Group 4:

Ruchi Sao 13PGP048 Geeta Hansdah 13PGP079

Trisha Gajbhiye 13PGP116 Bhavana Ziradkar 13PGP118
Sai Shilpa 13PGP124
Established in 1973 by Mr. Masatoshi Ito

1973-1991 managed by Southland corporation, later by Ito-Yokado Group

In 2004, Convenience store in Japan and in US contributed to 48.2% total revenue of IYG

Seven-Eleven Japan contributed 87.6% of operating income received from convenience store by IYG

In 2004, the average daily sales at four major convenience store chains excluding Seven-Eleven was 484,000 Yen
where as Seven-Eleven has daily sales of 647,000 yen

Core strengths were information systems and distribution systems

Worked on franchise model and followed a market dominance strategy

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 Limited geographical presence in Japan and about 70% (32 out of 47) of prefectures within Japan but their
presence was dense

All store had standard size of 125 m2 which was increased to 150m2 in 2004

Seven-Eleven offered to keep SKU of 5000. on average store kept 3000 SKU

Food items were classified in 4 broad categories depending upon storage & transportation
temperature- warm items, Room temperature items, Chilled items and frozen items

In 2004, Processed foods and fast foods contributed to 60% of total sales at each store

By 2004, Seven-Eleven had 290 manufacturing plants to produce fast food items and 293 DC’s

Offered services in store like bill payment services, photocopying, ticket sales and 7dream.com etc.

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 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- removal of product with no
demand, forecasting, identification of slow and non moving items

3 times daily delivery of rice dishes and Replenishment cycle time of less than 12
hours

At DC, delivery of like product were stacked in one vehicle and transportation was
done by Transfleet

In US, Distribution was through direct store delivery (DSD), wholesalers and CDC’s.
Inventory turnover of 17 compared to that 50 in Japan

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 SC can become responsive by reducing lead time. This can be done in
following ways:

 Real time information flow between suppliers, distributors and store

 Strong supplier network
 Good relationship maintenance with suppliers and distributors
 Analysis of day to day data for each store and each SKU will enable in
forecasting & reduction of replenishment time
 Cross-docking is one of the ways to be responsive

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 Real time information flow risk

• Server breakdown or hacking

Strong supplier network & good relationship maintenance with

suppliers and distributors
• Over-dependency on one supplier
• Risk due to natural calamities increase if all suppliers lie in close proximity

Analysis of day to day data for each store and each SKU

• Data congestion due to large volume of data from 3000 SKU × 10000 stores

Cross-docking

• Vehicle breakdown
• Natural calamities

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 Over-dependency on Information Systems

Any calamity on supplier end would lead to stock out situation

in Seven-Eleven because of absence of inventory in supply chain

No warehouse

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 Facility Inventory Information
location management Transportation
Infrastructure

Dedicated vehicle for Graphic order

One distribution No inventory because each category terminal
catering 50-60 stores of cross docking

Delivery during off-

Scanner terminal
peak hours
Real time information
High density market
flow to reduce stock
presence
out Store computer
Delivery using
linked to ISDN
scanner terminals
network
Micro-match between
supply and demand Allocation of stores
helping in increased POS register linked
per truck dependent
responsive to store computer
on sales volume
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 Proper product assortment as per required temperature at DC thus reducing
perishability
 Reduction in number of vehicle required for daily delivery at each store (1974,
70 vehicles visited each store every day, in 1994, only 11 were necessary)
 Reduction in delivery costs
 Rapid delivery of variety of fresh foods thus making the chain responsive
 Rapid and reliable delivery to distribution trucks through dedicated DCs

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 Demand from retailer is high enough to require FTL
 When lead time is critical
 Manufacturers and retailers in close proximity

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 Increase in No additional
customer cost as they
service level are using
Increase in
Virtual • Reduction in existing
Catering to market share,
convenience queuing at distribution
new market revenue and
store billing system and
counter footfall
no home
• Time saving delivery
for system
consumers

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 Number of store in Japan = 10,615
 Number of stores in US = 5,798
 More convenient in Japan to pick delivery from any store because of number
of stores
 Transportation cost will increase in US as there is different distribution
structure and consumer prefer home delivery
 Store density area ratio is higher in Japan than in US, thus making it
inconvenient for US customers to pick up from stores

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Pros Cons
 Increase in responsiveness  Product assortment will occur at
store thus increase in time
 Increase in variety of fresh
products  Increase in Labour cost
 Reduction in stock out  High coordination is required
between DSD, Wholesalers and
 Increase in distribution network
CDC
and support to stores
 Increase in cost for CDC
 Reduction in lead time for Fresh
products

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Pros Cons
 Backward integration  Extra effort to build supplier
network
 Scope for future expansion
 MIS maintenance
 Control over SC
 High risk
 Reduction in replenishment time
 Reduction in dependency

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Pros Cons
 No effort to build supplier network  Increase in dependency
 No data maintenance  No control over supply chain
 Low cost  Increase in lead time
 Risk sharing  Forward integration chances by
outsourcing party

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