united states. As stated by Deepak Patel (the integration service line director at EDS), the purpose of this signing was to implement an “XML-based integration system to automate the supply chain process for 7-Eleven’s more than 1,700 suppliers.” Previously small suppliers that could not afford an integrated system were recording transactions through printed invoices. With the new system “small suppliers can log on to a secure website and use an ID and password to submit invoices and track their progress, said Morrow. Large suppliers can transition from EDI to webMethods' XML-based Integration Platform over a period of time so that all of their systems eventually will be able to communicate with 7-Eleven using XML for data transfer”. EDS will also enable and host Vcom, an ATM like device that allows customers to easily cash checks, purchase money orders and obtain other financial services.

The implementation of the new system was summed up perfectly by Chief information officer Sharon Stufflebeme. "This agreement aligns well with our business objective of flexibility and scalability and meets the need to adapt as we change and grow. These applications help provide the support we need to continue to deliver customers what they want, when and where they want it."

7-Eleven also implemented other key technologies and models, such as the SAP Retail Merchandising System and it’s centralized purchasing and distribution model which will be explained in further detail below. As a whole, Total Quality Management was introduced ensuring quality standards were met throughout all stages of production and supply. Through implementing various systems, 7-Eleven’s supply chain efficiency dramatically improved. Orders could now be electronically processed in under 7 minutes and delivery truck routes could be mapped and maintained. Thus, it is evident that implementing technological systems has a major affect on 7-Elevens supply chain.

2. Describe the product characteristics of 7-Eleven and how this impacts upon replenishment.

7-Eleven has always been a provider of small everyday needs such as snacks, confectionary, cigarettes and fast food. However with a constant changing environment and marketplace 7-Eleven has learned to adapt. Often customers will be looking for a ‘healthy alternative’, however due to work time constraints and product availability, they settle for the quick and easy fast food option. 7-Eleven has taken this on board and hence adapted their product range to cater for those looking for something healthier, while still owning the label ‘convenience’.

In targeting the healthier alternative, 7-Eleven has launched their very own ‘munch’ range of gourmet sandwiches, pastries and cakes; which is outperforming the market in terms of growth. Its new strategy aims to feature a new range of ‘food on the run’ products as well as a new store design to highlight the availability of food service.

Fresh Coffee To Go is another major area that 7-Eleven has implemented, offering quality coffee at extremely low prices. As a further marketing technique 7-Eleven have been involved in ‘Cup With A Cause” with the funds raised going directly to certain celebrities chosen charity. This helps 7-Eleven establish good community relations and promote their name.

7-Eleven has also recently entered into a binding agreement with Mobil Oil Australia Pty Ltd to acquire its retail fuels business. This allows them to target more distinct locations such as main roads, where fuel will be a necessity.

One major product area within 7-Eleven is its well known Slurpee range. Since the beginning of 7-Eleven Slurpee’s were said to ‘sell themselves’. However after a slow decrease of sales over the years, 7-Eleven embarked on a $22 million Project Energise program to reinvigorate the Slurpee brand. Through undertaking extensive quantitative and qualitative market research 7-Eleven were able gather customer feedback on popular product areas and therefore develop and implement a marketing strategy. One major strength of 7-Eleven’s retail operations system is its capability to monitor sales in real time. This quantitative research tool allows 7-Eleven to track sale information on a daily basis. An interesting statistic found was that fifty percent of all 7-Eleven customers reported Slurpee as, “one of the main reasons why they visited 7-Eleven.” In particular 72 percent of those aged 15 to 24 years old reported that the Slurpee was the reason that they visited a 7-Eleven! Hence by connecting with the Slurpee brand they could accelerate income considerably. 7-Eleven set out to create a unique and fun implementation of the Slurpee brand, targeting the youth and the ‘experience’ they receive when drinking. Unique cup designs and names including Brain Freeze! Cram more in! Colour your Tongue! Mix it up! were introduced and actual customers were called ‘Slurpers’. This created a huge amount of buzz and produced more than 20 percent growth in sales and profit.

One huge step 7-Eleven took was investing in a new centralised automatic stock replenishment system - SAP ERP and SAP NetWeaver. This model automatically creates and fills store orders, saving a huge amount of time and resources. These orders are automatically created based on system sales and inventory data. This process has Reduced deliveries into stores from 110 per week to just 30 per week. This allows for a smoother stock replenishment process.

3. Describe the Information Systems in use in 7-Eleven. Provide examples of software, its use and benefits. For example are real-time systems used? Are tracking systems in use?

The growing development of technology makes it hard for organisations nowadays to remain up to date. However 7-Eleven ensures that technological systems are continually updated and integrated into their franchises to keep ahead of the growing market and competitors. 7-Eleven implemented quite a number of systems in line with the Project Energise aim to improve store operations. The Franchise Matrix, which is used for a range of things, is a huge concept introduced into the organisation. A key feature is that it is used to automatically reorder stock as mentioned above. 7-Eleven franchises can now take advantage of the new Business-to-Business system which generates stock orders automatically using scanned sales data and allows them to modify the order based on local conditions.

As part of the Franchise Matrix the user is provided with real time reporting of sales, profitability data and customer behaviour by measuring store performance and engagement against ten Key Performance Indicators (KPI’s). Such aspects include the analysis or strengths and weaknesses , company image, gross profit etc. SAP defines that “The system can tailor stock levels, pricing, promotions and optimal store layouts to maximise customer spending. Franchisees can compare KPIs to benchmark against 'like stores'. This allows franchisees to implement success strategies used in more profitable stores to improve their own performance.” An example of this is placing separate products that go well together next to each other. This way when a customer buys one they will be tempted to buy the other. Strategies like this are concepts that can easily be implemented with considerable benefit. As stated by Dennis Lewis, chief information officer, “Our supply chain and merchandising processes deliver cost and management efficiencies at enterprise level while retaining store level decision making and control,” continued Lewis. “SAP enables us to deliver transparency to our franchisees and is a fully integrated aspect of our business processes and therefore franchisee training programs at store level.”

A great example of implementing an effective and efficient system is that of Seven-Eleven Japan (SEJ). Seven-Eleven Japan established a solid information system to gather data about the latest trends and demands and was then able to use this data for product replenishment. Seven-Eleven Japan wanted to implement a system to discover who the customers actually are and also implement a product tracking system. An Integrated Service Digital Network was used to allow different franchisees to access the central database and hence all of the relevant information.

The process taken was that for every single customer the checkout clerk would input their gender and estimated age. Once this occurred they would then go ahead and scan the items. The relevant data is passed on to the central database through the digital network. The tracking system is also simultaneously processed. Finally analysis is undertaken on all the collected data, allowing management to recognise the products that generate the greatest profit in certain locations and stores. As a result of this process, franchises can recognise the greatest product areas and hence integrate these products into the automatic replenishment process, creating an efficient and effective environment.

4. Describe the use of Web-based services and E-commerce used by 7-Eleven.

7-Eleven has been solely about in store and over the counter purchases. However, the constant rise and development of technology enables other organisations such as WalMart to become involved in E commerce and hence damage competing stores market. 7-Eleven Japan has been the biggest focus point for E-commerce however E-commerce is seen as just a tool, not an end in itself. In regard to this, 7-Eleven has had little to do with E-commerce over the years, and instead primarily focused on providing customer needs in beneficial areas and locations. However 7-Eleven has implemented quite a few side projects which greatly use the internet’s benefits. One example is the Seven-Meal service which prepares meals and packages of cooking ingredients for those that find daily meal perpetration inconvenient. Items can be ordered by telephone, fax, and Internet, or at Seven-Eleven stores and can be picked up at the store or delivered using special vehicles that can keep the food at required temperatures.

However, more recently 7-Eleven Japan have launched their very on E-commerce website called 7dream. The purpose of 7dream is to allow shoppers to browse through over 100,000 items which include flowers, music and photo supplies. The way the site works is that customers can place orders online, and then go to a local 7-Eleven franchise and pay and collect their products. Although there is a distinct lack of internet service and connections in Japan, 7-Eleven Japan will still fully go ahead will E-commerce functions, and have installed terminals within stores. At the launch of the website in Tokyo, chairman Toshifumi Suzuki stated, "This will be a first step toward the full-fledged start of business-to-consumer e-tailing in a uniquely Japanese style based on the extensive network of the nation's convenience stores."

E-commerce has taken off quite considerably in Japan despite the stagnant economic situation. “Revenues have expanded every year by around 17% since 2005, and are expected to grow at nearly 10% a year for the next five years.” The managing director of Nomura Research Institute, Teruyasu Murakami,, stated that e-business in Japan had grown steadily since the mid 1990s. He added that between 500 and 800 e-businesses opened their virtual doors in Japan each month. Murakami also said that Japanese firms are starting to innovate and create new business models. He said a company such as 7dream.com would only be possible in Japan, where convenience stores are within walking distance from almost any location. (Enos, 2001). This sheds light on why Japan has been one of the first candidates to implement E-commerce type functions (also the US).

7-Eleven has also integrated other internet based services such as prepaid wireless connectivity. As part of the Wireless Speak Out program launched in April 2004, customers are provided with a pre paid wireless service for a small fee. In Canada for example, 7-Eleven Speak Out Wireless offers both pay-per-use plans and monthly plans. For pay-per-use, there is a non-government $1.25/month 911 fee charged by 7-Eleven, and long distance charges apply for calls outside the local calling area. Service may be increased with monthly add-ons such as SMS and unlimited mobile browsing. (Wales, 2009). Services such as 7-Eleven Speak Out Wireless portray 7-Elevens expansion into Internet and E-commerce systems.

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