SCM

1. •ABHISHEK KUMAR JHA
Supply Chain •AJAY KUMAR
•ASEEM CHATURVEDI
•ASHISH JUDE MICHAEL
Analysis •ASHWINI KUMAR MAHARANA
•ASHISH BHURE
•GAURAV MADAN

2. 1973- Established under licensing agreement from Southland
corp. USA
1974- Opened first store in Tokyo
1991- Acquired Southland Corp.
Source: Company website

3. Presentation flow
 Case analysis
 Case questions

4. Value Chain
Services
Inbound Operations Outbound Marketing and
Logistics Logistics Sales
•Suppliers •Sorting •CDC •Franchisee •Utility
•Quality •Wholesale •Ownership payment
Control •DSD •Meal
delivery
services
•7dream.com

5. Store Opening Strategy
 High density, concentrated store openings (Dominant Strategy).
 Concentrated presences in limited geographies.
Advantages
 Greater familiarity with customers.
 Increase in frequency of customer visits.
 Efficient construction of distribution structure.
 Effective sales promotion.
 Improvement in quality of store operation consulting services.

6. Franchise
•Transparent agreement
•Clear division of roles
Source: Company website

7. Combined Distribution System
CDC
Source: Company website

8. Information Flow

9. Information
System
Source: Company website

10. Key Characteristics
1. Dominant Strategy: Close strategy with customers.
2. Franchise Model: Low upfront cost, less operating hassles, transparent operations.
3. Wide product range.
4. CDS: Inventory management ,High Gross margin on floor space, better control, product
Freshness.
5. Information Systems: Integrated, Information flow.
6. Integrated Supply Chain Model.
7. E-commerce : increasing customer accessibility

11. Stores :Japan Vs US
Attributes Japan US
Distribution System CDS Hybrid (DSD+ Wholesale)
Store Size Smaller Larger
Buying Behavior Frequent/Daily purchaser Weekly Purchasers
Sales throughput High Low
Store Locations Proximity Distant
Inventory turnover rate 50 17

12. Ans-1
Ways for a convenience store to be responsive:
 Know the customer ( Through effective market research)
 Being close to the customer
 Ascertaining product range as per customer demand.
 Idea of convenience (Extra / extended hours …for 7-11 stores ..they remain open from 7 AM to 11
PM )
 Value Addition -offering add-on services like meal delivery service, pick up location service for
parcel etc.

13. Ans-1 …contd.
Risks:
 Expensive Market Research as customer behavior and preferences are dynamic.
 More no. of stores is expensive and at the same time , risk of cannibalization increases.
 Expensive and complex inventory management system.
 High SG&A and wages expenses.
 Moving away from core competency
 Over-dependence on IT infrastructure.

14. Ans-2
Risks associated with micro-matching supply and demand :
 Unbridled growth in costs associated with logistics
 Stock-out
 No safety stock
 High operational costs associated with the IT system

15. Ans-3
Steps taken by Seven Eleven as regards:
 Facility Location
 Dominant Strategy
 Inventory Management
 Centralized DC as regards fresh food items
 Rapid replacement strategy
 Transportation
 Ownership
 Category-wise segregation to mitigate perishability
 Efficient Scheduling
 Information infrastructure
 Investment in IT
 Setting up ISDN based system to realize TIS

16. Ans-4
Benefits of CDC based distribution policy:
 Reduced transportation cost
 Reduced perishability
 Efficient Inventory Management
 Better Gross Marginal Return on floor space
 Better Monitoring and Control
 Reduction in administration time.

17. Ans-4 ..contd.
DSD (Direct to store delivery) is more appropriate under following situation:
 Sizeable and constant demand
 Whenever new product is launched and the company pursues “PUSH” strategy.
 When the store density is low.

18. Ans-5
7dream concept:
 Started out on account of survey
 Goal was to exploit existing distribution system.
It is more likely to be successful in Japan rather than US as the preferences of US customer are
markedly different from Japanese one.

19. Ans-6
CDCs
Pros:
 More suitable for Supply chain activities pertaining to perishable items.
 High degree of monitoring and control
 Operational Efficiency
Cons:
 Wholesalers may have issues as their business will be impacted.
 Manufacturers are more comfortable with DSD scheme

20. Ans-7
3rd Party Distributor vs. ownership of distribution system:
Pros:
 Freedom from daily hassles regarding distribution control
 Cost-effective in some cases.
Cons:
 Less control over replenishment cycles and quality of items.
 Less margins to the franchisee as well as to the manufacturer.
 Less degree of responsiveness relatively.