Seven Eleven

Japan
Company
GROUP – 2
Jithin Nair
Jatin Bhatheja
Venkat
 • Established in 1973 by Mr. Masatoshi Ito
• Established its first store in 1974 in Tokyo
• 1973 – 1991 managed by Southland Corporation,
later by Ito – Yokado Group
• Listed in stock exchange in 1979.
• In 2004 Convenience Store in Japan and in US
contributing nearly 48.2% of total revenue of IYG.

About Seven • In 2005 Seven & I holding Co. established through

stock transfer to combine seven eleven, Ito Yokado
Eleven Company & Denny Japan
• 7 – 11 dominates 90% of Japan convenience stores
• Sales per day 647,000 yen in comparison with the
sales in other convenient stores covering 10 %
• Core Strengths are information systems and
distribution systems
• Franchise model and allowed market dominance
strategy.
 Responsibilities of 7 – Eleven.

• Develop merchandise
• Provide ordering services
• Pay for operating services
• Pay 80% of utility cost

UNDER Responsibilities of franchise

FRANCHISE • Operate and manage Store

SYSTEMS
• Hire & pay staff
• Order Supplies
• Maintain Store Appearance

Size of store increased from 125 square meter to 150 square

meter

They managed to keep 5000 SKU(Stock Keeping Unit) and 3000

SKU on an average.
 Offers products according to the local demand

Emphasises on local demand

Food items were classified on 4 categories:

STORE • Chilled temperature Items

INFORMATION • Warm Temperature Items

• Frozen Items
AND • Room Temperature Items

CONTENTS Other Products Include:

• Soft Drinks
• Nutrition Drinks
• Alcoholic Beverages
• Music CDs
• Magazines
• Software
• Soaps and Detergents etc.
 • Payment of bills
• Accept instalments on behalf of
credit companies
• Payment for internet shopping
• ATM at most stores
• Meal delivery services for aging
STORE population of Japan
SERVICES • Ticket Sales, Photocopying
• Pick up location for parcel delivery
• 7 dream E-commerce
• Home meal delivery especially for
women
• Nanaco (electric money)
 • Integrated Service Digital Network
(ISDN) linked more than 5000 stores
• IS support through Graphical Order
terminal, Scanner terminal, Store
Computer, POS Register to improve
ordering process.
• POS analysis data was provided each day
Integrated store to each store for removal of product with
information systems, no demand, forecasting and identification
Delivery Systems and US of slow and non moving items.
Markets • Delivery of products from Distribution
Centre (DC) done by Transfleet by Mitusi
and Co. for effective and efficient
functioning.
• In US Market Combined Distribution
Centre (CDC) concept with supported by
80% of store network.
• 23 CDC across North America
QUESTION
AND
ANSWER
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?
Ways to Become
Responsive
• SC can become responsive by reducing lead
time. This can be done in following ways:
• Real time information flow between suppliers,
distributors and store
• Strong supplier network
• Good relationship maintenance with suppliers
and distributors
• Analysis of day to day data for each store and
each SKU will enable in forecasting & reduction
of replenishment time
• Cross-docking is one of the ways to be
responsive
 Real time information flow risk.
• Server breakdown or hacking
Strong supplier network & good
relationship maintenance with suppliers
and distributors
• Over-dependency on one supplier
• Risk due to natural calamities increase if
Risk Associated all suppliers lie in close proximity
Analysis of day to day data for each
store and each SKU
• Data congestion due to large volume of
data from 3000 SKU × 10000 stores
Cross-docking
• Vehicle breakdown
• Natural calamities
Question 2

7 Eleven’s supply chain strategy in

Japan can be demonstrated as
attempting to micro-match supply
and demand using rapid
replenishment . What are some risk
associated with this choice?
 • Over-dependency on Information
Systems
• Any calamity on supplier end would
Risk Associated lead to stock out situation in
Seven-Eleven because of absence
of inventory in supply chain
• No warehouse
Question 3

What has 7 Eleven done in its

choice of facility location inventory
management, transportation and
information infrastructure to
develop capabilities that support its
supply change strategy in Japan ?
 Facility location
• One distribution catering 50-60
stores
• High density market presence
Support Systems Inventory management
• No inventory because of cross
docking
• Real time information flow to
reduce stock out
 Transportation
• Dedicated vehicle for each category
• Delivery during off peak hours
• Delivery using scanner terminals
• Allocation of stores per truck
dependent on sales volume
Information Infrastructure
Continued…
• Graphic order terminal
• Scanner terminal
• Store computer linked to ISDN
network
• POS register linked to store
computer
Question 4
7-Eleven does not allow direct
store delivery in Japan has all
products flow through its
distribution centre.
• What benefit does 7-Eleven
derive from its policy?
• When is direct store
delivery more appropriate ?
 • Proper product assortment as per
required temperature thus
reducing perishability
• Reduction in number of vehicle
required for daily delivery at each
store (1974, 70 vehicles visited
each store every day, in 1994, only
Benefits of current 11 were necessary)
7 Eleven System. • Reduction in delivery costs
• Rapid delivery of variety of fresh
foods thus making the chain
responsive
• Rapid and reliable delivery to
distribution trucks through
dedicated Distribution Centers
 • Demand from retailer is high
enough to require Full Truck Load
Appropriate Direct • When lead time is critical
Store Delivery
• Manufacturers and retailers in
close proximity