CASE STYDY ON 7 ELEVEN CONVENIENCE STORE
Created by: Ketan Gosavi SCM Batch 5
About
7-Eleven is the convenience store
with one simple focus, ‘Innovating to
make life easier for the customers’.
Founded in 1927 as an ice and
beverage stand in Dallas,
today 7-Eleven is a brand loved all
around the world.
7-Eleven, the iconic global retail
chain, is setting foot in India in
partnership with Reliance Retail Ltd
Responsive Convenience Store Supply
Chain
Ways to Enhance Responsiveness
Efficient Replenishment
Rapid replenishment of in-demand products through
efficient inventory management and distribution
systems.
Appropriate Technology
Utilization of suitable technology for tracking customer
demand and optimizing supply chain operations.
Responsive Supplier
Development of close partnerships with suppliers to ensure quick
response to changing customer needs and market demands.
Risks and Considerations
Costs Coupled with Demand
Uncertainty
High operational costs associated with
Operational Impact of Changing
meeting uncertain customer demand
Demand
patterns, leading to potential financial
risk. The risk of significant operational impact
if the demand patterns or customer base
undergo abrupt and substantial
changes.
Supplier Dependency and
Operational Risk
The reliance on responsive suppliers leads to operational risks if the supplier's
operations are affected by external factors.
Seven-Eleven’s supply chain strategy in Japan
What are some risks associated with this choice?
Risks of Micro-Matching Supply and Demand
Unanticipated Customer Demand
The tour bus phenomenon may cause stockouts as
unanticipated customers buy all of a product,
impacting regular customers.
Local Ripple Effect
Demand shifts may occur, causing excessive
replenishment at one site and insufficient supply at an
adjacent site.
Transportation Delays
Disruptions in traffic flow during deliveries may result in low service levels
for the next wave of demand.
Seven-Eleven's Supply Chain Strategy in
Japan
Facility Location and Inventory Management
Saturated Store Locations
Seven-Eleven Japan strategically places its stores in
close proximity to each other to create a dense
network, facilitating easy access for customers and
efficient inventory replenishment.
Information-Based Inventory System
The company's inventory management relies on real-
time data transmitted through an information system,
enabling a pull system for replenishing goods based
on actual demand.
Supplier and Distribution Network
Seven-Eleven maintains strong relationships with its suppliers and
operates an effective distribution network to ensure timely and efficient
replenishment of inventory.
Transportation and Information Infrastructure
Efficient Delivery Mechanism Advanced Information System
Seven-Eleven's advanced information
The company utilizes its delivery trucks
system facilitates direct communication
to move inventory between stores,
with suppliers and distribution centers,
ensuring a steady supply to meet
enabling accurate demand forecasting
customer demand efficiently.
and inventory management.
Integrated Supply Chain Network
The seamless integration of transportation and information systems creates a robust
supply chain network, supporting the company's overall strategy of high
responsiveness and customer service.
Seven-Eleven's Distribution Strategy
Benefits of Centralized Distribution
Total Control of the System
Seven-Eleven has complete oversight and
management of the distribution process, ensuring
efficiency and quality.
Aggregation of Demand
The centralized distribution center allows for the
consolidation of demand, enabling better forecasting
and inventory management.
Minimal Disruption at Retail Outlets
By minimizing multiple supplier deliveries, Seven-Eleven ensures minimal
disruption to the retail outlets, allowing them to focus on customer
service.
Appropriate Use of Direct Store Delivery
No Bulk Breaking Needed
Items not requiring bulk breaking at a
distribution center can be directly
delivered to stores, eliminating extra
Special Handling Requirements
handling. Products like lottery tickets,
newspapers, or alcoholic beverages
with specific handling needs can be
directly delivered.
Integrated Supplier Systems
Direct store delivery is suitable when supplier systems align with Seven-Eleven's,
facilitating seamless integration and operations.
7dream Concept for Seven-Eleven in
Japan
Photos provided by Pexels
Success of 7dream Concept in Japan
92% Customer Preference
92 percent of customers from one e-commerce company
prefer using Seven-Eleven stores for drop-off and
collection.
High Density Urban Areas
The concept is likely to work only for high-density urban
areas rather than suburban areas.
Global Appeal
The concept has potential for global appeal based on its
success in Japan.
Photos provided by Pexels
Likelihood of Success in Japan and the United States
Urban vs. Suburban
Convenience Customer Adoption
Likely to be convenient for urban US suburban customers may find it
areas but inconvenient for suburban incredibly inconvenient compared to
customers in the US. their Japanese counterparts.
Adaptability to Local Norms
The concept may need to adapt differently to local norms and preferences in the
United States.
Photos provided by Pexels
Seven-Eleven Supply Chain Structure
in the US and in Japan
Photos provided by Pexels
Pros and Cons of Duplicating Japanese System
Challenges in Duplication
Adapting the system to diverse urban and rural locations
poses logistical and cost challenges.
Cost Limitations
High cost of implementing the Japanese system in middle-
America, given the abundance of 24-hour alternatives in
suburban and rural areas.
Success of Japanese Approach
The Japanese system has demonstrated notable
advantages over existing U.S. systems through financial
and operational performance.
Photos provided by Pexels
Pros and Cons of Duplicating Japanese System
Hybrid System
Consideration of testing a hybrid
system in select U.S. markets to U.S. Adaptation
evaluate its effectiveness.
Applying the Japanese approach in
the U.S. should consider the
challenges and opportunities
presented by diverse market
Strategic Shift locations.
Continued adherence to the same strategy and operations in
the U.S. may lead to sustained failure and calls
for a shift in approach.
Photos provided by Pexels
What are the pros and cons to having a distributor
replenish convenience
VS
Seven-Eleven managing its own distribution
function? Photos provided by Pexels
Pros and Cons of Distributor Replenishment
Advantages of Distributor Replenishment
Reduced transportation, material handling, and labor costs
for the company.
Challenges of Distributor Replenishment
Loss of control, increased number of deliveries, and
integration difficulties of information flows.
Potential for Smooth Operations
Possibility for distributors to perform demand smoothing
function with minimal intervention.
Photos provided by Pexels
Pros and Cons of Distributor Replenishment
Cost Analysis Operational Control
Comparing the overall costs and Weighing the degree of control over
savings associated with distributor operations and information flow in
replenishment and company- distributor replenishment versus
managed distribution. self-managed distribution.
Effective Supply Chain Management
Assessing the impact of distribution models on supply chain efficiency and
customer service levels.
Photos provided by Pexels