Seven-Eleven Japan Co.

Assignment 1

Group 4

Dipraj Dhuri - 2022013

Vishnu Arakal - 2022156

Submitted to

Dr Kiran K
Supply Chain Analytics

Goa Institute of Management

Poriem - Goa
Study Questions:
1. A convenience store chain attempts to be responsive and provide customers with 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?
Ways a Convenience Store Supply Chain Can Be Responsive:
 Seven-Eleven Perspective: Seven-Eleven strives to provide customers with a
convenient shopping experience. To achieve this, they employ various responsive
strategies. For instance:
 Just-in-Time Inventory: Seven-Eleven aims to minimize inventory levels to
reduce costs and ensure fresh products. However, there is a risk of stockouts
if customer demand surges unexpectedly.
 Flexible Supplier Agreements: Seven-Eleven negotiates agreements with
suppliers for rapid replenishment, ensuring they can adjust product
assortment quickly. However, they need to manage the risk of supplier
reliability issues.
 Efficient Transportation: Seven-Eleven relies on efficient transportation
methods to make sure products reach stores promptly. Still, they face risks
such as transportation disruptions and escalating costs.
 Advanced Information Systems: Seven-Eleven uses advanced IT systems for
real-time data analytics and demand forecasting. These tools help anticipate
customer needs but carry the risk of errors or inaccuracies in the data.

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?
Risks of Seven-Eleven's Micro-Matching Supply and Demand in Japan:
 Seven-Eleven Perspective: In Japan, Seven-Eleven uses rapid replenishment to meet
customer demand more precisely. From their perspective:
 Demand Variability: Rapid replenishment allows them to respond quickly, but
it can be challenging to manage unexpected demand fluctuations, leading to
overstock or stockouts.
 Supply Chain Disruptions: Relying on frequent deliveries makes the supply
chain vulnerable to disruptions in transportation or supplier issues, which
could impact their ability to meet customer demand.
 Higher Costs: Maintaining frequent deliveries can increase transportation and
handling costs, which might impact their profitability.
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?
Seven-Eleven's Supply Chain Capabilities in Japan:
 Seven-Eleven Perspective: In Japan, Seven-Eleven has developed a robust supply
chain to support their convenience store operations:
 Facility Location: They strategically locate stores and distribution centers to
ensure proximity to customers, allowing for faster replenishment.
 Inventory Management: Seven-Eleven uses advanced inventory management
systems to monitor stock levels closely, ensuring products are in stock when
needed.
 Transportation: They employ efficient transportation methods to guarantee
timely deliveries to stores.
 Information Infrastructure: Seven-Eleven's sophisticated IT systems enable
accurate demand forecasting and inventory optimization, aligning their
supply chain with customer needs.

4. Seven-Eleven does not allow direct store delivery in Japan but has all products flow
through its distribution center. What benefit does Seven-Eleven derive from this policy?
When is direct store delivery more appropriate?
Benefits of Not Allowing Direct Store Delivery (DSD) in Japan:
 Seven-Eleven Perspective: In Japan, Seven-Eleven's policy of not allowing DSD and
routing all products through its distribution center aligns with their commitment to
quality and efficiency.
 Centralized Control: This approach provides Seven-Eleven with centralized
control over distribution, ensuring consistent product quality and inventory
management practices across all stores.
 Reduced Costs: By consolidating deliveries and utilizing economies of scale,
they can reduce transportation costs.
 Quality Control: Seven-Eleven maintains rigorous quality standards, and this
policy helps ensure consistent quality across all products.
  However, Seven-Eleven acknowledges that DSD might be more appropriate in cases
where specific products require specialized handling or when suppliers offer unique
value that justifies the added complexity and costs.

5. What do you think about the 7dream concept for Seven-Eleven Japan? From a supply
chain perspective, is it likely to be more successful in Japan or the United States? Why?
7dream Concept for Seven-Eleven Japan:
The "dream" concept for Seven-Eleven Japan, centered around using its extensive
convenience store network for e-commerce and online shopping, appears promising in its
home market. With over 16,000 stores and a strong brand presence, Japan's consumer
preference for picking up online orders at trusted locations like Seven-Eleven stores aligns
well with this strategy. Furthermore, the well-integrated supply chain and technology
adoption in Japan support efficient online order fulfilment. However, translating this
concept to the United States presents challenges. The U.S. convenience store market differs
significantly, with diverse consumer behaviours and preferences. Geographical size,
distribution complexity, and a competitive landscape necessitate adaptations. Success
would depend on Seven-Eleven's ability to tailor its supply chain to meet American
consumers' expectations. While the "dream" concept's success in Japan is anchored in its
infrastructure and consumer trust, its U.S. expansion would require strategic adjustments to
navigate a distinct market and supply chain landscape effectively.

6. Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in
Japan and the United States with the introduction of CDCs. What are the pros and cons of
this approach? Keep in mind that stores are also replenished by wholesalers and DSD by
manufacturers.
Duplicating Supply Chain Structure with CDCs in the United States
Pros:
1. Improved Freshness and Quality: CDCs enable better control over product freshness
and quality by centralizing the storage and distribution of perishable items.
2. Supply Chain Control: Seven-Eleven gains greater control over its supply chain
operations, ensuring that products meet its standards and align with its brand
promise.
3. Increased Sales: The emphasis on fresh foods can attract more customers,
potentially increasing sales in the fresh-food category and competing effectively with
other foodservice providers.
Cons:
1. Higher Costs: Establishing and maintaining CDCs involves significant infrastructure
and operational costs, which may impact profitability.
2. Integration Challenges: Integrating CDCs with existing distribution methods like
Direct Store Delivery (DSD) and wholesale deliveries can be complex and require
adjustments.
3. Supplier Resistance: Suppliers accustomed to their distribution methods may resist
changes, necessitating collaboration and potentially affecting relationships.
4. Market Adaptation: Adapting the supply chain strategy to the U.S. market's unique
characteristics and consumer preferences can be challenging and may require
substantial modifications.
5. Competition: The convenience store market in the United States is highly
competitive, making it essential to navigate market dynamics effectively.

7. The United States has food service distributors that also replenish convenience stores.
What are the pros and cons to having a distributor replenish convenience stores versus
company like Seven-Eleven managing its own distribution function?
Pros of Using a Distributor:
1. Reduced operational complexity for the retailer: Retailer can focus on core activities
as the distributor handles logistics.
2. Access to a wider range of products: Access to diverse suppliers increases product
variety.
3. Potential cost savings: Economies of scale achieved by the distributor may reduce
costs for the retailer.
Cons of Using a Distributor:
1. Less control over supply chain operations: Retailer has limited influence on how the
distributor manages logistics.
2. Dependence on distributor: Retailer relies on the distributor's efficiency and
reliability, which can be risky.
3. Limited customization: Retailer has less ability to tailor supply chain processes to its
unique needs.
Pros of Managing Distribution In-House:
1. Greater control and visibility: Retailer has full control and transparency in supply
chain operations.
 2. Tailoring to specific requirements: Supply chain can be customized to meet specific
retailer needs.
3. Better coordination: Improved coordination with other retail functions is possible.
Cons of Managing Distribution In-House:
1. Higher operational costs: Retailer incurs increased costs for infrastructure and
operations.
2. Increased complexity: Managing logistics internally adds complexity to the retailer's
operations.
3. Expertise required: Retailer needs supply chain management expertise to handle
operations effectively.