7Eleven Case

Study
Assignment Questions
Name FT Number
Sandeep Gupta FT181075
Abhishek Awasthi FT182004
Nithyapriya V FT181052
Anant Mishra FT182016
Bhuvan Bharti FT182031
Vivek Dayal FT182108
Amogh G FT182012

1/13/2018
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?

A convenience store chain can improve responsiveness to this uncertainty using one of
the following strategies, especially for fresh and fast foods:

a. Central Distribution System: Maintain daily inventory at distribution centre

which are localised based on regions and work on SC to deliver products to
stores.

b. Store clustering: Open stores in clusters (that is, high number of stores in the
same/nearby location) by configuring out high market demand in a region.
This will mitigate the risk of high non value added inventory and reduce
logistics cost to a high extent.

c. Total Information System: Use of latest technology to maintain optimum

inventory and real-time demographic information of customers. This will
replenish inventory levels as soon as required.

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?

The risks of rapid replenishment are:

a. High transportation costs (includes fuel, staff, etc) due to efficient supply
chain.

b. High dependency on suppliers: If suppliers are not able to match the

demand, this could lead to shortages.

c. Need for continuous plant maintenance: Due to 24/7 use of manufacturing

plant, there is a need for weekly/monthly preventive maintenance of the
plants, leading to high costs.

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?

Market dominance strategy: SevenEleven followed the MARKET LEADER dominance

strategy.

a. Facility Location: They chose markets where the demand was high and
established high concentration of stores in such areas. The did not try to
dilute their presence in order to capture more market.
 b. Inventory Management: They used rapid replenishment technique wherein
they used TIQ by which daily automatic data collection on consumer
consumption was sent to the Manager who in turn sent the consolidated
demand to suppliers and distributers simultaneously.

c. Transportation: They followed combined delivery system where like products

were directed to a single truck. There were 4 such categories: frozen foods,
chilled foods, room-temperature processed foods, and warm foods. The
deliveries were made during off-peak hours. That reduced the delivery time
spent at each store.

d. Information Infrastructure: They took the help of latest technology systems

in order to reinforce the information structure of SevenEleven which helped
them create a trend analysis on consumer buying pattern. Some of the
different technologies used were: Graphic Order Terminal, Scanner Terminal,
Store Computer and POS Register.

4. Seven Eleven does not allow direct store delivery in Japan with all products flowing
through its distribution centre. What benefit does Seven Eleven derive from this policy?
When is direct store delivery more appropriate?

Distribution Centers offered SevenEleven with short replenishment cycle times. It also
allowed careful tracking of sales. The steps they followed were:

a. The store manager used a GOT to place order which was immediately
transmitted to the supplier as well as the Distribution Center.

b. The supplier receives order from all 7eleven stores which then sent the
orders to the Distribution Centers.

Direct store delivery (DSD) lowers the transportation costs. DSD is most appropriate
when stores are large and when the supplier sends full-truckload (FTL) items. DSD is the
ideal method for cost efficient operations.