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Published by: Asfand Ahmed Khan on Jan 31, 2011
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nd lunch sandwiches are assembled on demand.

The main risk with this approach is that capacity is decentralized, leading to poorer utilization. Local Inventory. Another approach is to have all inventory available at the stor e at all times. This allows for the centralization of cooking capacity. The main risk is obsolete inventory and the need for extra space. Rapid Replenishment. Another approach is to set up rapid replenishment and suppl y the stores with what they need when they need it. This allows for centralizati on of cooking capacity and low levels of inventory, but increases the cost of re plenishment and receiving. 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 main risk for Seven-Eleven is the potentially high cost of transportation an d receiving at stores. 3. WHAT HAS SEVEN-ELEVEN DONE IN ITS CHOICE OF FACILITY LOCATION, INVENTORY MANA GEMENT, TRANSPORTATION, AND INFORMATION INFRASTRUCTURE TO DEVELOP CAPABILITIES T HAT SUPPORT ITS SUPPLY CHAIN STRATEGY IN JAPAN? All choices made by Seven-Eleven are structured to lower its transportation and receiving costs. For example, its area-dominance strategy of opening at least 50 to 60 stores in an area helps with marketing but also lowers the cost of replen ishment. All manufacturing facilities are centralized to get the maximum benefit of capacity aggregation and also lower the inbound transportation cost from the manufacturer to the distribution center (DC). Seven-Eleven also requires all su ppliers to deliver to the DC where products are sorted by temperature. This redu ces the outbound transportation cost because of aggregation of deliveries across multiple suppliers. It also lowers the receiving cost. The information infrastr ucture is set up to allow store managers to place orders based on analysis of co nsumption data. The information infrastructure also facilitates the sorting of a n order at the DC and receiving of the order at the store. The key point to emph asize here is that most decisions by Seven-Eleven are structured to aggregate tr ansportation and receiving to make both cheaper. 4. SEVEN-ELEVEN DOES NOT ALLOW DIRECT STORE DELIVERY IN JAPAN, WITH ALL PRODUCTS FLOWING THROUGH ITS DISTRIBUTION CENTER. WHAT BENEFIT DOES SEVEN-ELEVEN DERIVE FROM THIS POLICY? WHEN IS DIRECT STORE DELIVERY MORE APPROPRIATE? Direct store delivery (DSD) would lower the utilization of the outbound trucks f rom the Seven-Eleven DC. It would also increase the receiving costs at the store s because of the increased deliveries. Thus, Seven-Eleven forces all suppliers t o come in through the DC. DSD is most appropriate when stores are large and near ly-full truck load quantities are coming from a supplier to a store. This was th e case, for example, in large U.S. Home Depot stores. For smaller stores it is a lmost always beneficial to have an intermediate aggregation point to lower the c ost of freight. In fact, Home Depot itself is setting up these intermediate faci lities for its new stores that are often smaller. 5. WHAT DO YOU THINK ABOUT THE 7DREAM CONCEPT FOR SEVEN-ELEVEN JAPAN? FROM A SUP PLY CHAIN PERSPECTIVE, IS IT LIKELY TO BE MORE SUCCESSFUL IN JAPAN OR THE UNITED STATES? WHY? 7dream makes sense given that Japanese customers are happy to receive their ship ments at the local convenience store. From a logistics perspective, online deliv eries can piggy back on Seven-ElevenвР⠢s existing distribution network in Japan. Delive s from the online supplier can be brought to the DC where they are sorted along with other deliveries destined for a store. This should increase the utilization of outbound transportation allowing Seven-Eleven to offer a lower cost alternat ive to having a package carrier deliver the product at home. The primary negativ es are that 7dream will use up storage space and require the store to be able to retrieve specific packages for customers. One can argue that the concept may be more successful in Japan given the existin g distribution network of Seven-Eleven and the frequency of visits by customers. Online delivery is able to link with the existing network. The high visit frequ ency ensures that packages are not occupying valuable store shelf space for a lo ng time. Also, the frequent visits ensure that the marginal cost to the customer

This is less likely to be th e case in the United States. In fact.S. This allows a dist ributor to reach levels of aggregation that cannot be achieved by a single chain such as Seven-Eleven. a distributor is able to aggregate deliveries across many competing stores. The difficulty of duplicating the Japan supply chain structure in the United Sta tes follows primarily from the much lower density of U. Even then. Given the lower density of stores. Add Project New Business essays * * * * * * * * * * * * * * * * * * * * * * * ) * Cultura organizacional y eficacia del trabajo en equipo (09 July) * Caso Kudler Fine Foods (08 July) * business plan for anti depressant drug (06 July) Market Segmentation (23 January) Gap Strategic Overview (15 August) Johari Windows Testing (15 August) Walmart Inc. it may be argued that going through the distributor has Seve n-Eleven subsidize deliveries to competing smaller chains that may also be using the same distributor. 7. Seven-Eleven stores. T his is compounded by the fact that Seven-Eleven stores are getting both direct s tore deliveries as well as wholesaler deliveries to its stores. (15 August) Tesco Case Study (15 August) Project for Intrinsic Value (15 August) Maruti vs Hyundai in india (15 August) Bill French (15 August) International commerce (15 August) Risk identification (15 August) Coca-Cola (14 August) Krispy Kreme Doughnuts project (14 August) ?????? Shangri-La (13 August) Victoria's Secret Advertising Case (13 August) Rentabilidad de los valores (12 August) Marketing planning (12 August) Carusos's pizza un Nuevo Enfoque (12 August) Substantive Conflict (12 August) Starbucks Marketing Strategy (12 August) Pharma trend (12 August) Third Party Logistics and Supply Chain (08 August) materiality and SOX (02 August) Financing Alternative Benchmarking: Lester Electronics And Junip (27 July . The big disadvantage to having all deliveries done throug h a distributor is that Seven-Eleven is unable to exploit having a large number of stores. WHAT ARE THE PRO S AND CONS OF THIS APPROACH? KEEP IN MIND THAT STORES ARE ALSO REPLENISHED BY WH OLESALERS AND DSD BY MANUFACTURERS. having its own distribution system would add much less value than in Japan given the lower density of stores and larger distance between sto res. WHAT ARE THE PROS AND CONS TO HAVING A DISTRIBUTOR REPLEN ISH CONVENIENCE STORES VERSUS A COMPANY LIKE SEVEN-ELEVEN MANAGING ITS OWN DISTR IBUTION FUNCTION? One can contend that a distributor brings much more value to the table in the Un ited States relative to Japan. 6. Its own distribution system would help more if all w holesaler deliveries and direct store deliveries were stopped and routed through the DC. Setting up its o wn DCs does not allow Seven-Eleven to get the same level of transportation aggre gation as it gets in Japan. SEVEN-ELEVEN IS ATTEMPTING TO DUPLICATE THEIR SUCCESSFUL JAPANESE SUPPLY CHAI N STRUCTURE IN THE UNITED STATES WITH THE INTRODUCTION OF CDCS.of picking up at a Japanese Seven-Eleven is small. THE UNITED STATES HAS FOOD SERVICE DISTRIBUTORS LIKE MCLANE THAT ALSO REPLENI SH CONVENIENCE STORES.

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