7-Eleven is number 1 franchising in the world. This presentation is about supply chain strategy in the 7-Eleven store. Source: From many source and many presentation

1. Supply Chain
Study Case
By:
Adhyatma Satya Wardhana (2513203001)
Nur Rahmawati (2513203005)
Prita Meilanitasari (2513203201)
Ratih Pamelawati (2513203204)

2. History
1927
1928
1946
1952
1962
1990
1998
2005
2013
Southland Ice Company selling milk,
eggs, and bread from the improvised
ice house storefront in Dallas Texas
- ‘Tote'm Stores’
- +Gasoline stations in
some of Dallas store
'Tote'm Stores'
became '7-Eleven'
Opened 100
Stores
Started 24-hour
schedule in
Austin, Texas
Financial difficulties
(Ice division and Chief Auto Parts
division were sold to General Electric
and later purchased by AutoZone
Company was saved from
bankruptcy by the Japanese
Corporation Ito-Yokado
7-Eleven became subsidiary of
'Seven & I Holdings Co.' by
Ito-Yokado corporation
'Seven & I' the fifth largest
retailer in the world (*35000
stores in approximately 100
different countries*)

3. Supply
Product
Assortment Food and Beverage (52%)
Non-Food (48%)
Services
Beverage, Food service, Process Food
Consumer products such as soap, shampoo and also phone card and
other cash refill cards
pay point services for example utilities bills, credit card payment,
ticket payment, plane ticket at Counter Service

4. Source of Supply
Suppliers
In-House
Manufacturer
±1,200 – 1,500
suppliers

5. Supplier Selection
7-eleven Use E-
procurement,
specifically,
supplier infromation
management
Start (supplier
want to apply)
Register as
new supplier
Submit a new
product
waiting for
the result
Accept
?
Deal with the
contract
Rejected
End
No
Yes

6. Know How to Recruit a Supplier
Invite potential
suppliers by offer
a proposal from
the web

7. Know How to Recruit a Supplier
In general, 7-eleven need
suppliers leverage category,
because easy to manage, easy to
subtitute the product,& the
stock of the product available
enough

8. 7-eleven has several
distribution centers
serving several store
area to deliver fresh
and quality products
with less lead time and
helps to reduce
inventory and logistics
costs to the whole
chain
Source: Logistics Thailand, 2005 The DCs contain the system that
shorten order cycle time, granting the
fresh and superior product and service
quality to the customers.
Fresh Food Managed Distribution
Supplier
(Chilled Temp)
Ex: Sandwiches,
sweets, milk
Supplier
(Warm Temp)
Ex: Box lunch,
rice balls, fresh
bread
Supplier
(Frozen Temp)
Ex: Ice cream,
Ice cube,etc
Supplier
(Room Temp)
Ex: Canned food,
Instant noodles
DC
Store
Store
Store
Store
Store

9. Ways to be Responsive
Efficient Distribution System
Integrated Information System
Market Dominance Facility

10. Efficient Distribution System
• Short replenishment cycle times
• Flexible to alter delivery schedules depending on customer demand
• Combined delivery system
• Products are grouped by the cooling needs
• A single truck brings a group of products and visits several stores
within a geographical region

11. Order
Fulfillment
Oder fulfillment from
Stores to DC
Source: Logistics Thailand, 2005

12. Order
Fulfillment
Oder fulfillment from
DC to Supplier
Source: Logistics Thailand, 2005

13. Integrated Information System
Source: adapted from Hau Lee, 2007

14. Shifts in consumer demand
Design reactive supply chain
adjusts supply to stores three times a day
inventory to be turned over 55 times a year
How IT capabilities impact business agility

15. System at the Store
POS
• capture data about customer purchases, customer demographics (age and gender), along with
local events and other region-specific data.
• data are transmitted to database at the headquarters for analysis
Electronic Order Booking (EOB)
• show the inventory position of the product on shelf and in store’s inventory
• Store managers determine which items to order and the exact quantities they will need for their
stores
• orders were relayed by the store computer to both the appropriate vendor and the Seven-Eleven
distribution center
Scanner terminal
• read bar codes and recorded receive product coming in from a distribution center
Store computer
• linked the POS register, EOB, and the scanner terminal to the ISDN network
• tracked store inventory and sales, placed orders, and provided detailed analysis of POS data

16. Information Analysis of POS Data
Dynamic shelving and merchandizing
• Sales trend by time and day  Adjust the merchandising mix on the shelves according to
consumption patterns
• Sales trends for new product  decide whether to keep or drop an item
• Top-selling items  Keep in-stock
New product development
• Identify slow and non-moving items  allowed a store to convert shelf space to introduce new
items - About half of 3000 SKUs are replaced by new ones every year
• forecast future consumer trends and to assist manufacturers in new-product development  SEJ
developed a new category of fresh noodles jointly with the manufacturer, Nisshin
• Tailor the merchandise selection to the tastes and needs of the local market
localized promotions
• customer demographics information are correlated and substituted along with local events and
other region-specific data  implement localized marketing strategy

17. Market Dominance Facilities
7-Eleven Spread in Japan
7-Eleven Spread in USA
7-Eleven Spread in Hongkong
40,000
Stores All
Around the
World (2013)

18. Expansion Strategy
Corporate Store
Franchise Store
Corporate Store
Franchise Store
Franchise Store
Franchise Store
Franchise Store
Location:
1. Convenience Store:
Near the business area
(*busy area*)
2. Gas Station (*at some
country*) : At suburban
area
7-Eleven
Responsibility
Franchisee
Responsibility
Development of
Supply and
Merchandise
Operation and
management store
Providing the
ordering system
Hiring and paying
staff
Cost of system
operation
Ordering
Accounting Maintaining store
appearance
Advertising Customer Service
Installation and
Remodeling of
facilities

19. Market Dominance Facilities
Market Dominance
Strategy
Have many outlets
 Clustering system
Convenient
Locations
Close to Customers
Culture and habit
research
Limited Storage at
Store
Frequent deliveries
Small Deliveries
Inventory
Management:
Rapidly moving
items were kept
in enough
quantities while
the slow moving
items would be
replaced by a
new one
50-60 stores in a
geographical area
supported by 1 DC
(*Japans’ Case)

20. Market Dominance Facilities
Advantages 1. High Distribution Efficiency
2. Improved brand awareness
3. Increased system efficiency
4. Franchisee support services
5. Improved advertising effectiveness
6. Entry barrier for competitors

21. Conclusions
o Quick Responsive to Demand
(Responsive Chain  Relative High Pricing, Close to market)
o Precise Replenishment
(Perishable Product  Rapid Replenishment)
“ Data Sharing and Direct Shipping”
Strategic Fit

22. Conclusions
• The information system allowed Seven-Eleven stores to better match
supply with demand
• Collaboration with suppliers is enabled through sharing 7-eleven’s
data analysis through a program called 7-Exchangee data system for
category management, which suppliers access through secure
website, can provide insight that lead to new product or new
packaging.
• 7-Eleven has high density of stores in a given area, efficient and
rapid collection, process and feedback of POS data.
• Multiple deliveries to all stores for fast moving product (up to 3
times a day)  Limited storage at store.

23. hank You