...example a nearby baseball game increasing the demand for beer and chips. 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). 7-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. Assignment/Question #2 7-Eleven has a high degree of responsiveness, due to the high implied demand uncertainty and medium-high supply uncertainty. It is very crucial for their supply chain ability to respond to wide ranges of quantities demanded, meet short lead times, handle a large variety of products, meet a very high service level and handle supply uncertainty due to the customer needs mentioned above. Additionally they are innovative in the sense that they introduce constantly new products, as well as new services, to attract...
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...1. Convenience store to achieve responsiveness Handling information is very important to be responsive. 7-11 has already practised collecting information at POS and the SKUs are periodically reviewed through integrated network. Bringing production facilities closer to the stores High storage of inventory at certain store with capacity and replenish nearer store from there * Integrated information systems POS for forecasting Rapid replenishment * Bringing production facilities closer to the stores * High storage of inventory at certain store with capacity and replenish nearer store from there * * Integrated information systems pos for forecasting * Rapid replenishment 1, 2 & 3 Risk In being responsive is The Flexibility If the customer trend changes the business is in trouble. If a particular region goes out of trend the region would get isolated from the entire business and loss occurred with the properties associated with fixed cost. Over dependence on IT Infrastructure - Even though the IT infrastructure maintaining the information is good, failure in IT or n/w would make responsiveness more challenging and introduce new challenges. Selling power of supplier Need more capacity to accommodate Quality Shouldn’t lag in quality as the responsiveness is high Cost management & complex inventory handling Order cost increases if no of replenishment is more Inventory carrying cost increases if order in excess Under Utilization...
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...1. What has Seven-Eleven done in its choices of facility locations, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan? Seven-Eleven has two levels of facility locations, one is distribution center, and another is retailer store. Distribution center is a platform to collect and allocate the order from supplier to retail store. Limited number of distribution center supports the near cluster stores. Distribution center focus on efficiency rather than responsiveness to transmit product. Seven-Eleven tends to open the stores in a dense network. It opened the majority of its new stores in areas with existing clusters of stores. Dense stores can maintain a high responsive level to the market. Besides, it also can reduce delivery cost. For instance, the trucks do not need to replenish stocks in dispersed locations. This makes the supply chain be more effective owning to the faster and convenience transportation route. In view of the inventory management, Seven-Eleven keeps no stock in distribution center and limited inventory in retailer stores. Supplier will immediately deliver stock to distribution center if receive store order. Store only keep daily inventory and place the product in particular time to response customer buying behavior. For example, breakfast, newspaper and fresh food will be placed in the shelves on the morning. The popular dinner box is placed in the evening...
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...SUPPLY CHAIN MANAGEMENT 7-11 JAPAN History 7-Eleven is part of an international chain of convenience stores, operating under Seven-Eleven Japan Co. Ltd, which in turn is owned by Seven & I Holdings Co. of Japan. Eleven, primarily operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores, with more than 46,000 outlets. Timeline 1973: York Seven Co., Ltd., established 1974: First store opened (Toyosu Store, Koto-ku and Tokyo) 1975: 24-hour operations (Toramaru Store, Koriyama, Fukushima Prefecture) begun 1976: Total number of stores reached 100. Integration of suppliers and joint delivery started. 1978: Corporate name changed to Seven-Eleven Japan Co., Ltd 1980: Total number of stores reaches 1000 1982: POS and EOB ordering systems introduced. 1985: Introduction of interactive registers capable of transmitting information to and from the headquarters and stores. 1997: Introduction of fifth generation Total Information System 2000: Establishment of e-commerce Company, 7dream.com 2001: Establishment of IYBank Co., Ltd., through joint investment with Ito- Yokado Co., Ltd. Installation of IYBank ATMs in stores. 2004: Establishment of SEVEN-ELEVEN (BEIJING) CO., LTD as a joint venture. Competitive strategy: The strategy followed by 7-11 was to provide high-availability of a variety of reasonable quality products at reasonable prices. Strategy of 7-Eleven Japan Market Dominance was the main objective of 7-11. This was done...
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...Seven-Eleven Japan Co. Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing Seven-Eleven in the United States. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2003. During that period, the number of stores increased from 2,299 to 10,303, annual sales increased from 386 billion to 2,343 billion yen, and net income increased from 9 billion to 91.5 billion yen. The Seven-Eleven Japan Franchise System Seven-Eleven Japan developed an extensive franchise network and performs a key role in the daily operations of this network. The Seven-Eleven Japan network includes both company-owned stores and third-party-owned franchises. In 2004 franchise commissions accounted for over 68 percent of revenue from operations. To ensure efficiency, Seven-Eleven Japan based its fundamental network expansion policy on a market-dominance strategy. Entry into any new market was built around a cluster of 50 to 60 stores supported by a distribution centre. Such clustering gave Seven-Eleven Japan a high density market presence and allowed it to operate an efficient distribution system. Seven-Eleven Japan, in its 1994 annual report, listed the following six advantages of the market-dominance strategy: ...
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...Seven-Eleven Japan1 Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing 7-Eleven in the United States. On September 1, 2005, Seven & I Holdings Co., Ltd., was established as the holding company for Seven-Eleven Japan, Ito-Yokado, and Denny’s Japan. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2007. During that period, the number of stores increased from 2,299 to 12,034, annual sales increased from 386 billion to 2,574 billion yen; and net income increased from 9 billion to 91.5 billion yen. Additionally, the company’s return on equity (ROE) averaged around 14 percent between 2000 and 2004. In 2004, Seven-Eleven Japan represented Japan’s largest retailer in terms of operating income and number of stores. Customer visits to Seven-Eleven outlets totaled 4.1 billion in 2007, averaging almost 35 visits to a Seven-Eleven annually for every person in Japan. Company History and Profile Both Ito-Yokado and Seven-Eleven Japan were founded by Masatoshi Ito. He started his retail empire after World War II, when he joined his mother and elder brother and began to work in a small clothing store in Tokyo. By 1960 he was in sole control, and the single store had grown into a $3 million company...
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...1 i CASE STUDY ~ SEVEN-ELEVEN JAPAN CO. Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing SevenEleven in the United States. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2003. During that period, the number of stores increased from 2,299 to 10,303; annual sales increased from 386 billion to 2,343 billion yen; and net income increased from 9 billion to 91.5 billion yen. Additionally, the company's return on equity (ROE) averaged around 14 percent between 2000 and 2004. In 2004, Seven-Eleven Japan represented Japan's largest retailer in terms of operating income and number of stores. Customer visits to Seven-Eleven outlets totaled 3.6 billion that year, averaging almost 30 visits to a SevenEleven annually for every person in Japan. COMPANY HISTORY AND PROFILE Both Ito-Yokado and Seven-Eleven Japan were founded by Masatoshi Ito. He started his retail empire after World . War II, when he joined his mother and elder brother and began to work in a small clothing store in Tokyo. By 1960 he was in sole control, and the single store had grown into a $3 million company. After a trip to the United States in 1961, Ito became convinced that superstores...
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...Supply Chain Management Case study: 7-eleven Japan Co. Name: Chow Lai Ting Student number: 113226 Section 5 Background Seven-Eleven Japan was established in 1973 with its first store opened in Tokyo. It is considered an outstanding and well-known enterprise in Japan. The rapid growth of Seven-Eleven is also remarkable. In 1985 to 2007, its number of store had drastically increased from 2,299 to 12,034. The annual sales increased from 386 billion to 91.5 billion. Additionally, the company’s return on equity averaged around 14 percent between 2000 and 2004. Seven-eleven is not only the largest convenient store but also the largest retailer with its number of store and operation income in Japan. The reason why Seven-eleven is such successful is its competitive strategy, which is providing a high-availability of product that the customer find it convenient to shop. Thanks to its market dominant strategy and franchise system adapted, and its drivers make the best balance to the trade-off between efficiency and responsiveness, Seven-eleven has considerably become the most successful retail store. Problems The problem of Seven-eleven supply chain is that it replies too much on the transportation to make replenishment every day. The store would not have enough inventories if there is any accidents happen since the storage unit in store is very little. The risks associated with the system that Seven-eleven uses are costly with demand uncertainty. When the demand patterns...
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...Sunil Chopra TEACHING NOTE: SEVEN-ELEVEN JAPAN CO. The goal of this case is to illustrate how a firm can be successful by structuring its supply chain to support its supply chain strategy. Once Seven-Eleven Japan decided to provide responsiveness by rapid replenishment, it then structured its facilities, inventory, information, and distribution to support this choice. The case also brings up the question of whether the same approach can work in the United States, especially given the greater distances and lower store density. Questions 1. 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 RISKS IN EACH CASE? As responsiveness increases, the convenience store chain is exposed to greater uncertainty. A convenience store chain can improve responsiveness to this uncertainty using one of the following strategies, especially for fresh and fast foods: Local capacity: The convenience store chain can provide local cooking capacity at the stores and assemble foods almost on demand. Inventory would be stored as raw material. This is seen at the U.S. fast food restaurant franchise Subway where dinner and lunch sandwiches are assembled on demand. The main risk with this approach is that capacity is decentralized, leading to poorer utilization. Local inventory: Another approach is...
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...SUPPLY CHAIN MANAGEMENT SEVEN-ELEVEN JAPAN CASE STUDY 1 1. 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 risks in each case? It is very important for a convenience store to be responsive, as they should be as convenient as possible, in order to fulfill their customers needs and preferences. Seven Eleven Japan is exactly fulfilling these criteria and therefore is a great example of a responsive convenient store. They have a lot of stores situated in convenient locations, they carefully track their items offering short replenishment cycles (less than 12 hours), they use highly sufficient and appropriate technologies to enhance forecasting and they have a responsive distribution and supply chain, that is vertically integrated in many of their SKUs. The main risks associated with high responsiveness are higher costs and greater uncertainty. Improving responsiveness (in general) could also include local capacity, inventory and enhancing replenishment, however this could lead to higher uncertainty and higher costs (especially for fresh and fast food), due to increasing capacity and store size to hold inventory (5000 SKUs in Seven Eleven Case). 2. Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What...
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...Seven-Eleven Japan was first established in 1973. They set up their first store in Koto-ku, Tokyo, in 1974 and the company was first listed on the Tokyo Stock Exchange in the month of October, in 1979. In 2004, it was owned by the Ito-Yokado group which alongside the Seven-Eleven stores, managed a chain of supermarkets in Japan and owned a majority share in southland-the company managing Seven-Eleven in the United States. The founder of both Ito-Yokado and Seven-Eleven Japan, Masatoshi Ito, started his retail empire after World War II when he joined his mother and brother and began to work in a small clothing store in Tokyo. He was in complete control by 1960, and the single store had grown into a $3 million company. In 1961, after a trip to the United States, Ito came to the conclusion that superstores were “the wave of the future,” and so the empire began. Ito’s chains of superstores in Tokyo were instantly popular and soon became the core of Ito-Yokado’s retail operations. After Ito’s initial request in 1972, about the prospect of opening Seven-Eleven convenience stores in Japan was rejected, further approach’s by the entrepreneur, saw Southland, the US company, agreeing to a licensing agreement one year later. However, this agreement came to a price: in exchange for 0.6 per cent of total sales, Southland was to give Ito exclusive rights throughout Japan. With this placed in action, the first Seven-Eleven convenience store opened in Tokyo in May 1974. Following this...
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...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...
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...are some different ways that a convenience store supply chain can be responsive? What are some risks in each case? A convenience store can be more responsive by doing exactly what Seven-Eleven Japan is doing; many locations, rapid replenishment, appropriate technology deployment, and an equally responsive supplier (vertical integration for many of their SKUs). The risks associated with this system are the costs coupled with demand uncertainty. If demand patterns change dramatically, or the customer base changes, then Seven-Eleven is left with an operation that is not needed. In Seven-Eleven Japan’s case, multiple operations might be shuttered if an apartment building or large employer shuts down or relocates. 2. Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What are some risks associated with this choice? Micro-matching supply and demand using rapid replenishment assumes that each store will repeat the same demand pattern on a daily basis. The tour bus phenomenon, where a group of unanticipated customers comes to the store and buys all of a type of product will cause difficulty for regular customers. During such an event, the store will likely stock out and customers may visit the next Seven-Eleven site down the block to make their purchases. Some of this demand may permanently shift, causing a local ripple; the replenishment may be excessive at one site and insufficient at an...
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...SEVEN-ELEVEN JAPAN CO. CASE ANALYSIS What is the future outlook for Seven Eleven Stores in USA? Seven-Eleven is part of an international chain of convenient stores. 7-Eleven, primarily operating as a franchise, is the world's largest operator, franchisor and licensor of convenience stores, with more than 46,000 outlets. The Seven-Eleven business model consists of five key elements: * A differentiated merchandising strategy; * Utilization of 7-Eleven’s retail information system & Managed distribution; * Providing a convenient shopping environment; and * A unique franchise model. Let us have a brief look over 7-Eleven stores in US and Japan: Seven-Eleven Japan: * High density market presence with 50-60 stores supported by distribution centre. * Limited geographical presence * Emphasized regional merchandizing * Processed and fast foods contributed to most of its sales * Products like food and beverages, magazines and consumer items such as soaps and detergents * Services offered like payment of electricity bills, telephone, gas bills, meal delivery services, 7 dream e-commerce, electronic money offering and many * Advanced information technology helped store to analyse store data every day morning and helps in having valuable shelf life * Information system installed in every outlet and linked to HQ, Suppliers and 7-eleven distribution centres. Uses ISDN to collect, process and feedback POS data quickly * Delivery frequency...
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...To look up at Seven-Eleven Japan as a business and supply chain management model is the ability to gather data about its customers and transform it into “information”. As seen, the company’s key success is the integration among partners as well as share information through highly evolved data-rich supply chain system. Altogether they help facilitate a coordinated supply chain. That is to say, Seven-Eleven Japan knows who is buying which product and at what time, the company knows it because the system is really efficient. Now the system knows who, where and what is sold at any time of the day, thus the supply chain is really responsive and offer the goods where it is needed. This enables Seven-Eleven Japan to be ahead of all others about information system and supply chain management. However, on the other hand, the company takes some risks in doing this, because the Japanese population can be bored or moved. Seven-Eleven has to be careful about the needs every day, and has to react very quickly to all kind of problems the company has to face. Every single person is important in statistics; the company really cares on customer demands. Though the main risk for the company is the potentially high cost concerning the transportation. In order to support its supply chain, Seven-Eleven has remodelled the transportation in their supply chain. The number of trucks was really high, and they could use fewer trucks to do all the transportation work. They have different kind of trucks...
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