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Overview of 7Eleven Japan
•Founded by Masatoshi Ito, post world war ll
•By 1960 the single store had grown into a $3 million Co.
•In 1961 realized that superstores were the wave of the future
•In 1972 approached the Southland corporation about the
possibility of opening 7eleven convenience store
•In 1974 first 7eleven convenience store opened in Tokyo
Company Name: Seven-Eleven Japan Co.,Ltd.
Head Office: 8-8, Nibancho, Chiyoda-ku,Tokyo 102-8455, Japan
Chairman and C.E.O.: Toshifumi Suzuki
President and C.O.O.: Ryuichi Isaka
Date of Establishment: November 20, 1973
Capital: 17,200 million yen
Number of Employees: 6,070(as of February 28, 2013)
Total Store Sale in Japan: 3,508,444 millions yen
Revenue from operations: 617,559 millions yen
Operating Income: 186,760 millions yen
Ordinary Income: 194,104 millions yen
Net Income: 112,446 millions yen
Number of Stores in Japan: 15,072
At 7eleven we are on a mission to make life a
little easier for our guests.
Our vision is to be the best retailer of
Goods or Products include
Convenience at the Store
Payment of bills
-Electricity, Telephone, Gas, Insurance premium
Payment of installments on behalf of credit
Payments for internet shopping
ATM’s at almost all the stores
Ticket sales, photocopying
Pick up location for parcel delivery
Original Product Development Framework
Daily orders from 14005 stores
Seven eleven Japan
Daily Food Production Facilities
(of which, 156 are dedicated sites
Temperature-separated Distribution Centers
Daily deliveries from distribution centers
Facility classified into two sector
•Less in number
•Served stores in its cluster
•More in number
•Keep inventory in shelf
Inventories kept in…
•Poor at responsiveness
•Kept daily stocks
•Efficient but not very responsive
Transportation at 2 levels
•Vendor to DC ( Vendor derived)
•DC to Store (7eleven derived)
Mode of Transportation
Road ( using Vans & Trucks )
Reasons behindRapid replacement cycles
Provided high responsiveness as opposed to efficiency
Information system components:
-Risk of fuel price fluctuation
-The Company increased profits and reduced risk
-7eleven offered reasonably
-Their market dominance
allowed ease of access to the
-Such pricing decision increased
the efficiency of the supply
Q.1 A convenience store chain can be responsive and provide
customers what they need, when they need it, where they need it.
What are some different ways that a convenient store supply
chain can be responsive? What are some risks in each case?
As responsiveness increases, the convenience store chain is
exposed to greater uncertainty. A convenience store chain can
improve responsiveness to this uncertainty using one of the
following strategies, especially for fresh and fast foods:
Local capacity: The convenience store chain can provide local
cooking capacity at the stores and assemble foods almost on
demand. Inventory would be stored as raw material. The main
risk with this approach is that capacity is decentralized, leading
to poorer utilization.
Local inventory: Another approach is to have all inventory
available at the store at all times. This allows for the
centralization of cooking capacity. The main risk is obsolete
inventory and the need for extra space.
Rapid replenishment: Another approach is to set up rapid
replenishment and supply the stores what they need and when
they need it. This allows for centralization of cooking capacity,
low levels of inventory, but increases the cost of replenishment
Q.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 its supply choice?
The risks with this supply choice are high cost of
transportation which includes gas, vehicle, staff, also the
cost of receiving continuous incomes of products at the
store, the risk of having obsolete inventory and lack of
Q.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?
All choices made by Seven-Eleven are structured to lower its transportation
and receiving costs. For example, its area dominance strategy of opening at
least 50-60 stores in an area helps with marketing but also lowers the cost of
All manufacturing facilities are centralized to get the maximum benefit of
capacity aggregation and also lower the inbound transportation cost from the
manufacturer to the distribution center (DC).
Seven-Eleven also requires all suppliers to deliver to the DC where products
are sorted by temperature. This reduces the outbound transportation cost
because of aggregation of deliveries across multiple suppliers. It also lowers
the receiving cost.
The information infrastructure is set up to allow store managers to place
orders based on analysis of consumption data. The information infrastructure
also facilitates the sorting of an order at the DC and receiving of the order at
the store. The key point to emphasize here is that most decisions by SevenEleven are structured to aggregate transportation and receiving to make both
Q.4 7eleven does not allow direct store delivery in Japan but has
all products flow through its distribution center. What benefit
does 7eleven derive from this policy? When is direct store
delivery more appropriate?
DCs was introduced by 7eleven , so that it always had fresh products
i.e., offer short replenishment cycle times. It also allowed careful
tracking of sales.
The store manager used a graphic order terminal to place an order so it
was immediately transmitted to the supplier as well as the DC. The
supplier receives order from all 7eleven stores and started production
to fill the orders. The supplier then sent the orders by truck to the DCs.
When the company wants to achieve cost efficiency then DSD is
better, in this situation manufacturers are responsible for their goods
and also stores need not to maintain a distribution system.
Direct store delivery (DSD) would lower the utilization of the
outbound trucks from the Seven-Eleven DC. It would also
increase the receiving costs at the stores because of the
Thus, Seven-Eleven forces all suppliers to come in through the
DC. DSD is most appropriate when stores are large and nearlyfull truck load quantities are coming from a supplier to a store.
Q.5 What do you think about the 7dream concept for 7eleven
Japan? From a supply chain perspective, is it likely to be more
successful in Japan or the United States? Why?
7 dream is an e-commerce company of 7eleven Japan which
allowed 7eleven store customers to pick up their online
purchases at the local convenience store rather than have home
We believed 7dream will be more popular in Japan. Because:•Store density is higher than that in U.S.
•Americans do not mind leaving the products delivered directly
to their home .
Q.6 7eleven is attempting to duplicate the supply chain structure that has
succeeded in Japan in 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.
Ensure Fresh supply of items
Wholesalers may have issues because of these distribution centers
Manufacturers may prefer direct store delivery as they have more control
Q.7 The United States has food service distribution that also replenish
convenience stores. What are the pros and cons to having a distributor
replenish convenience stores versus a company like 7eleven managing its
own distribution function?
Managing the distribution system is entirely the distributor’s
headache and not 7eleven’s
May be cost effective
Less control over replenishment cycles and or quality of items
May not be as responsive as having own distribution function