Course: Logistics and Supply Chain Management
Prof. Dr. Stephan M. Wagner
Seven-Eleven Japan Co. 1) Demand uncertainty – Demand uncertainty means your business has difficulty accurately predicting customer demand in the future. This poses a significant challenge because it makes inventory hard to control and manage. Using technology to monitor sales over time can help offset demand that fluctuates from one period to the next. In the Seven Eleven case the company implied demand uncertainty can be categorized as high, due to the nature of the customer needs and product properties. Customer needs: customer is usually in a hurry making an urgency-buy, he has a low tolerance for response time, requires high product availability & high service level. The range of quantity demanded can also be high due to unexpected events, e.g. super ball game increasing the demand for beer, chips and commercial. These customer needs causes a high implied demand uncertainty. Products properties: middle range of products (3000SKUs) 60% of total sales at each store are processed and fast foods, 50% changes in the course of a year due to seasonal demand & new products. Local preferences are important and vary, different consumption patterns throughout the day, stores have limited shelf space and little buffer inventory (limited store size) Seven Eleven supply uncertainty is medium to high. Supply uncertainty is increased due to: high diversity of products, perishable products (e.g. frozen and dairy products), the rate of innovative/number of new products, possible delivery delays due to dense traffic around stores as well as possible low yields further upstream the supply chain (2nd, 3rd tier suppliers of raw materials e.g. rice). All these attributes call for a responsive supply chain. 2) Seven Eleven has a high degree of