Supply Chain

Study Case

By:

Adhyatma Satya Wardhana (2513203001)

Nur Rahmawati (2513203005)

Prita Meilanitasari (2513203201)

Ratih Pamelawati (2513203204)

History

19271928

19461952

19621990

19982005

2013

Southland Ice Company selling milk,

eggs, and bread from the improvised

ice house storefront in Dallas Texas

- ‘Tote'm Stores’

- +Gasoline stations in

some of Dallas store

'Tote'm Stores'

became '7-Eleven'

Opened 100

Stores

Started 24-hour

schedule in

Austin, Texas

Financial difficulties

(Ice division and Chief Auto Parts

division were sold to General Electric

and later purchased by AutoZone

Company was saved from

bankruptcy by the Japanese

Corporation Ito-Yokado

7-Eleven became subsidiary of

'Seven & I Holdings Co.' by

Ito-Yokado corporation

'Seven & I' the fifth largest

retailer in the world (*35000

stores in approximately 100

different countries*)

Supply

Product Assortment Food and Beverage (52%)

Non-Food (48%)

Services

Beverage, Food service, Process Food

Consumer products such as soap, shampoo and also phone card and

other cash refill cards

pay point services for example utilities bills, credit card payment,

ticket payment, plane ticket at Counter Service

Source of Supply

Suppliers

In-House

Manufacturer

±1,200 – 1,500

suppliers

Supplier Selection

7-eleven Use E-

procurement,

specifically,

supplier infromation

management

Start (supplier

want to apply)

Register as

new supplier

Submit a new

product

waiting for

the result

Accept

?

Deal with the

contract

Rejected

End

No

Yes

Know How to Recruit a Supplier

Invite potential

suppliers by offer

a proposal from

the web

Know How to Recruit a Supplier

In general, 7-eleven need

suppliers leverage category,

because easy to manage, easy to

subtitute the product,& the

stock of the product available

enough

7-eleven has several

distribution centers

serving several store

area to deliver fresh

and quality products

with less lead time and

helps to reduce

inventory and logistics

costs to the whole

chain

Source: Logistics Thailand, 2005 The DCs contain the system that

shorten order cycle time, granting the

fresh and superior product and service

quality to the customers.

Fresh Food Managed Distribution

Supplier

(Chilled Temp)Ex: Sandwiches,

sweets, milk

Supplier

(Warm Temp)Ex: Box lunch,

rice balls, fresh

bread

Supplier

(Frozen Temp)Ex: Ice cream,

Ice cube,etc

Supplier

(Room Temp)Ex: Canned food,

Instant noodles

DC

Store

Store

Store

Store

Store

Ways to be Responsive

Efficient Distribution System

Integrated Information System

Market Dominance Facility

Efficient Distribution System

• Short replenishment cycle times

• Flexible to alter delivery schedules depending on customer demand

• Combined delivery system

• Products are grouped by the cooling needs

• A single truck brings a group of products and visits several stores

within a geographical region

Order

Fulfillment

Oder fulfillment from

Stores to DC

Source: Logistics Thailand, 2005

Order

Fulfillment

Oder fulfillment from

DC to Supplier

Source: Logistics Thailand, 2005

Integrated Information System

Source: adapted from Hau Lee, 2007

Shifts in consumer demand

Design reactive supply chain

adjusts supply to stores three times a day

inventory to be turned over 55 times a year

How IT capabilities impact business agility

System at the Store

POS

• capture data about customer purchases, customer demographics (age and gender), along with local events and other region-specific data.

• data are transmitted to database at the headquarters for analysis

Electronic Order Booking (EOB)

• show the inventory position of the product on shelf and in store’s inventory

• Store managers determine which items to order and the exact quantities they will need for their stores

• orders were relayed by the store computer to both the appropriate vendor and the Seven-Eleven distribution center

Scanner terminal

• read bar codes and recorded receive product coming in from a distribution center

Store computer

• linked the POS register, EOB, and the scanner terminal to the ISDN network

• tracked store inventory and sales, placed orders, and provided detailed analysis of POS data

Information Analysis of POS Data

Dynamic shelving and merchandizing

• Sales trend by time and day Adjust the merchandising mix on the shelves according toconsumption patterns

• Sales trends for new product decide whether to keep or drop an item

• Top-selling items Keep in-stock

New product development

• Identify slow and non-moving items allowed a store to convert shelf space to introduce newitems - About half of 3000 SKUs are replaced by new ones every year

• forecast future consumer trends and to assist manufacturers in new-product development SEJdeveloped a new category of fresh noodles jointly with the manufacturer, Nisshin

• Tailor the merchandise selection to the tastes and needs of the local market

localized promotions

• customer demographics information are correlated and substituted along with local events andother region-specific data implement localized marketing strategy

Market Dominance Facilities

7-Eleven Spread in Japan

7-Eleven Spread in USA

7-Eleven Spread in Hongkong

40,000

Stores All

Around the

World (2013)

Expansion Strategy

Corporate Store

Franchise Store

Corporate Store

Franchise Store

Franchise Store

Franchise Store

Franchise Store

Location:

1. Convenience Store:

Near the business area

(*busy area*)

2. Gas Station (*at some

country*) : At suburban

area

7-Eleven

Responsibility

Franchisee

Responsibility

Development of

Supply and

Merchandise

Operation and

management store

Providing the

ordering system

Hiring and paying

staff

Cost of system

operation

Ordering

Accounting Maintaining store

appearance

Advertising Customer Service

Installation and

Remodeling of

facilities

Market Dominance Facilities

Market Dominance Strategy

Have many outlets Clustering system

Convenient Locations

Close to Customers

Culture and habit research

Limited Storage at Store

Frequent deliveries

Small Deliveries

Inventory

Management:

Rapidly moving

items were kept

in enough

quantities while

the slow moving

items would be

replaced by a

new one

50-60 stores in a

geographical area

supported by 1 DC

(*Japans’ Case)

Market Dominance Facilities

Advantages 1. High Distribution Efficiency

2. Improved brand awareness

3. Increased system efficiency

4. Franchisee support services

5. Improved advertising effectiveness

6. Entry barrier for competitors

Conclusions

o Quick Responsive to Demand

(Responsive Chain Relative High Pricing, Close to market)

o Precise Replenishment

(Perishable Product Rapid Replenishment)

“ Data Sharing and Direct Shipping”

Strategic Fit

Conclusions

• The information system allowed Seven-Eleven stores to better match

supply with demand

• Collaboration with suppliers is enabled through sharing 7-eleven’s

data analysis through a program called 7-Exchangee data system for

category management, which suppliers access through secure

website, can provide insight that lead to new product or new

packaging.

• 7-Eleven has high density of stores in a given area, efficient and

rapid collection, process and feedback of POS data.

• Multiple deliveries to all stores for fast moving product (up to 3

times a day) Limited storage at store.

hank You