A convenience store
chain attempts to be responsive and provide customers with 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
known as the supply chain ability to respond within a proper timeframe towards
customer demand or changes in the market. There are several ways for
convenience store in order to show their responsiveness to customers as done by
Seven Eleven Japan as follow:
the number of distribution center, vendor, or stores in potential location in
order to expand the market and be able to fulfill more customer needs. Moreover,
more facilities would likely reduce the distance of customers into the stores
which will increase the visiting frequency of customers into the stores. High
cost investment and maintenance cost to build and maintain all the stores were
the risk for this decision.
rapid replenishment (delivery capacity) to meet more customer demands. Despite
the high cost for transport with larger capacity, there are others additional
cost for loading and docking. Another risk is the probability of uncertainty
will increase if the delivery products in huge capacity is kind of food or beverages
which need special treatment and easily going stale.
the number of inventory at desired Stock Keeping Unit so the products status
will always available. Even though this method is quite helpful to maintain the
products stocks but the inventory cost is quite high and it needs extra space
of warehouse which may also have a bad impact if the products were kept is a
seasonal products or customer will only seek these product on specific
integrated information system between stakeholders (vendor, distribution
center, store manager, customer) to make the information flow process become
faster and more efficient. Uncertainty will possibly occur if there is any
technical problem on the network or the user which lead to incompatibility of
demand and supplies.
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 risk associated with this
supply and demand strategy using rapid replenishment that Seven Eleven Japan
attempt were done within a timeframe with the number of delivery that has been
set by default based on forecasting analysis conducted previously. The risk
occurs if there is a forecasting error and communication error which makes
demand and supplies are not matched. These problems will make inventory
excesses or shortages occur. For instance, if suddenly there is high demand occur
from a group of tourists on holiday season which possible to reduce the stores
stock drastically while the replenishment schedule is still need to wait at the
time, which result to the products availability for other customer.
problem arises if the shipping time were delayed which cause massive complaints
from customers as the effect of unsatisfied service and also the next shipping
schedule will be chaos.
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?
Seven Eleven Japan choices will be
explained briefly below:
policy with market dominance strategy where Seven Eleven stores
around a cluster consist of 70 to 80 different stores supported by a
distribution center and able to fulfill huge number of customer surrounding.
The stores location that close to each other will make the shipping facility
(such as truck) easier to deliver each stores order.
Eleven has a rapid replenishment cycle since it is controlled by customers
demand or order. There are only few products stored in the warehouse. The rest
of products are foods and beverages which needs to be delivered immediately so
that the products will still fresh until customers receive the products. There
are also seasonal products that needs to deliver directly by suppliers into
Seven Eleven stores through distributor because if it stored in the warehouse
for too long, it will pass the specific season which makes the product will not
be salable anymore.
provides the products after receiving order from integrated store information
system. After going through manufacturing process, the products will be
delivered to distribution center based on the daily, weekly, or monthly
schedule that has been set by Seven Eleven manager in order to achieve
effective responsiveness with minimum cost.
Eleven use the Total Information System which connects the head of company,
stores, vendors, distribution center, and customers so the supply chain will be
more responsive and effective. This information system matches the supply and
demand data in order to achieve high responsiveness and lower production and
Seven-Eleven does not
allow direct store delivery in Japan but has all products flow throug its
distribution center what benefit does Seven-Eleven derive from this policy?
When is direct store delivery more appropriate?
Distribution center has several important roles for
Seven Eleven such as reduce the store manager burden to check, count, and
manage the products transfer from factory to the store, especially when the
company deliver some small order packages in a rapid cycle that will cause
trouble for the manager if it is delivered for a couple of times. In this
situation, distribution center has a role to collect the product packages and
deliver the products to Seven Eleven retail stores so the manager will only
focus on maintaining and increasing services for customers. Moreover, the
manager is able to handover the Seven Eleven system to distribution center for
them to run the system based on Seven Eleven desired standard.
Direct Store Delivery more appropriate when the
delivery actually using the maximum capacity of shipping truck from the
manufacturing into the retail store so the transportation cost will be
minimized. It also able to be done if the products that were delivered is
guaranteed matched according to the number, standard, and safety system that
owned by Seven Eleven itself.
5.What do you think about the 7dream concept for
Seven-Eleven in Japan?From a supply chain perspective, is it likely to be more
successful in Japan or the United States? Why?
7dream applies the concept of using Seven-Eleven as a
place of inventory of goods as well as place of goods by customers in the
nearest area on online delivery system. This concept led to the great success
of 7dream, because from the results of surveys conducted on customers, they
prefer to take the goods they buy in the drop off area nearby rather than
delivered directly to the destination or home address. This is an important
consideration of the customer because of the unwarranted and secure goods if in between to the
destination. But this is also one issue where the possibility of customers not
picking up the goods as soon as possible so as to eat a place that goods are
not offset by Seven Eleven store capacity.
In terms of supply
chain perspective, indeed in Japan more successful than in America.
Because in Japan they
apply a system or concept that uses the delivery network and frequency of Seven
Eleven visitors. Use of this existing network in addition to reducing cost is
also a point of 7dream success in Japan. And frequent customer visits to Seven
Eleven keep the goods on the Seven Eleven inventory quickly taken and take no
place else. This is a barrier in America due to differences in culture and
customs of society.
6. Seven-Eleven is
attempting to duplicate supply chain structure that has succeed in Japan and
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.
Implementation of Japan’s Sevel supply chain
structure to SevEl America can be done but will not be exactly the same as its
supply chain structure. There will be many obstacles faced when implementing
the Japanese SevEl supply chain in America. One of them is due to differences
in organizational culture in both regions and most likely suppy chain will not
run normally. Besides that there is also a difference between Japanese and
American local culture as well as the customs of society and SevEl is not just
a company that dominates the American region like Japan but there are still
companies like SevEl which also dominate in the American area. This is what
affects the level of supply chain success depends on many factors.
However, the implementation of Japan’s SevEl
system in America is also possible because it has proven to be a real success
in Japan. And to adjust the system can be done hybrid, which is done in areas
in America that have a greater chance of success.
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-Elecen managing its own distribution function?
Pros: The advantage of having an outsourced distributor is at the cost.
Reduced costs required for material or product transportation and employee
financing for the distribution system. This also greatly affects the design of
the built system, because it allows the company to accelerate the flow of
products, operations, and funds and the absence of any third party
Cons: The most unfavorable first thing from outsourced distributors is
the loss of full control of the flow of products, operations, and funds. And
also the difficult integration of systems that have been built before by the