Posted at 11.19.2018
Factors which effect the decisions regarding the opening and shutting of stores includes the dominating location strategy which 7-Eleven is pursuing to maintain its positions as the marketplace leader, 7-Eleven is designed to provide customers with what they want, when they need it. From a tactical perspective, one of the company's key goals is to micro-match resource and demand by location, season, and period. 7-Eleven designs and manages location, inventory, vehicles, and information to support this objective. The business opens its store only to those areas where in fact the potential customers exist rather open its stores all around the country, And if indeed they accomplish that, this in the end increase its cost which is against the design of its supply chain. These factors impact your choice regarding opening and final of stores.
In Japan, fresh food takes its significant percentage of 7-Eleven's sales. Most of the fresh food is grilled off site and sent to the stores. To create the best original products with top quality than any opponents, 7-Eleven continue steadily to make a hypothesis, test drive it, make anther hypothesis, and take a look at it again and again, thinking that the tastes and quality of the product must fulfill customers. SEJ executives repeatedly test original fast-food everyday so the quality of the products can be advanced before they can be purchased. In addition to directly giving an answer to the changing needs of customers, original items are impressive in differentiating stores because they cannot purchase somewhere else. SEJ provides customers mainly with junk food such as grain balls, sandwiches and delicatessen items. In addition they partner with manufacturers to increase the quality of foods and the efficiency of production. Since original product development can reduce the costs of marketing and ad when compared with other basic products, even in Japan's deflationary environment, SEJ can maintain competitive prices rather than be forced to price them as cheap commodities. The reason why 7-Eleven chosen off-site preparation of fresh foods and succeeding delivery to store is,
The reason why 7-Eleven discourage direct store delivery from distributors and make an effort to move all products through combined DCs is reduce its transportation cost and make its resource chain better. The circulation system empowered 7-Eleven to lessen the number of vehicles necessary for daily deliver service to each store, even though the delivery frequency of each item was quite high. In 1974, 70 vehicles stopped at each store every day. In 1994, only 11 were necessary. This significantly reduced delivery cost and enabled speedy delivery of a variety of fresh foods. 7-Eleven Japan has been developing a streamlined circulation system with the aim of making the retailing business mutually good for customers, stores, and suppliers. Due to these initiatives, a combined syndication system run by third celebrations exclusively for Seven-Eleven was proven. The combined distribution system allows products from different suppliers to be packed on the same pick up truck for delivery to stores. Taking the system one step further, temperature-separated combined syndication consolidates the shipment of products from the manufacturer to the store at similar perfect temps. Foods are fresher because they are efficiently delivered to stores. Temperature-separated mixed distribution system has turned into a clear benefits in team merchandising with manufacturers, and also contributes to greater product differentiation at Seven-Eleven stores.
In the United States, 7-Eleven is going for a similar method of the one found in Japan. Fresh foods are being presented into the stores. 7-Eleven has once again made a decision to avoid on-site cooking food insurance firms suppliers that prepare food the fresh foods to them. These foods are then sent to the stores on a daily basis. Because this will eventually increase the delivery time and reduces the freshness of the meals which 7-Eleven offers to its customers, which will can also increase its transportation cost which would again lead 7-Eleven towards inefficiency. So, In the United States, 7Eleven has attempted to replicate the Japanese model with mixed DCs where product is received from suppliers and then shipped to the stores. The success of this strategy is reflected by the upgraded performance of 7-Eleven in the United States.
7-Eleven is the greatest convenience store operator in the world, with about 24, 000 stores. The company uses Combined Distribution Centers (CDCs) to provide a lot of the perishable products sold in its North American stores. The 23 CDCs receive, sort out and deliver a huge selection of products, including bakery goods, sandwiches, dairy products and produce, on a daily basis to more than 4, 500 7-Eleven stores in the U. S. and Canada.
CDCs are in charge of sorting products effectively and regularly for each store dished up from the service (typically between 300 - 700 stores per CDC). Products are positioned in a given location for every store, staged for launching and then put onto pickup trucks for delivery. Setting the right product and amount for the right store is essential to the company's success, but it can be a very time-consuming activity.
The Company founded the Combined Delivery System, whereby the same kind of products coming from different suppliers can be centralized into 223 CDCs. The blended distribution system allows products from different suppliers to be loaded on a single trucks for delivery to 7-Eleven stores. Put together distribution consolidates product shipment from manufacturers to stores at similar optimum temperatures.
The design of Source Chain functions of 7-Eleven in Japan is reliable. 7-Eleven Japan is operating of efficient source chain. If they locate in a location they blanket (clustering) the area with stores; stores available in clusters with related DC's. This clustering enables 7-Eleven to attain more efficiency. To support its efficient resource string 7-Eleven used certain drivers such as it developed an extremely highly included information system with help of ISDN system which allows 7-Eleven to forecast its future sales and make its press process more effective and productive and help them to maintain low inventory in its DCs, and it's also reduced its travel cost by making use of its information system. 7-Eleven used its development site facilities very effectively in the form of CDCs, it does not store inventory in warehouses which reduces its cost and make its resource chain better. 7-Eleven also builds up some products which again permits it to offer low prices which is competitive advantage for 7-Eleven, it offers food to its customer with low price and better quality somewhat low price and low quality. The reason for its success is 7-Eleven's efforts to secure a strategic fit between its competitive strategy and its location, vehicles, inventory, and information strategy in the supply chain. This finally makes its source chain an efficient supply string.
In the United States, 7-Eleven stores were not as concentrated previous to 1994. Between 1994 and 1997, 7-Eleven closed down several of its stores in isolated locations. Today, the business focuses on new stores in areas that curently have a strong 7-Eleven presence. This strategy is constant with the location strategy in Japan. This prominent location strategy allows the company the advantages of consolidation in both warehousing and travelling. The supply chain implications of 7-Eleven strategic decisions in U. S are as follows:
Historically, the distribution structure in USA was completely different from that of Japan. Stores in the United States were replenished using immediate store syndication by some producer, with the rest of the products supplied by wholesalers. With the purpose of introducing "Fresh" products 7-Eleven launched the concept of CDCs around 2000.
Direct store distribution by manufacturers and wholesaler delivery to stores also continued.
These steps helped 7-Eleven to become better in its source string in U. S from procurement to retailing. These steps allowed 7-Eleven to buy raw material only when required, and manufactured it when customers demand it and also permitted to maintain minimum inventory in DCs and distribution on its stores and franchise are more successful which reduced its transportation cost.
The challenges (obstacles) being confronted by 7-Eleven towards a competent supply string management are as follow:
The first task towards an efficient supply string management was the technology, the information system (ISDN) which 7-Eleven developed in Japan can't be develop in U. S because of huge territory folks, If they set up such system in US this will increase its cost. In such instances, internet technology might become more sufficient and cost-effective.
In the initial years the, several 7-Eleven stores were shutdown because of unprofitability.
Historically, the circulation structure was very different in the United States from that of Japan. Stores in america were replenished using immediate store delivery by some company with the rest of the products supplied by wholesalers. This increases the replenishment time and reduces the freshness of food, and also increases the transportation cost.
7-Eleven should use clustering in the regions of its stores and provide more facilities with appropriate capacity. THE INFO system which is 7-Eleven is currently using in Japan should be improved into business intelligence model as like as SAP so that they can support their competitive strategy with its supply string strategy because information is the main element to success regarding 7-Eleven. In the inventory management 7-Eleven should use JIT strategy more effectively it will maintain the balance between the shortage and surplus of the inventory. 7-Eleven can further reduce its transport cost by making the clusters of suppliers, sellers and manufacturers though that they had reduced their transportation cost drastically by the introduction of CDCs. 7-Eleven should use in-house sourcing in several countries to lessen the product routine time as well as its production cost, which would allowed 7-Eleven to offer more cheaper prices of goods with maximum quality, again though 7-Eleven is offering much lower prices to its customers as compare to their rivals but in-house sourcing would provide 7-Eleven more versatility in its charges strategy.