- Seven-Eleven Japan was established in 1973 and managed by Southland corporation until 1991 when it was taken over by Ito-Yokado Group. - In 2004, convenience stores in Japan and the US contributed 48.2% of IYG's total revenue, with Seven-Eleven Japan alone contributing 87.6% of operating income from convenience stores. - Seven-Eleven Japan had core strengths in information systems and distribution systems to support over 10,000 stores with daily sales averaging 647,000 yen compared to 484,000 yen for competitors.

1. Group 4:
Ruchi Sao 13PGP048 Geeta Hansdah 13PGP079
Trisha Gajbhiye 13PGP116 Bhavana Ziradkar 13PGP118
Sai Shilpa 13PGP124

2. Established in 1973 by Mr. Masatoshi Ito
1973-1991 managed by Southland corporation, later by Ito-Yokado Group
In 2004, Convenience store in Japan and in US contributed to 48.2% total revenue of IYG
Seven-Eleven Japan contributed 87.6% of operating income received from convenience store by IYG
In 2004, the average daily sales at four major convenience store chains excluding Seven-Eleven was 484,000 Yen
where as Seven-Eleven has daily sales of 647,000 yen
Core strengths were information systems and distribution systems
Worked on franchise model and followed a market dominance strategy
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3. Limited geographical presence in Japan and about 70% (32 out of 47) of prefectures within Japan but their
presence was dense
All store had standard size of 125 m2 which was increased to 150m2 in 2004
Seven-Eleven offered to keep SKU of 5000. on average store kept 3000 SKU
Food items were classified in 4 broad categories depending upon storage & transportation
temperature- warm items, Room temperature items, Chilled items and frozen items
In 2004, Processed foods and fast foods contributed to 60% of total sales at each store
By 2004, Seven-Eleven had 290 manufacturing plants to produce fast food items and 293 DC’s
Offered services in store like bill payment services, photocopying, ticket sales and 7dream.com etc.
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4. Integrated services digital network (ISDN) linked more than 5000 stores
IS support was through Graphic Order terminal, Scanner terminal, Store computer,
POS register- to improve ordering process
POS analysis data was provided each day to each store- removal of product with no
demand, forecasting, identification of slow and non moving items
3 times daily delivery of rice dishes and Replenishment cycle time of less than 12
hours
At DC, delivery of like product were stacked in one vehicle and transportation was
done by Transfleet
In US, Distribution was through direct store delivery (DSD), wholesalers and CDC’s.
Inventory turnover of 17 compared to that 50 in Japan
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6.  SC can become responsive by reducing lead time. This can be done in
following ways:
Real time information flow between suppliers, distributors and store
Strong supplier network
Good relationship maintenance with suppliers and distributors
Analysis of day to day data for each store and each SKU will enable in
forecasting & reduction of replenishment time
Cross-docking is one of the ways to be responsive
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7. • Server breakdown or hacking
Real time information flow risk
• Over-dependency on one supplier
• Risk due to natural calamities increase if all suppliers lie in close proximity
Strong supplier network & good relationship maintenance with
suppliers and distributors
• Data congestion due to large volume of data from 3000 SKU × 10000 stores
Analysis of day to day data for each store and each SKU
• Vehicle breakdown
• Natural calamities
Cross-docking
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9. Over-dependency on Information Systems
Any calamity on supplier end would lead to stock out situation
in Seven-Eleven because of absence of inventory in supply chain
No warehouse
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11. Facility
location
One distribution
catering 50-60 stores
High density market
presence
Inventory
management
No inventory because
of cross docking
Real time information
flow to reduce stock
out
Micro-match between
supply and demand
helping in increased
responsive
Transportation
Dedicated vehicle for
each category
Delivery during off-
peak hours
Delivery using
scanner terminals
Allocation of stores
per truck dependent
on sales volume
Information
Infrastructure
Graphic order
terminal
Scanner terminal
Store computer
linked to ISDN
network
POS register linked
to store computer
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13.  Proper product assortment as per required temperature at DC thus reducing
perishability
 Reduction in number of vehicle required for daily delivery at each store (1974,
70 vehicles visited each store every day, in 1994, only 11 were necessary)
 Reduction in delivery costs
 Rapid delivery of variety of fresh foods thus making the chain responsive
 Rapid and reliable delivery to distribution trucks through dedicated DCs
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14.  Demand from retailer is high enough to require FTL
 When lead time is critical
 Manufacturers and retailers in close proximity
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16. Virtual
convenience
store
Increase in
customer
service level
• Reduction in
queuing at
billing
counter
• Time saving
for
consumers
No additional
cost as they
are using
existing
distribution
system and
no home
delivery
system
Catering to
new market
Increase in
market share,
revenue and
footfall
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17.  Number of store in Japan = 10,615
 Number of stores in US = 5,798
 More convenient in Japan to pick delivery from any store because of number
of stores
 Transportation cost will increase in US as there is different distribution
structure and consumer prefer home delivery
 Store density area ratio is higher in Japan than in US, thus making it
inconvenient for US customers to pick up from stores
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19. Pros
Increase in responsiveness
Increase in variety of fresh
products
Reduction in stock out
Increase in distribution network
and support to stores
Reduction in lead time for Fresh
products
Cons
Product assortment will occur at
store thus increase in time
Increase in Labour cost
High coordination is required
between DSD, Wholesalers and
CDC
 Increase in cost for CDC
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21. Pros
Backward integration
Scope for future expansion
Control over SC
Reduction in replenishment time
Reduction in dependency
Cons
Extra effort to build supplier
network
MIS maintenance
High risk
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22. Pros
No effort to build supplier network
No data maintenance
Low cost
Risk sharing
Cons
Increase in dependency
No control over supply chain
Increase in lead time
Forward integration chances by
outsourcing party
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