7 Eleven Japan

7-Eleven Japan
12000 10000
Yen (bns)

8000 6000 4000 2000 0 1974 1980 1990 2000 2003

# of stores

stores sales

7-Eleven Japan
2500 2000
Yen (bn)

12000 10000 8000 6000

# of stores

1500 1000 500 0 2000 2001 2002 2003 2004

sales net inc # of stores

4000 2000 0

7-Eleven Japan

27%

30% processed food fast food fresh food non foods 30%

13%

7-Eleven Japan
Success thru Supply Chain strategy
Goal: Responsiveness by rapid response Actions: Restructured facilities, inventory, information & distribution to support goal.
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7-11s Market Dominance Strategy

Cluster of 50-60 stores with a DC (distribution center)

Impact of Strategy
Distrbn effy Brand awareness Systems effy Effy of franchisee support Advertising effectiveness Entry barriers for new competition

Approaches to Improving Responsiveness

I. Local Capacity
local cooking raw material inventory

II. Local Inventory

all inventory, at all stores, at all times cooking centralized

III. Rapid Replenishment

supply stores with what they need ,when they need cooking centralized low inventory Drawback: Cost of replenishment & receiving high

Drawback: no economies of scale in production

Drawback: risk of obsolete inventory greater space reqmts

Aim: lower transportation & receiving costs at all points

Area dominance strategy Centralized manufacturing Information management

50-60 stores cluster helps marketing & lowers transportation costs

High capacity utilization Lower outbound transport costs Products sorted by temp. Stores mgrs place orders Orders based on consumption Helps order sorting at DC and stores
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No Direct Store Delivery. Everything via DC

Direct store delivery would lower :

utilization of outbound trucks
Increase receiving costs at stores because of higher no. of deliveries
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Policy

7Dream (online ordering)

On line deliveries can piggy back on 7-11 distribution n/work Increase truck utilization
Drawback:
Use more space Spl effort reqd to retrieve specific customer pkgs

Online ordering
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Comparisons
Japan
High density of stores No DSD.Only via CD

USA
Lower stores density Both DSD & wholesaler deliveries

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Should 7-11 use a distributor in USA or have its own distribution franchisee?

Distributor can aggregate deliveries across competing stores

7-11 may be subsidizing deliveries of small suppliers who would piggy back on common distributor.

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