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Case Study Answers2
Case Study Answers2
Firstly, they are bringing products closer to the customers. What makes it
differences is customers can get the item or buys an item close-by compare than
ordering that must be waiting for a few days. Examples, when an increased demand
for close-by,convenience stores ,Seven Eleven felt that besides bringing stores to
new areas, it could also continue to open stores in densely populated urban areas such
as Tokyo,Nagoya and Osaka.But, the risk might be incurred between the variety of
demand that cannot be fulfilled altogether at the same time. The customers also
possibility change their mind toward the same thing to others.
Secondly, offering variety of services toward customers. The offers that Seven
Eleven list 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 payment. On the other side, the system might be
break down for some time due the weather or the system failure to play well.
Thirdly, offering a flexible system to the customers. For examples, Seven Eleven
have established of operating hours to some customers due their respective needs and
easy to use beside the close-by locations for their purchases. The risk is some of
customers may be can and cannot use an e-commerce well, it might be hard for them.
Then, the service are not fully utilized by the customers.
There are many risks for Seven-Elevens supply chain strategy in attempting to
micro-match supply and demand using rapid replenishment. But the main risk or the
biggest risk that would happen is the potentially high cost of transportation and
receiving at Seven-Eleven stores. It is a fact that when rapid replenishment happened,
it would finish off all inventory in stock. For this reasons the inventory need to be
deliver frequently, maybe several times a day. These deliveries would increase the
transportation cost by a lot. There is another reason for the increase of the
transportation cost which is the location of the stores. The suppliers and factories are
centrally located but the Seven-Eleven stores are scattered all across the city. The
effort that Seven-Eleven took to supply inventories several times a day to all the
stores would definitely increase the cost of transportation.
The next risks of micro-match supply and demand for Seven-Eleven using rapid
replenishment are the dependence of information system is high. Although using
information technology would give a great advantage to the business but it would also
give great disadvantages. When a company relying too much on information
technology, they are risking having a break down if the system fails. Seven-Eleven
Japan attributed a significant part of its success to the Total Information System
installed in every outlet and linked to headquarters, suppliers and the distribution
centers. The hardware system that was used by the store include graphic order
terminal, scanner terminal, store computer, and POS register. This is a prove that
Seven-Eleven relying too much on its information system. Any sudden breakdown of
the information system would halt the entire system of the stores, the distribution
centre, and the suppliers. Information system is also used to forecast customer
demand. When system failure occur, the situation of mismatch of stocks and demand
are sure to happen where there will be a mismatch between the customer needs and
the goods supplied. This situation would result in too many inventory or less in the
case where customer needs are inconsistent.
Seven-Eleven Japan has chosen to operate a highly responsive operation and has
chosen a supply chain design that supports this strategy. Seven-Elevan Japan
emphasized regional merchandising to cater precisely to local preferences. Each store
carried food item, beverages, magazine and customer items.
Their facility location choices are to saturate an area with stores, thereby making
it easy for customers to shop and their own delivery trucks to move from store to store
to replenish inventory.
A store places or customer who orders with high volume/ low volume, but
with high value. If a store place or customers makes large orders and covers a
profitable percentage of the companys monthly profit, then a direct store
delivery is a great way to deliver the order.
The delivered items dont need any bulk broken at a DC or it requires a special
handling.
The supplier has a consonant system. For example, a daily newspapers
delivery.
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?
The concept of Seven Eleven Japan is allows e-commerce sites to use Seven
Eleven stores as drop-off and collection place for online items by e-commerce
customers. It has been success while the customers are satisfied with their product
being shipped to the local convenience store rather than walk in. So, the best option to
be use is 7dream.com. Refer on the recent survey revealed that 92 percent of the
customers of e-commerce company more preferred to have their item by this
way.According to logistics, online deliveries can be copy by using Seven Elevens
current distribution network in Japan as a role model .The online delivery helps
supplier sort the items more efficiently for the store. Doing so will increase the
utilization of transportation which gives Seven Eleven the opportunity to offer a lower
cost alternative to having a package carrier deliver the product in house.However, if
more demand of online purchased, Seven Eleven will use up storage space and require
the store to keep the items well before the time of collection by customers.
Its seems this concept more suitable for the citizen who are living in urban areas
in Japan. It is cause the main goal that has been set to exploit the existing distribution
system and the fact that stores were easily accessible to most Japanese.Moreover, the
frequency of visits by customers to Seven Elevens Japan more encouraged the
successful of the convenience store within online delivery links with existing network
provided.
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.
The supply chain structure for United States will be not operates smoothly like on
Japan, there are pros and cons of this approach :
Pros :
Consolidation of deliveries because the distribution system was linked each
other and entire supply chain for all product categories. When a store placed
an order, it was immediately transmitted to the supplier as well as the
distributor center and when the supplier received orders from all Seven-Eleven
stores and started production to fill the orders.
Monitor and control for product and and supply chain which are at CDC
deliveries of product like from different suppliers such as milk and sandwiches
were directed into a single temperature-controlled truck. With practice this
CDC, the quality of the product supplied along the supply chain can be
verified and control from the single centers.
Can reduces the workload at the stores when the inventory is delivered only
once a day, this shall make life easy for staff as they shall have schedule time
to spend on inventory management, hence they can provide much of their
remaining time completely focusing on the customer need and customer
satisfaction. With this distribution system enabled Seven-Eleven to reduce the
number of vehicles required for daily delivery service to each store, even
though the delivery frequency of each item was quite high.
Cons :
Increasing the wages of staff by sorting to delivery to stores every night
because they need to deliveries request from the store manager were sent
to the nearest CDC and by the 10.00 p.m.
Difficulty to manage the new systems, introducing the new systems is not
easy to do because its need an adjustment, especially for middle manager
and employees who are familiar with the old distribution systems
Difficult to control effectively, even overall CDC is very effectively in
distributing the product but it was very hard to control effectively because
its depends on distributions center
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?
The first pros in having a distributor replenish convenience the stores are related
to cost. When someone else is replenishing stores, it would cost less in transportation
and material handling. This is because the cost depended on how supply and
reordering operations are designed. It is possible that the distributors perform the
aggregation or demand smoothing function with minimal intervention compared by
the individual Seven-Eleven franchise. Having a distributor replenish the store also
means that they do not have to invest anything in distribution centres, fleet, personnel
or trucks to perform this task.
The second pros in having a distributor replenish convenience stores are it added
value. We could say that a distributor brings much more value to United States
compared to Japan because considering the lower density of stores, a distributor is
able to aggregate deliveries across numerous competing stores. This enables a
distributor to reach levels of aggregation that cannot be accomplish by a single chain
such as Seven-Eleven. Distributor replenish convenience stores are value added also
because they understand customer demands very well.
The third pros are it will help the company to focus on their core business.
Creating a company is hard but to develop it is harder. If the company hire a
distributor replenish convenience stores, they can push that problem aside and focus
more on how to make their company become stronger.
The cons of having a distributor replenish convenience stores are the lack of
control and responsiveness. This is because there is no direct link between the
company, the convenience stores and the customers. The level of service consistency
cannot be monitored or controlled fully by the company.
Other than that, the cons of having a distributor replenish convenience stores are
the inability to exploit having large number of stores. It is certain that getting the job
done through the distributors has Seven-Eleven subsidize deliveries because they are
competing with smaller chains that may also be using the same distributor.