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This case study deals with the organizational structure and business processes of Seven-Eleven Japan Co. to provide its customers with their necessities.
Harvard Business Review (KEL026-PDF-ENG)
January 01, 2005
Case questions answered:
- A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case? How does Seven-Eleven achieve the responsive strategy?
- What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?
- Seven-Eleven does not allow direct store delivery in Japan, with all products flowing through its distribution center. What benefit does Seven-Eleven derive from this policy? When is direct store delivery more appropriate?
- Seven-Eleven is attempting to duplicate the supply chain structure that has succeeded in Japan in the United States with the introduction of CDCs. What are the pros and cons of this approach? Keep in mind that stores are also replenished by wholesalers and DSD by manufacturers.
- What do you think about Seven-Eleven coming to India? What would be the best strategy to operate in India? How should they start the initial phase of operation? Can Seven-Eleven replicate the success in India by following the strategy used in Japan?
- What is your expectation about the competition of Seven-Eleven in India?
- What do you recommend for Seven-Eleven in the COVID-19 era?
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Seven-Eleven Japan Co. Case Answers
1. A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case? How does Seven-Eleven achieve the responsive strategy?
There are various ways in which a convenience store could be more responsive. Responsiveness can be broken down into two broad categories.
- Knowing what the customers need.
- Making sure they get it when they need it.
- Making sure it is available where they need it.
These can be achieved in the following ways:
Combining one or more of the above measures could mitigate most of the issues in a supply chain and make it more responsive.
Seven-Eleven achieves responsiveness by attempting to micro-match supply and demand using rapid replenishment. This assumes that the demand pattern would be relatively constant on a day-to-day basis.
Some risks associated with this method are:
- Risk of Delay in transportation since all units flow through their warehouses.
- Higher cost of transportation.
- Risk of no stock – This will happen when a group of customers come into the store and buy all the inventory of products that are generally in high demand.
- Risk of system failure – Seven-Eleven depends highly on technology to micro-match supply and demand using rapid replenishment. Therefore, if there were to be a Network failure / Server breakdown, it would put their whole system into the high-risk territory.
2. What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan?
Seven-Eleven’s supply chain strategy is essential to closely monitor demand on a daily basis and try to tweak their supply to fulfill that demand in a short span of time. To support such a strategy, the following systems and capabilities have been put into place:
- Seven-Eleven has a
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