Supply Chain Management
Case: Seven-Eleven Japan Co.

1 Responsiveness

* In general, a convenience store supply chain has three ways of being responsive:

1.1 In-Store Capacity * Integrating cooking equipment inside the stores will match supply and demand for warm dishes. The process of cooking and assembling the food will be moved after the customer order arrives (i.e. pull process) reacting directly to consumers demand. This shift implies a decentralization of the supply chain hence, requiring higher costs and poorer utilization (i.e. efficiency loss). Furthermore, training costs incur since employees at the stores need to run the machines.

1.2 Local Inventory Keeping stock holdings high at the store also is a way of being responsive and offering a high service level. Although this allows for the centralization of cooking equipment, extra space is needed and the efficiency of the supply chain is contingent on the correct forecast of demand thus, creating idle inventory or even wasted inventory if the products are perishable when demand deviates from the inventory level. 1.3 Rapid Replenishment This approach is used by Seven-Eleven. High delivery frequency sets a high responsiveness at the store but increases delivery costs. Furthermore, it keeps the absolute number of inventory items needed to run the store low (i.e. stores are can be smaller than if local inventory was build up), even though the store capacity usage is high. Rapid replenishment also leads to a lower safety stock. Overall increasing responsiveness also increases cost. 2 Rapid Replenishment * As stated above, a high delivery frequency increases delivering costs. Also, the time spent for receiving the products coming in increases with the number of deliveries. Depending so heavily on their delivery system, in order to offer changing merchandise mix by location and