6. Pillars of creation of “Close & Convenient”
stores
A Management
System
Product
Development
Daily Services
1.Unique system called Tanpin Kanri
(item-by-item management)
2.Franchise Method
3.Store Opening Method
4.Distribution System
1.Team MD(Merchandising)
2.Focus on taste, quality and safety
3.7 Gold, 7 Premium
4.7 Lifestyle, Daily Fresh Foods
1.Omni-Channel Distribution
2.Pick up Station
3.Meal, Home delivery service
4.Mobile Store Service
7. 7-Eleven Japan Co.
Seven- Eleven’s Market Dominance Strategy:
Cluster of 50-60 stores supported by a distribution center (DC).
Such clustering gave Seven Eleven Japan a high-density market
presence and allowed it to operate an efficient distribution
Boosted distribution efficiency
Better franchisee
support
Improved Brand
awareness
Increased system
efficiency
Created entry
barriers
Payment of Bills –
Electricity, Telephone, Gas
Payment: Internet shopping
ATMs at almost all the stores
Meal Delivery service for
aging population of Japan
Pick up location for parcel
delivery
Services offered:
8. 7-Eleven Japan Franchise System
SEJ and franchisees are on an equal footing, and there is a clear division of roles
The focus is not on increasing sales but on increasing gross profit, fostering co-existence and co-prosperity among all parties
9. Facility Location
Seven- Eleven Japan network included both company-owned stores &
third-party owned franchise
Has cluster of stores (50-60) in small geographical area supported
by a Distribution Centre (DC)
CDCs consolidate product from different vendors and combine
them all on to one truck
Driving time from the CDCs to the store not more than 90 mins
Good judgement in knowing which tasks to be outsourced and what to
be kept in house. Tasks including supplier evaluation and dismissal.
Inventory Management
7-Eleven Japan Supply Chain
•No inventory
•Highly
efficient
At DC
•All inventory,
at all stores,
at all times
At Store
Supplier
(Chilled Temp)
Supplier
(Warm Temp)
Supplier
(Frozen Temp)
Supplier
(Room Temp)
Distribution
Center
Distribution Strategy
10. 7-Eleven Distribution System
Value Net Integrator Model
“The Value Net Integrator coordinates activities across the value net by gathering, synthesizing, and distributing information”
Information about the sale of goods and services can be managed separately from the physical sale of those goods
and services.
• goods and services travel
from manufacturer to
distributor to merchant to
customer
• information about the
members of the physical
chain is gathered
analyzed and distributed
The model identifies two
separate value chains
11. Collect data
• gather sales
information
from all
franchisees
Use data
• makes this
information
available to
suppliers of
goods in
exchange for
favorable
pricing
Benefit
collective
bargaining
power over
suppliers
valuable, real-
time marketing
data about how
its products are
selling.
Franchiser
Supplier
The 7-Eleven value net ensures that hot selling products can be delivered overnight, allowing the
franchisees to operate lean.
By continually improving its operation, 7-Eleven stays ahead of competition
7-Eleven Distribution System
Value Net Integrator Model(cont.)
12. The 7-eleven Japan have a number of ways for gathering
information – what customer wants at the right time.
Customer orders are taken at :
Kiosks in Konbini outlets
Konbini websites
Mobile portals.
Data collected from these channels are synthesized in a
central office and various orders are grouped and placed as
required to different suppliers and allies.
7-Eleven Distribution System
Value Net Integrator Model(cont.)
overcome space crunch issues, avoid extra
stocking and additional inventory costs.
effectively plan their distribution pattern in
the existing distribution network
helped the firm to expand the product range
helped diversion into goods which wasn’t
expected to be sold on convenience stores
Benefits
13. Use of Information Technology
1. Point Of Sales System
Manages thousands of products, the processing of
orders from stores, and the collection and analysis of
daily sales data,
Capture data on customers' purchases and analyzes
them to learn more about customer preferences and
sales trends.
The POS systems garner the information advantage for the
company in developing the original food items better and more
quickly than its competitors, thus making premium pricing viable. Main Register
The main register has all price
information stored inside, so
the price information is fast
retrieved when a bar code is
read by a scanner.
Sub Register
If the main register breaks
down, the sub register
14. Use of Information Technology
2. Graphic Order Terminal
3. Scanner Terminal
Delivered information about a weather
forecast, events near a store, and a campaign
of a product
Managed inventory through their
graphic order terminal and receive
inventory using the scanner terminal.
15. Use of Information Technology
4. Store Computer
“Integrated Services Digital Network is a set of communication standards for simultaneous digital transmission of voice,
video, data, and other network services over the traditional circuits of the public switched telephone network”
Store Computer linked to the ISDN network,
the POS register, the graphic order terminal,
and the scanner terminal.
It communicated between the various input
sources, tracked store inventory and sales,
placed orders, provided detailed analysis of
POS data, and maintained and regulated store
equipment
Satellite telecommunication were also used to
connect to corporate headquarters, suppliers
and logistics
16. Integrated Information System:
How it helped?
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
Dynamic shelving and merchandizing
• Sales trend by time and day -> Adjust the merchandising mix on the shelves according to consumption 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 new items - About half of 3000 SKUs are replaced by new ones
every year
• forecast future consumer trends and to assist manufacturers in new-product development
• Tailor the merchandise selection to the tastes and needs of the local market localized promotions
Localized Promotion: customer demographics information are correlated and substituted along with local events and other
region-specific data
17. •The 7 Eleven Stick – Order anywhere anytime
•Improvement in Staffing Process
•Product Assortments – more a bane than boon
• 7 Eleven at India!
Suggestions
18. Presented by:
Brijesh R G
Chakshu Raj
Lokendra Singh Rathore
Mythili V
Rasika Sonkusale
Santosh Kumar
Notes de l'éditeur
The Value Net Integrator model is perhaps one of the most sophisticated business models. At itscore it is a fairly simple, yet profound concept that information about the sale of goods andservices can be managed separately from the physical sale of those goods and services. Themodel identifies two separate value chains. The physical value chain along which goods andservices travel from manufacturer to distributor to merchant to customer and the virtual valuechain through which information about the members of the physical chain is gathered analyzedand distributed. The Value net Integrator model is quite powerful because it permits a highlyprofitable business to be developed with minimal capital investment in physical assets.Value net integrators co-ordinate activities across the value net by gathering, synthesizing anddistributing information. Major entities involve the firm itself, customers, suppliers and allies.Major flows are products, information and money.7-Eleven’s value net gathers sales information from all its franchisees and it makes thisinformation available to suppliers of goods in exchange for favorable pricing, the benefit of which 7-Eleven passes to its franchisees. The value net gives all franchisees collectivebargaining power over suppliers and the suppliers get valuable, real-time marketing data abouthow its products are selling. By carefully monitoring the supply chain, the 7-Eleven value netensures that hot selling products can be delivered overnight, allowing the franchisees to operatelean. 7-Eleven does not need to own physical distribution centers. It outsources that function,using the information about what is selling to know which products to stock and at whatfrequency. By continually improving its operation, 7-Eleven stays ahead of competition.
The 7-eleven Japan have a number of ways for gathering information – what customer wants atthe right time. Customer orders are taken at :1) Kiosks in Konbini outlets2) Konbini websites3) Mobile portals.Data collected from these channels are synthesized in a central office and various orders aregrouped and placed as required to different suppliers and allies. So the 7-eleven model collects,synthesizes and distributes information effectively so that it overcame space crunch issues,avoided extra stocking and additional inventory costs.Also, central data processing helped the organization to effectively plan their distribution patternin the existing distribution network, increasing its efficiency. Adaptation of technology andmovement to value net integrator model helped the firm to expand the product range and helpeddiversion into goods which wasn’t expected to be sold on convenience stores.High wireless penetration was also effectively used by the form to collect information fromcustomer at times of their convenience
EJ adopted an Electronic Order System (EOS) early on to speed up the ordering process. EOSis a battery-powered 280-gram hand-held computer. The store manager would walk along thegondolas and input the numbers to order items. Managers can check stock levels and salestrends on the same screen while placing orders. Then the operator would connect EOS to theStore Computer (SC) and transfer the data. The entire ordering process would usually take 1.5 to2 hours. The orders are transferred to the HQ through the ISDN and aggregated and processed by the host computer. Order data processed at the HQ is then transferred to themanufacturers, wholesalers, and distribution centers for use in planning and logistics. Orders offast food and fresh food items are placed three times a day, magazines once a day, and processedfood items three times a week. In the case of bento, the order would reach the vendor in 2 to 3hours with data re-organized into order bills, delivery routes, production amounts, etc.When products are delivered to the stores, they are scanned by Scanner Terminals (ST) that areconnected to the SC. Thus, inventory control can be done at the SC level. Each store manager places orders based on the order list that contains HQ-recommended items. SEJ uses the POSdata and its accumulated know-how to decide which items to include in its recommendations.Store managers then pick items from this pre-approved list and order through HQ