Factual Information on Seven Eleven Japan (SEJ)

• Largest convenience store in Japan with market value of $95 B. The third largest retail company in the world after Wal-Mart and Home
• Established in Stock value increased by 3000 times from 1974 to 2000.
• In 2000, total sales $18,000 M, profit $620

• Sales:
  • Products
    • 9% Processed food: drinks, noodles, bread and snacks
    • 6% Fast food: rice ball, box lunch and hamburgers
    • 0% Fresh food: diary products
    • 3% Non-food: magazines, ladies stockings and batteries.
  • Services: Utility bill paying, installment payments for credit companies, ATMs, photocopying

  • More on SEJ

    Japanese Images of Seven Eleven:

    • Convenient
    • Cheerful and lively stores
    • Famous for its great boxed lunch and dinner

     

    • A SEJ store is about the half the size of a US 7-eleven store, that is about 110 m². Average sales about twice of an average US store. Virtually no storage
    • In 1985, there were 2000 stores in Japan, increasing by 400-500 per
    • SKU’s offered in store: Over 3,000 (changes by time of day, day of week,

    season)

     

    • SC strategy: Micro matching of supply and demand (by location, time of day, day of week, season)

  • Seven Eleven - Number of Stores

  • What are the ways to become responsive

    Especially for fresh and fast foods:

    • Local Capacity: Provide local cooking capacity at the store and assemble

    foods almost on demand, e.g., Subway

    • Benefit: Low inventory investment ( only raw material), high customization and freshness
    • Risk: Decentralized capacity, e., low utilization
    • Local Inventory: Have all inventories available at the store all the time
      • Benefit: Centralized cooking capacity, e., high utilization and low production cost
      • Risk: High inventory investment, obsolete inventory, need for extra space
    • Rapid Replenishment: supply the store what they need and when they need it
      • Benefit: Centralized cooking and low levels of inventory
      • Risk: Increased cost of transportation

    • Information Strategy

      Quick access to up-to-date information:

      • In 1991, SEJ implemented Integrated Service Digital Network to link stores,

      headquarter, DCs and suppliers.

      • Customer checkout process

      –         Clerk records the customer’s gender, (estimated) age and purchased items. These Point of Sales (POS) data are transmitted to database at the headquarters.

      • Daily use of the data
        • Headquarters aggregate the data by region, products and time and pass to suppliers and stores by next Store managers deduce trend information.

      –         Weekly use of the data

      • Monday morning, the CEO chairs a weekly strategy formulation meeting attended by 100 corporate managers. Tuesday morning, strategies are communicated to Operation Field Counselors who arrive in Tokyo on Monday night. Tuesday afternoon, regional elements (e.g. weather, sport events) are factored into the Tuesday nights, field counselors return back to their regions.

      • Information Analysis of POS Data

                             

        • Analysis of :
          • Sales for product categories over time
          • SKU (stock keeping unit)
          • Waste or disposal
          • 10 day (or week) sales trend by SKU

         

        • Sales trend by time and day
          • Different sales patterns for different sizes of milk at different times of the day results in rearrangement of the milks in the fridge. Extreme store
            • Flavored milks are put in front of the pure milks in the evening (or the morning?).

         

        • List of slow moving items
          • About half of 3000 SKUs are replaced by new ones every year
        
        

        Facilities and Distribution Strategy

         

        • Have many outlets, at convenient locations, close to where customers can
        • Focus on some territories, not all: When they locate in a place they cluster the stores in the

         

        • Limited storage space at stores
          • Frequent and small deliveries to stores
            • The number of truck deliveries per day is reduced by a factor of 7 from 1974 to Still, at least 3 fresh food deliveries per day.

         

        • Products are grouped by the cooling needs
          • Combined delivery system: frozen foods, chilled foods, room temperature and hot foods.
          • Such product groups are cross-docked at distribution centers (DC). A single truck brings a group of products and visits several stores within a geographical region

1- Briefly describe Supply chain strategy of Seven Eleven Japan

2- Briefly describe how Seven Eleven Japan manages its facilities and transportation and discuss the advantages of these facility and transportation decisions.

3- Briefly describe how Seven Eleven Japan manages its facilities and transportation and discuss the advantages of these facility and transportation decisions