REPORT

ON

Case Study: Seven-Eleven Japan Co.

BY:

Shashank Chauhan

Contents

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Contents..................................................................................1
EXECUTIVE SUMMARY ...................................................2
BACKGROUND:....................................................................................................3

STERNGTHS & RISKS………………………………………………13

CONCLUSION………………………………………………………14

EXECUTIVE SUMMARY

With the proper utilization of proper supply chain practices Seven-Eleven had realized unique
growth in the business.Seven-Eleven have found better ways of developing their CDC as well

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as DSD that is through information knowledge expertise with their business functions to
deliver frequent product services of varied items and the engagement assurance given to the
customers.

The advantage of successful and improved implementation of chain Seven-Eleven effectively

tripled the buying power and also accessed new products.. The distribution systems of Seven-
Eleven were re-engineered and the Combined Distribution Centers (CDC) have been
introduced by the company to better manage the flow of products into the stores. With the
implementation of CDC and DSD (Door Store Delivery) centers allow smoothing of
distribution operation to the stores and the provision of better quality and better information
of supply and deliveries is available and the control of the supply chain is achieved. The
implementation of technology POS (Point of Sales) helps to move ahead and give addational
boost to the profit of seven-eleven.

BACKGROUND:

Seven-Eleven Japan Company was founded in the year 1973 and had its first store in
Tokyo, and by the year 2004, Ito-Yokado group owned the company and thus, managed
successful supermarkets in Japan and that, Seven-Eleven had realized unique growth in the

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business sector. This report will be focusing and deal with several discussion and case
analysis of Seven-Eleven Japan Company within the rising truth of Seven-Eleven as a leading
convenience store chain as it can be within Japanese retail business functions. The critical
analysis will incur as to how the company does its business operation reflecting their supply
chain management as well as upon valuing their logistics into a more effective and reliable
perspective. The understanding and execution of supply chain process and outcomes have to
be present and supply chain analysis of Seven-Eleven is given more weight and value. The
utilization of supply chain strategy of Seven-Eleven and such performance drivers upon the
balance nature business responsiveness and the awareness of certain risks involved.

ANALYSIS:

According to seven-eleven “filling in the entire map of Japan is not our priority. Instead, we
look for demand where Seven-Eleven stores already exist, based on our fundamental area
dominance strategy of concentrating stores in specific area”

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Seven Eleven continues to grow during the prolonged 1990s downturn. From 1991 to 2002
the stores increased from 19603 to 42000. As percentage of all retail stores in japan this
shows an increase from 1.2% to 3.2%. By 2004 its operating income reaches to 165.7 billion
yen, positioned it as a leader not only in convenience store but also in Japan’s retail industry.

Extensive franchise network played a key role in the daily operations. With the help of
franchise network they:

 Boosted distribution efficiency

 Improved brand awareness
 Increased system efficiency
 Enhanced efficiency of franchise support services
 Improved advertising effectiveness
 Prevent competitors’ entrance into the dominant area

Thus improved franchise networking helps seven-eleven to increase their profit allow it to
continue its domination.

Total salesof products(billion yen)

2,358.80 2,128.70

2002
2003
2,228.20
2004

Fiscal year ending in 2000 (billion yen) 2004(billion yen) ANALYSIS

February (in
(% INCREASE)
BILLION YEN)

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Net sales 1,964 2343.2 19.31%
Revenue 327.0 445.4 36.21%
Ordinary income 140.2 168.9 20.47%
Net Income 68.2 91.5 34.16%

Number of stores 8,153 (in 2000) 10,303(in 2004) 26.38%

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 Numberof Stores
12000
10,303
10000 9,690
9,060
8,602
8000 8,153
7,732
7,314
6,875
6,373
6000 5,905
5,475
5,058
4,629
4,270
4000 3,954
3,653
3,304
2,964
2,651
2,299
2000 2,001
1,643 Number of Stores
1,306
1,040
801
375591
0 15 69 199
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4
7
9
6
7
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7
9
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9
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9
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9
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9
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2

With the leading domination in the market Seven-Eleven in 2004 change the standard size
of new stores from 125 square meters to 150 square meters.

Seven-Eleven starts too emphasized more on regional merchandising to attract the local
preferences in terms of food items, beverages, magazines etc. This helps them to increase
the sales:

ITEMS 2002 (Sales in 2004(Sales in billion ANALYSIS (%

billion yen) yen) INCREASE)
Processed Foods 681.5 725.4 6.45%
Fast Foods 642.2 704.4 9.69%
Fresh Foods 264.9 305.0 15.14%
Non Foods 540.2 624.0 15.52%
Total 2,128.7 2,358.8 10.81%

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Thereafter seven eleven join hands with NEC. This helps them to design with better
information system that was ISDN enabled with e-commerce. NEC develops graphic order
terminals, scanner terminals, store computer and pos register. With the help of graphic order
terminal implementation seven eleven equipped itself with better visibility and networking.

With combined delivery system they have reduced the delivery time, reduced number of
vehicles. They have managed the vechiles in such a way that in :

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Vehicles in 1974 Vehicles in 1994 ANALYSIS (%
Decrease ) Cost
saving in transport
70 11 84.28%

Annual Sales (BillionYen)

2500
2,343.20

2,213.20
2,114.00
2,046.60
2000 1,963.90
1,848.10
1,740

1,609

1500 1,477.10
1,392.30
1,281.90
1,194.90
1,081.80
Annual Sales (Billion Yen)
1000 931.9

780.3
686.3
599.1

500 521.9
453.6
386.7
319
256.5
202.1
153.6
109.8
72.5
17.439.8
0 0.7 4.8

197419761978198019821984198619881990199219941996199820002002

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Supply Chain Strategy by Seven-Eleven

Competitive Strategy
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 Supply Chain Strategy

Efficiency Supply Chain Structure Effectiveness

Logistical Drivers

Facilities Inventory Transportatio

n

Information Sourcing Pricing

Cross-Functional Driver

In short we can say that Seven-Eleven have done the following:

 Store assessment that increased productivity of inventories and store space within
consumer interface
 Optimized time and cost in with the help of Seven-Eleven replenishment system
 Efficient promotion in maximizing total system efficiency of trade and consumer
promotion
 Product introduction reflect effectiveness of new product development and
introduction activities

STRENGTHS & RISKS

Strengths:

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  DSD (Direct store delivery) and CDC (Combined distribution centre) makes seven eleven
networking strong.

 Combined distribution system saves time.

 Seven Eleven effectively does Micro matching of demand and supply.

 Seven Eleven have various Franchises which also help in stronger branding.

 Implementation of IT like connecting through ISDN, wide screen graphic display helps in

smoothning of flow of information.

 Seven Eleven have very effective store management and transportation system.

Risk:

 Dedicated employees needed as there is a hard work for the inventory movement.

 Improving ability means reducing constraints is the biggest risk.

 As seven eleven had drastically reduced the vehicles they don’t have any backup plans. If the
vehicle .

 breaks down the system of delivery breaks down.

 Seven eleven is connected through IT systems if IT system breaks down their whole system
breaks down which is the biggest risk in their networking.

CONCLUSION:

Thus we realize that by integrating the supply chain certain constraints of business can
be minimized and customer service levels can be improved through executing information

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technology systems. Thus, with the help of models like CDC and DSD incorporate better,
more valuable supply chain network expecting solid store chain ground. Moreover,
adaptation of IT implementation incurs a substantial use for Seven-Eleven. The company in
its business services can require precise infrastructure within their distribution centers
enabling effective information flows and streamline supply logistics. Thus right logistics and
collaboration upon providing imperative business operation benefits considering the majority
of customers worldwide.

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