7-Eleven Japan Supply Chain Case
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?
In order to be response, a store has to make a selection between holding large inventory or frequent orders & frequent delivery routes.
With holding large inventory, risks would be: risk of unsold products; inventory costs (in terms of money) and holding costs (in terms of area).
With frequent orders and frequent deliveries, risks would be high transportation costs, low efficiency, and risk of opportunity cost by not being able to deliver on time and meet high demand.
2) 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 risks associated with this choice?
One risk would be more transport visits that will increase transport costs and decrease efficiency.
And there is opportunity cost risk, where supply and demand will not match (for example: a group visit) which results in not being able to afford wide demand fluctuation.
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?
Facility location: Location selection is based on 7-Eleven Japan’s market dominance strategy, which is building 50-60 stores in high urban area all supported by on distribution service.
Inventory Management: Each store had choice from 5000 SKUs and carried on average 3000 SKUs which were highly dependent on local demand.
Transportation: orders from suppliers are sent by truck to the distribution center, then, at the distribution center, products are classified into 4 categories according to their holding temperature: frozen foods, chilled foods, room temperature
In order to be response, a store has to make a selection between holding large inventory or frequent orders & frequent delivery routes.
With holding large inventory, risks would be: risk of unsold products; inventory costs (in terms of money) and holding costs (in terms of area).
With frequent orders and frequent deliveries, risks would be high transportation costs, low efficiency, and risk of opportunity cost by not being able to deliver on time and meet high demand.
2) 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 risks associated with this choice?
One risk would be more transport visits that will increase transport costs and decrease efficiency.
And there is opportunity cost risk, where supply and demand will not match (for example: a group visit) which results in not being able to afford wide demand fluctuation.
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?
Facility location: Location selection is based on 7-Eleven Japan’s market dominance strategy, which is building 50-60 stores in high urban area all supported by on distribution service.
Inventory Management: Each store had choice from 5000 SKUs and carried on average 3000 SKUs which were highly dependent on local demand.
Transportation: orders from suppliers are sent by truck to the distribution center, then, at the distribution center, products are classified into 4 categories according to their holding temperature: frozen foods, chilled foods, room temperature