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