MM 5004 Operations Management - Final Exam DILEMBA Management

By Mohammad Alfian Syah Siregar - 29322150

Supply Chain
Assignment Questions – Seven Eleven Japan Co.

1. A convenience store attempts to be responsive by giving customers what they need,

when they need it, and where they need it. What are some different ways that a
convenience store supply chain can be responsive? What are the risks associated with
each?

Answer:
Convenience store supply chain can be responsive by providing what customers need
timely.

Type Benefit Risk

Make to stock 1. Could easily response 1. Bad forecasting could lead to
model increasing customer’s overcapacity
demand immediately 2. Need more time for product
2. Low operational cost replacement
Micro-match 1. Quick replacement for slow- 1. High operational cost
rapid moving sales product 2. High dependency on DC and
replenishmen 2. Less inventory space Suppliers
t model

2. SEJ’s supply chain strategy can be described as attempting to micro-match supply and
demand using rapid replenishment. What are the risks associated with this strategy?

Answer :
The risks associated with this strategy are;
a. High operational cost
SEJ’s the distribution centre carried no inventory, all the order made by store are
sent to appropriate suppliers. Then the suppliers will packed each store delivery to
distributions centre, and the package will be delivered to each store using SEJ’s
truck.
This inventory and distribution process could generate high operational expenses
because they need to invest a lot in vehicles and employee (driver)
b. Shortage of goods
Because of the distributions centre carried no inventory and SEJ’s high dependency
on suppliers, there might be possibilities when the suppliers can’t deliver the
 product in time or even can’t fulfil the order made by the store. It might cause
product unavailability/ shortage in the store.

3. How has SEJ’s choice of store locations, inventory management, transportation, and
information infrastructure supported its supply chain strategy?

Answer :
a. The store location strategy used by SEJ is “close-by convenient store”. The firm’s
expansion continuity is supported by its 158 distribution centers, in which each DC
covers from 50 up to 60 store. This near-customer approach strategy can benefit
them in terms of branding, grabbing more market that are not yet covered or have
distant access to supermarket.
b. In terms of inventory, the store owner only order the goods that are contribute the
most to the sales. The owner can get the data by looking at the system (Graphic
order terminal), this process can eliminate over capacity waste.
c. In transportation and distribution aspect, SEJ adopt Cross Docking, an approach used
in consolidation warehouse where, rather than making large shipments, large
shipment are broken down into small shipment for local delivery area. 1 This logistics
management requires a lot of vehicle, that’s why they partnered with Mitsui and Co
for supporting their logistics. They also categorize the products (food and non-food),
and make delivery timeline for each category, the delivery time can be adjusted
depending on weather and season.
d. In information aspect, the use of technology in really help them to identify the
consumption patterns of customer, it also enables them to identify which product
contribute the most to the sales and which product that are less popular. Total
Information System linked every store to head quarter, suppliers and SEJ DC. They
can generate and analyse the data to make a better inventory and sales planning.

4. SEJ does not allow its suppliers to deliver directly to its stores; all products flow
through its distribution centers. How does this policy benefit SEJ? Under what
circumstances might direct store delivery be more appropriate?

Answer :
This policy benefit SEJ in terms of optimizing/maximizing the truck capacity to deliver
the goods, so it would save the amounts of money. If the suppliers allowed to deliver
directly to stores, it will cause double transportation expense. One expense for the truck
delivery from DC (for goods that are not provided by suppliers), and another expense is
for the delivery fees that are charged by suppliers for delivering good to each store.

1
F. Robert Jacobs; Richard Chase, Operations and Supply Chain Management (McGraw-Hill Education : New York,
2021) p.427
 Direct store delivery might be more appropriate to be implemented in a condition
where there are suppliers that is distant from a DC, or a fresh product such as fruit/
vegetables.

5. What are the pros and cons of Seven-Eleven attempting to duplicate its Japanese
supply chain structure in the US by introducing CDCs? Keep in mind that stores in the
US are also replenished by wholesalers and directly in-store by manufacturers.

Answer :
Pro:
a. By using CDCs in US, it might save them cost of in transportation, system and
employee (not as much as full DC shipment)
b. It makes the store owner easier to coordinate with suppliers if there are
products that are out of stock or damaged without having to wait from the
distribution center
Cons :
a. Increasing in miscommunication might occur because more parties are involved
in the related process
b. It might also cause the difficulty to identify each suppliers performance because
each and another store might have different experiences

6. What markets are better suited for SEJ’s growth?

Answer :
Based on sales performance data stated in the case, and also the service provided by SEJ
to its customer, these markets might be better suited with SEJ’s growth
a. Elderly People
 It’s stated in the case that about 47% of store sales were by elderly people (60
years or more). SEJ’s high networking makes it easier for the elderly people to
shop, also it’s supported by SEJ’s home delivery service called Seven-Meal
b. Office employees
 SEJ offers fast and processed food that could be easily access by office
employees that usually need quick service
c. Women
 Women are better market for them, in 2009 SEJ estimated that more than
70% of women in their 40s worked either part-time or full-time outside the
home. With current network, SEJ might be an easy choice for them to shop for
daily household needs, from fresh/daily foods to non-foods product such as
soap, detergent, etc.
Industry 4.0

Read the case “Reshaping Business with Artificial Intelligence, Closing the Gap Between
Ambition and Action” and answer the following questions;

1. Do you believe that AI will lead to job reduction? Why?

Answer:
I believe that AI will lead to job reduction. The jobs that are going to be replaced by AI
are typical manual boring jobs that most of the process are still manual. Once it can be
done by AI, the employee should have a better productivity and performance. In my
opinion, the AI implementation should be seen as an opportunity, not a threat because
it actually helping and make us better in our role. We can agree that the jobs which are
available now, didn’t exist years ago when technology were less popular, I think it will
apply the same way with AI.
AI still need human to maintain, fixing, and enhancing it, thus this might also create
another job opportunity. It is true that AI will lead to some job reduction, but also
creating or giving birth to another job opportunity.

2. How the company reinvent economic value with AI? What is the benefit and
challenges shifting economic value with AI?
Answer:
The impact of AI may not be linear, but may build up at an accelerating pace over time.
AI’s contribution to growth may be three or more times higher by 2030 than it is over
the next five years. An S-curve pattern of AI adoption is likely—a slow start due to
substantial costs and investment associated with learning and deploying these
technologies, but then an acceleration driven by the cumulative effect of competition
and an improvement in complementary capabilities. The fact that it takes time for
productivity to unfold may be reminiscent of the Solow Paradox. 2 Complementary
management and process innovations will likely be necessary to take full advantage of
AI innovations.3

2
The Solow Paradox is a phenomenon in which increased investment in IT is not visible in productivity statistics.
For an in-depth debate, see Mekala Krishnan, Jan Mischke, and Jaana Remes, “Is the Solow Paradox back?”
McKinsey Quarterly, June 2018
3
Solving the productivity puzzle: The role of demand and the promise of digitization, McKinsey Global Institute,
February 2018.
 The benefit of shifting economic value with AI are;
a. Increasing labor productivity, AI will augment human capabilities, freeing up
workers to engage in more productive and higher-value tasks, and increase
demand for jobs associated with AI technologies.4
b. Replacing human for working in dangerous area/ risky activities. By automating
routine or unsafe activities and those prone to human error, AI could allow
humans to be more productive and to work and live more safely. One study
looking at the United States estimates that replacing human drivers with more
accurate autonomous vehicles could save thousands of lives per year by reducing
accidents.5

The challenges that might be facing for companies who are going towards AI
implementation is the readiness of all parties. The firm strategy to implement AI
technology should be followed by preparing the readiness in such aspects;
a. Employee
Company must be able to train and upskill its employee, so that when the AI is
implemented, the employee could keep up with the firm purposes
b. Infrastructure
Implementing AI means a lot of investment in building supporting infrastructure.
It could cost a company significant amount of money, but if they do it wisely, it
will be a good investment in the future

3. How your company recreate strategy and build competitive advantage through AI
implementation? Provide real example of AI implementation in you company?
Answer:
BTPN has become one of the leading Bank that implement Digital Banking called Jenius.
BTPN sees the opportunity on how the future bank will be, Jenius allow our customer to
open account, perform transaction, block-unblock debit card, and lots of features that
usually need to done by coming to Bank/ ATM. One of the feature in Jenius that using
the AI technology is called Flexi Cash. Flexi Cash offers standby fund whenever you need
extra money then you can immediately withdraw money after you’ve activated the
feature.
If the customer apply to activate Flexi Cash, our AI will analyse the related data (SLIK
Checking, Customer’s financial habit, etc), all those data are proceed by AI and it will
decide whether the submission is approved or rejected. All this process only takes less
than 5 minutes.

Refer to the readiness assessment model of industry 4.0 by INDI 4.0, do the following:
4
The promise and challenge of the age of artificial intelligence : James Manyika and Jacques Bughin, McKinsey
Global Institute, October, 2018
5
The promise and challenge of the age of artificial intelligence : James Manyika and Jacques Bughin, McKinsey
Global Institute, October, 2018
 1. Pick up one component (pilar “Manajemen dan organisasi”, “orang dan budaya”, and
“produk dan layanan”) and subcomponent (bidang) from the model
2. Find out and explain the implementation of that component and subcomponent in
your company
3. Related with no 2 responses, explain the strategy to increase the level of readiness
from the existing condition (as-is) into goals (to be). For example: You may explain
step by step how to increase from the level 1 (kesiapan awal) into level 3 (kesiapan
matang)

Answer :

1. Pick up one component (pilar “Manajemen dan organisasi”, “orang dan budaya”, and
“produk dan layanan”) and subcomponent (bidang) from the model

Answer:
I would give my analysis and explanation regarding the “Produk dan Layanan” in BTPN

2. Find out and explain the implementation of that component and subcomponent in
your company
Answer:
a. Product Customization – Level 3
 51-75% product and services that are provided by BTPN to its customer are
customized. BTPN categorized its product based on customer segmentation.
 BTPN Wow! Is a product for mass market customer, it allows customer to
perform bank transaction (e.g. transfer, bill payments, cash withdrawal in
partnered agent) through basic phone by using USSD dial (*247#)
  Tabungan Citra Pensiun, savings product that is specially designed to provide
comfort for pensioners and those who would enter retirement in conducting
banking transaction. One of the beneficial feature is LKPP (Layanan
Kunjungan Pembayaran Pensiun), Our bank staff would deliver directly to
customer’s house if the customer is in a sick condition.
 Jenius, a digital product designed for tech-savvy community (Gen Y, Z and
Millenials)

3. Related with no 2 responses, explain the strategy to increase the level of readiness
from the existing condition (as-is) into goals (to be). For example: You may explain
step by step how to increase from the level 1 (kesiapan awal) into level 3 (kesiapan
matang)

Answer: To increase the level of readiness from existing condition from level 3 to level 4.
BTPN might take the following steps;
 Maximizing its current data to optimize the process, to get new insight
 Combining the less popular product into a brand new product that has more
value
 Maintaining the current condition, ensure that there’s no bottleneck