Group C: Jesus Garcia, Paola Moreno,

Sebastian LaRoche, Miguel Caballero,

Mº Gabriela Cabral

About us: • History and Business Model

Industry Analysis: • Porter 5 forces and KSF.

Marketing Strategy:• Consumers• Competitors• 4 P´s

Supply Chain and Business Process: • Distribution Strategy• Concepts: Agility, Adaptability, Aligment

Agenda1.

2.

3.

4.

• Founded in 1927 by the Southland Corporation in Dallas, USA. They invented the Convenience Store concept.

• In 1962 they started to experiment with the 24 hour schedule.

• By 1980 they already had more than 6,000 outlets.

• In 1980 the company ran into financial difficulties, and was rescued from banckruptcy by Ito-Yokado, its larges franshisee.

• The Japanese company gained a controlling share of 7-Eleven in 1991, during the Japanese asset bubble of the early 1990s. Ito-Yokado formed Seven & I Holdings Co. and 7-Eleven became its subsidiary in 2005.

• At present,7-Eleven is the world’s largest operator, franchisor and licensor of convenience stores (largest convenience retail chain), with approximately 6,000 stores the company operates and franchises in the United States, which more than 4,700 are franchised. Overseas, 7-Eleven licensees and affiliates operate more than 29,700 (including Japan, Taiwan, Thailand, South Korea, China, Hong Kong, Malaysia, Mexico, Singapore, Australia, Philippines, Indonesia, Norway, Sweden and Denmark.)

About Seven Eleven7-Eleven, Inc. (7-Eleven) is a retailer operating convenience stores. It is engaged in franchising and licensee

business of convenience stores globally. The product line of the company includes gifts, beverages, electronics

accessories, movies, international calling cards, video and computer games as well as services including pre-

paid tax filling card, financial services such as issuing cash cards, money orders and credit cards, etc.

• To consistently serve the changing needs of customers for their convenience

Mission

• To be the best retailer of convenience

Vision• Servant Leadership

• The 7-Eleven Way

Culture

Capacity: What you can do to lead.Commitment: What you want to do to lead.Character: What you will do to lead.

I – IntegrityC – Customer FocusA – AccountabilityR – RecognitionE – Excellent ExecutionaboutPeople & Teamwork

7 Eleven: A World Class Organization

Competitors- High-traffic sites

- Very fragmented industry (top 50 Co = 35% sales)

- Major: Circle K, Pantry, Exxon

Substitutes+ Gas stations, grocery stores,

mass merchandisers, warehouse clubs, restaurants (prepared

meals)

Suppliers- Fuel: Supply agreements (volume) Oil Co, refineries, distributors Low

Margin- Non-fuel: Long-Term Contracts

manufacturers, grocery wholesalers, distributors

Customers+ Drive the demand

+ Competitive pricing+ Effective merchandising

+ High-traffic locations

Barriers to Entry+ Large companies advantage in purchasing

and finance- Small companies can compete effectively by

acquiring superior location or offering specialized merchandise

US convenience store industry:• 120,000 stores• $300b revenue

Industry Analysis: Porter 5 Forces

Business Model

Doing Business

• Non manufacturer• Commitment with vendors in order to better meet their customers' expectations• Alignment with suppliers so as to create a three-way wins – for customers, vendors and 7-Eleven

Working Together Online: Web-based way for potential and existing business partners to work easily with 7-Eleven

• Better collaboration and communication of the critical business info• New Vendor/Supplier Application Process• 7-Eleven Project Forum:• Bid, estimate or quote projects• Invoice for projects• Update project timelines• Provide equipment related information

Business Key Success Factors

Reliable and fast Supply Chain

- Demand forecast & Supply Planning through IT systems

- Intensive distribution strategy to keep cost low

- Quick response to demand shifts- Balanced inventory

- Relationships with suppliers- Employee training

Location, location, location

-Traffic- Visibility

- Brand Awareness- Purchase intention

- Convenience - Neighbourhood & Community

involvement

7-Eleven’s Marketing Strategy

Fast and Flexible offer adapted to customer’s changing wants and

needs due to advanced IT systems

Competitive prices compared to the rest of competitors including even

supermarkets (for highly demanded products)

Convenience: Location, opening hours (24hours), assortment,

communications & promotions

“Oh thank heaven for 7 eleven”

“Oh thank heaven for 7 eleven”

7-Eleven’s Consumers

People On The Move

All AgesAll Genders

Look for specific productBuy when need

Represent an accurate sample of society

Purchase can be impulsive, last minute &/or urgent

“7-Eleven® stores are part of the neighborhood and committed to serving the changing needs of customers”

4P’s: Product assortment

Around 2.000 new products as 70% of Merchandise will be replaced within 1 yearIn response to customer’s taste and needs shifts

3.000 products a all year IT Integrated Multimedia System allow managers to know:-What, How, When, To Whom- Products sold together And to shorten lead-time from HQ decision to each store

4P’s: Pricing strategy

Push more profitable private-label products

Competitive prices vs. grocery stores

Aggressive pricing on high-volume everyday items to allay the perception its prices are higher than those at grocery stores

Focus on fresh-food offerings and 7-select own brand

4P’s: Place – Retail Stores

The OUTSIDEIntersections/traffic lights

Medium size outletsParking/High traffic

Involved in a community

The INSIDEComfortable, low

corridorsVisibility

Profitable pathwayProduct display

Critical factor for retailersas it partly determinesthe profitabilityof the business

4P’s: Promotions and Communication

Radio and outdoor when in the carAt the movies and sporting eventsOnline at Facebook, Twitter and slurpee.com To their Mobile phone

Reach consumers wherever they are

Emotionally creative and rational promotions

Kwik-E-Marts – The Simpsons 7-Eleven7-Eleven Road Trip Rally: Reality ShowIron Man 2: “Collect like a super hero. Live like a billionaire”Viral Slurpee on facebook11th of June (7/11 day) Free Slurpee7-Evelen Cycling teamZinga social 7-eleven game

7-eleven´s Product Development

Co-Development with Manufacturers with 7-Eleven Taking the Leadership Role

The advantages for themanufacturers are:

1. Manufacturers’ products are sold extensively in the chain stores of 7-Eleven spread all over the country.

2. Results of product marketing are collectable using the POS (Point of Sales) system.

3. Crucial data of consumers and market which are indispensable for future development of their products are obtainable.

The advantages that 7-Eleven enjoy are:

1. For a period of time, 7-Eleven can sell those newly developed products on an exclusive basis allowing differentiation from competitors.

2. Obtain information from manufacturers prior to other competitors.

7-Eleven Japan also co-developed new products with major food manufacturers. This method is called co-development or team merchandise.

A data repository provides store managers with information on what's selling, but the managers use their own on-the-spot knowledge of the neighborhood to make final ordering decisions.

By adding local control of the ordering process, 7-Eleven takes the opposite approach to Wal-Mart Stores Inc.'s much-heralded replenishment supply-chain model, in which products are automatically reordered once stocks fall below a certain level.

7-Eleven´s in-store ProcessStore Managers:

They oversee store operations, expenses and profits, organization, employees and inventory, backed by assistant managers who ensure that the customer environment is clean and friendly day to day.

1.

Employees:

They are trained to be representatives of 7-Eleven to the eyes of the costumer in terms of costumer service and functions to be performed.

2. They receive the merchandise from vendors or from seven eleven’s distribution center, and immediately allocate them in the corresponding area.

Products position in shelves are changed 3 times a day because different products are demanded in different times of the day.

Orders for fresh-food items are aggregated at 7-Eleven headquarters and transmitted to third-party commissaries and bakeries, which prepare them for delivery the next day by one of the company's 22 distribution centers around the country.

7-Eleven´s Logistics Process

The system connects stores to McLane Company Inc., 7-Eleven's primary wholesale distributor, and to the commissaries and bakeries that provide fresh-food products. They work closely with 7-Eleven and the suppliers to come up with the most efficient distribution process we can.

Store managers enter orders into workstations or handheld computers by 10 a.m. daily.

1.

By 11 a.m., orders have been consolidated by EDS (Electronic Data System) and dispatched to 7-Eleven's suppliers.

2.

Through a systemized " distribution plan " , all goods from more than 100 suppliers are handled by the distribution center centrally.

3. With this method, suppliers find it easier to handle the distribution of 7-ELEVEN products. Stores are also able to have minimal stock and enhance management of store space.

Truck drivers carry cards with bar codes that are scanned into store computers when they arrive with a delivery.

If a driver is often late, the operator will review his route and might add another truck to lighten the load.

4.

Main supporters of 7-Eleven´s Logistics System

Information System:1.

Seven-Eleven’s new technology gave it four advantages.

The first was in monitoring customer needs, Instead of pushing products on to customers, companies were being pulled by customer needs.

Second, Seven-Eleven uses sales data and software to improve quality control, pricing and product development. Thanks to its systems, the company can collect sales information from all its stores three times a day, and analyse it in roughly 20 minutes.

Third, technology has helped to predict daily trends. As customers become more fickle, product cycles are shortening. Wheather is also taken into account.

Finally, Seven-Eleven’s electronic investment has also improved the efficiency of its supply chain. Orders flow quickly. Those sent in by 10am, for delivery after 4pm, are electronically processed in less than seven minutes.

Main supporters of 7-Eleven´s Logistics System

Store

•Ordering•Sales Analysis•Accounting, Cash, Reports, Payroll, etc.•Training.

Vendors

•Joint Distribution•McLane•Direct Store Delivery (DSD) Vendors.

Headquarters

•Merchandising

•Information Systems

Field Office•Accounting

•Market Office

•File transmissions•Software distribution

Information System (continued): 1.

Main Supporters of 7-Eleven´s Logistics System

Joint Delivery System2.

o7-Eleven wanted to be recognized as the company who provided the convenience of one-stop shopping: you can find all the products you want to buy in the store. oFor this purpose, 7-Eleven Japan had to create a system of small lot delivery and high

frequency delivery.

Advantages:

1. It is possible to shorten the delivery distance and time.

2. Reduction of the number of delivery vans.

3. Delivery volume to the store per delivery increases and the efficiency of the loading capacity improves.

Main Supporters of 7-Eleven´s Logistics System

Joint Delivery System (continued):2.

In order to keep the taste and freshness of foodstuff at the highest level, an appropriate temperature for all foodstuff must be maintained during delivery.

Main Supporters of 7-Eleven´s Logistics System

Dominant Strategy3.

Seven eleven basically focuses their operation in certain areas which then are crowded with multiple stores.

The main advantage of this strategy are:

Reduced Costs: because of shorter distances.

Reduced Delivery Time.

Reduced advertising expenses: because of less covered area.

Better store management from corporate: as Field Office Managers can go around the stores more often giving out crucial advice and support to store managers.

• Agility1. Real-time systems detect changes in costumer preference and track data on sales and consumers at every store. 2. Collaborative relationships with suppliers.3. Dependable logistics systems.

• Adaptability1. Joint Distribution.2. Expansion of the types of vehicles from trucks to motorcycles, boats and helicopters.

• Alignment1. Exchange of information freely with vendors.2. Equitable share risks, costs, and gains of improvement initiatives.

7-Eleven´s Triple-A Supply Chain Strategy

• Quick changes in demand.Due to:1. Weather fluctuations.2. Activities in the nearby areas.3. Impulsive behavior.

• Delays in distribution.Due to:1. The spread of stores in key locations.2. continuous replenishment requirements.

• Challenges of Virtual Integration:

Aligning interests of SE with those of 3rd parties.

The Challenge

Source: The triple-A Supply Chain. HBR, Hau L. Lee.

The strength of 7-Eleven resides in its endless efforts to develop “innovative business processes” such as “consistent production, distribution and sales systems”, “team merchandising” and “joint delivery”.

The innovation of processes creates differentiation from others and builds up its advantageous position among its competitors.

7-Eleven lavishly invests in the construction of the infrastructure supporting “innovative business processes”, the “information systems”, which help to connect departments organically and enhance the management efficiency of the whole organization.

7-Eleven relays heavily on the input or formulation of hypothesis by the store employees in order to get accurate information on “demand by item”.

Conclusions

Backup Slides

7-Eleven Competitors

Compete on: LocationOpening hoursPriceProduct assortmentBrand awareness

Compete with: 24 hours convenience storesSupermarkets chainsSingle-storesGas station stores

7-Eleven´s Intensive Delivery System.

Source: The Success of 7-Eleven Japan.

Example of the intergrated system of production, distribution, and sales: Ice Cream

Source: The Success of 7-Eleven Japan.