7-Eleven Japan

Co. Case Analysis

Abhinav Mutneja - 19PGDM005
Arka Bose - 19PGDM215
Sajal Malhotra - 19PGDM121
Sai Shiva Rao - 19PGDM245
Suraj Chandel - 19PGDM265
 Established in 1973 7-Eleven was Japan’s
by Mr. Masatoshi Ito leading convenience
with store operator,
IYG Holding formed
accounting for a 41.0
Southland by Ito-Yokado and 7-
percent market share
Corporation Eleven

7-Eleven 1979 2005

Japan Co. 1973 1991 2015

Listed in Tokyo Seven & i Holdings

Stock Exchange was established
through a stock
transfer combining 7-
Eleven Japan, Ito-
Yokado, and Denny’s
Japan
7-Eleven Japan Co. (Contd.)
• In 2004, average daily sales at the four major convenience store
chains excluding 7-Eleven Japan totaled 484,000 yen. 7-Eleven
stores, in contrast, had daily sales of 647,000 yen—more than
30 percent higher than the combined competition.
• In 2016, daily sales at a store in Japan averaged 655,000 yen
which was almost twice the average at a U.S. store
• In 2015, Convenience store in Japan and in US contributed to
44.3% total revenue of Seven & i Holdings
• By 2016, 7-Eleven had stores in 46 of 47 of the prefectures
within Japan had more than 19,000 stores
• Core strength were of the organization were information
system and distribution system
• The Organization worked on franchise model and followed a
market-concentration strategy
7-Eleven Japan Franchise System
• 7-Eleven Japan network included both company-owned stores and
third party owned franchises.
• Each DC supported 50 to 60 stores
• This clustering gave them a high-density market presence
• Majority of the new stores were opened in these existing clusters
• 7-Eleven Franchise was very sought after (Less than 1 in 100)
• 45% gross profit to 7-Eleven Japan, 55% to the store owner
• 7-Eleven Japan Responsibilities vs Franchise owner responsibilities
7-Eleven Store
• Stores initially had standard size of 125 sq. meters which was increased to 150
sq. meters in 2004
• Seven-Eleven offered to keep SKU of 5000. on average, each store kept 3000
SKU
• Each store carried food items, beverages, magazines, and consumer items such as
soaps and detergents.
• 4 types of food item : warm items, Room temperature items, Chilled items
and frozen items
• In 2015, processed and fast foods contributed about 56 percent of the total sales at
each store.
• Other offered services in store were like bill payment services, photocopying,
ticket sales and 7dream.com etc. In the United States had Gasoline Products
which accounted almost 37$ of the revenue
 7-Eleven Japan’s Integrated Store Information System
• In 1982, 7-Eleven became the first company in
Japan to introduce a POS system comprising POS
cash registers and terminal control equipment.
• In July 1991, Integrated services digital network
(ISDN) linked more than 5000 stores
• IS support was through Graphic Order terminal,
Scanner terminal, Store computer, POS
register- to improve ordering process
• POS analysis data was provided each day to
each store
• All this information was available on the graphic
order terminal with the objective of improving
order placement
 7-Eleven in the United States
• In US, Distribution was through direct store delivery (DSD),
wholesalers and CDC’s.
• CDC followed japanese approach of delivering perishables one a
day.
• Compared to Japan, greater quantity of hot food (pizza, wings)
was prepared in store
• Inventory turnover of 17 compared to that 50 in Japan
7-Eleven’s Distribution System

• Firmly backed by End to End Information

System
• Cross docking of products at DCs into
temperature controlled trucks
• No inventory held at DCs
• At DC, delivery of like product were
stacked in one temperature controlled
vehicle and delivered to multiple stores
 Conclusion
OVERVIEW ADVANTAGES AND RISKS

• Responsive supply chain strategy • ADVANTAGES

• Integrated Supplier and Distribution Network • Rapid replenishment of inventory
• High density market presence in a region • Allow Regional Merchandising of products
• End to end information system • Increased visibility in Supply Chain
• Less Inventory held at facilities in the Supply Chain
• Rapid introduction of New Products on Shelves
• Allows FTL delivery of products from DCs
• Cost efficiency, achieved by reducing the amount of
inventory held at facilities in Supply Chain & by using
single temperature truck to carry multiple items
• DISADVANTAGES & RISKS
• High dependence on Infrastructure Availability
• Stock-out risk due to Supply Chain disruptions
• Risk of Information System Breakdown
7-Eleven Japan Co. (Contd.)
3. What has 7-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?