Question 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? Answer: There are many different ways that a convenience store supply chain can be responsive, beside they also have some risks in each case:  Proximity, bringing products closer to the customers. It makes a difference when a customer buys an item close-by than ordering it and waiting for a few days. But proximity to customers might create a variety of demands that probably will not be fulfilled altogether at the same time. There is also a possibility that customer needs change in time. Offering variety of services in the case of this case study Seven Eleven offered attractive services to customers such as ski lift voucher pass, payment of mail order purchases, internet shopping, a meal service delivery, automatic teller machines installation in each store, pick up online services, electronic money service that allow customers to prepay and use a card or cell phone to make payments etc. On the other hand, a short coming might result due to the failure of one or more information system due to failure or break down. Offering a flexible system to the customers, for example, establishment of operating hours to some customers according to their respective needs and also easy and reachable locations for their purchases. The main risk is some customers may not be at ease in using e-commerce. The service offered might not be used at its full capacity. Establishment of e-commerce (7dream.com) to exploit existing distribution system as most of the stores were accessible by the Japanese population hence many orders and the fact that no extra charge for customers when they order through the web. The problem here is that trust becomes an issue. There is a possibility for the system abuse in the case of electronic systems, with customers and all that are involved in the chain. There is a danger of fraud. Information and communication. Knowing exactly what are the demand trends for customers in a particular area and addressing them. Availability of stock information to the store owners enabling them to order items at ease and convenience when requested by customers. But you might agree to offer a service at a specific time of the day to a customer but due to unavoidable circumstances you might not get the customer to receive your delivery hence more cost of returning the items to the store. Offering efficient distribution system that linked to entire supply chain network for all product categories. However, the risk is to have a major break down in case of system failures.

Through the use of integrated information system that that linked the headquarters, suppliers, distribution centres and the customers, with a two way high speed communication system. But the fixed cost of this system is very high. Maintaining high inventory at the stores at all times. Leading to an increased of extra space and supply chain costs.

Question 2: Seven-Elevens 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? Answer:  There might be a mismatch between the customer needs and the goods supplied resulting into over stocks or inventory or less in the case where customer needs are higher and inconsistent. Information system is used to forecast customer demand. In the case of any system failure, there will a resulting mismatch of stocks and demand. Uncertainty and periodic customer demands might affect the replenishment process. Seasonal demands would probably mean that customers will need more goods at certain peak period and less at certain time. Over stock and under stock will be a risk in this situation. Seven eleven has so many convenience stores, hence leading to increased transportation and inventory holding costs.

 

Question 3: 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? Answer:  Facility location. It has opened the majority of its new stores in areas with existing clusters of stores supplied by distribution centers. For instance, the market dominance strategy opens 50 to 60 stores in an area. A good strategy to reduction of cost and proximity to many customers. Inventory management. No inventory was kept at the distribution centers. Inventory was merely transferred from supplier trucks to seven eleven distribution centers. Transportation. It has outsourced transportation exclusively to Transfleet Ltd., a company set up by Mitsui and Company. Information infrastructure. It has developed the following hardware systems to facilitate faster processing of customer orders; (i). Graphic order terminal, a hand held hardware device to be used by the store owner or manager to place orders.

  

(ii). Scanner terminals, to read the codes and record inventory, used to receive products coming in from a distribution centre, and automatically check against previously placed orders. (iii). Store computer to link integrated service digital network, the point of sales register, the graphic order terminal and the scanner terminal by communicating among various input sources, tracking inventory and sales, and placing orders. (iv). POS (point of sales) register to understand the functioning of the information network, including sampling of daily operations. Its purpose was that as soon as the customer purchased an item and paid, the item information was retrieved from the store computer and the time of sale was automatically recorded.

Question 4: Seven-Eleven does not allow direct store delivery in Japan but has all products flow through its distribution center. What benefit does Seven-Eleven derive from this policy? When is direct store delivery more appropriate? Answer: The benefit that Seven Eleven reached with regards to this policy is clearly, reducing the number of fleet/vehicle used in transportation, hence reduction of handling (loading/unloading). Besides that, it also lowers holding cost, delivery cost, and less time (time is money). Detaching from this activity, the company management will have much time to concentrate on her core tasks. The direct store delivery is more appropriate when a store places orders with high volume (full track consignment) or low volume, but high value. It can also be applied for customers with high importance to the supply chain in the company, for example, if a customer makes huge orders and covers a good percentage of the companys monthly profit (probably 40% profit accrued through one customer), then a special service like this one can be organized. Question 5: What do you think about the 7 dream concept for Seven-Eleven Japan? From a supply chain perspective, is it likely to be more successful in Japan or the United States? Why? Answer: The 7 dream concept of Seven Eleven Japan is a good idea since it facilitates online ordering by customers via internet enabling them to place orders and organize for goods pick up at their own appropriate time or convenience.

It is likely to succeed in Japan from a supply perspective because of the delocalized stores and the fact that customers frequently visit stores of their convenience to pick up their online purchases. The United States also uses direct store deliveries method.

Question 6: Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan in the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that stores are also replenished by wholesalers and DSD by manufacturers. Answer: This approach has many pros and cons as outlined below; Pros;   Consolidation of deliveries. Cost effectiveness. Close accessibility to a variety of goods by the customers as they can access easily a variety of commodities in combined distribution centers. Minimal cost involved in customer movement. Increased frequency of products delivery to various distribution centers enhancing the matching of customer demands by the Company with high responsiveness.

 Cons  

Reducing the holding cost and less time spent in the case of un-combined distribution centers. Can someone explain properly this point???? Matching delivery schedules for all the customers could be a problem. Probably many customers will prefer direct store delivery for their convenience decreasing the activity of CDCs. Direct service delivery already serves half volume of customer deliveries. Increasing the wages of staff by sorting for delivery to stores at every night.

Question 7: The United States has food service distributors that also replenish convenience stores. What are the pros and cons to having a distributor replenish convenience stores versus a company like Seven-Eleven managing its own distribution function? Answer: Pros;  Having a distributor replenish convenience stores means that they do not have to invest anything in distribution centers, fleet, personnel.

   Cons   

Proximity of distributors to distribution convenience stores added value as they very well understand customer demands. Outsourcing encourages specialization hence quality. The company will be able to focus on her core business.

An additional cost for the company for outsourcing the service. Lack of control and responsiveness, because there is no direct link between the company and the convenience stores and customers. The level of service consistency cannot be fully monitored by the company.