Ammor ZinebLogistics and Supply Chain Management

Company Overview

� Established in 1973, with the first store in

koto-Ku in Japan

� The leader among convenience stores in

Japan.

� The third largest retail company in the world

after WAl-Mart and Home Depot.

� Most known for its cheerful and lively stores.

� It knows an extensive franchising system.

Seven-Eleven products

� Goods: Processed food: drinks, noodles, breadand snacks

� fast-food: rice balls, box lunch and hamburgers.

� Fresh food: diary products

� Non-food: magazines, batteries…

� Services: In-store payment of Tokyo ElectricPower bills

� Gas, insurance premiums, telephone.

� ski-lift pass vouchers

� payment for mail-order purchases, payment for Internet shopping.

� A meal delivery system for the aging population.

� Photocopying, ticket sales,

Supply chain Objective

� Micro-matching of supply and demand (by

location, time of day, day of week, season)

Facilities Strategy

� Limited storage space: stores of only 125-150

m2 space.

� Frequent and small deliveries to stores:

Deliveries arrive from over 200 plants.

� Products are grouped by the cooling needs

� Combined delivery system.

Combined Distribution Centers (CDCs)

� Delivery of like products from different suppliersare is directed into a single-temperaturecontrolled truck.

� Four categories of STC:

1. Frozen food

2. Chilled food

3. Room-temperature processed food

4. Warm food

� Delivery during off-peak hours

� Goods are received: with the use of scannersDelivery time spent at each store reduced

� Distribution centers store no food.

� Such product groups are cross-docked at distribution centers (DC). Food DCs store no inventory. A single temperature-controlled truck brings a group of products and visits several stores within a geographical region Aggregation

� No supplier (not even coke!) delivers direct.

� The number of truck deliveries per day is reduced by a factor of 7 from 1974 to 2000.

� At least 3 fresh food deliveries per day.

Direct store delivery (DSDs)

� This is used mainly in US, not in Japan

� Stores are replenished directly from some

manufacturers or wholesalers.

Market-dominance Strategy

� A high density market presence: 10356 stores in 2004.

� The majority of new stores in areas with existingclusters of stores and corresponding distribution centers.

� Advantages:

1. Boosted distribution efficiency

2. Improved brand awareness

3. Increased system effciciency

4. Improved advertising effectiveness

5. Prevented competititors’ entrance into thedominant area.

Information Strategy

� It is the most significant part that contributed

to its success.

� Total information system installed in every

outlet and linked to headquarters, suppliers

and the seven-eleven distribution centers.

� Quick access to up to date information due to

its hardware system.

� >>>Good information means good decisions.

Information Strategy

� Weekly use of the data Monday morning, the CEO chairs a weekly strategy formulation meeting attended by 100 corporate managers.

� Tuesday morning, strategies are communicated to Operation Field Counselors who arrive in Tokyo on Monday night.

� Tuesday afternoon, regional elements (e.g. weather, sport events) are factored into the strategy. Tuesday nights, field counselors return back to their regions.

Hardware system

� Graphic order terminal

� Scanner terminal

� Store computer

� POS register.

Graphic Order terminal

� Hand-held device used by the manager to

place orders

� The orders are recorded and placed in the

order in which they are in the shelves

� When placing an order, the manager has

access to detailed analysis of POS.

Information Analysis of POS Data

� Sales analysis of product categories over

time

� SKU analysis (store keeping unit)

� Analysis of waste or disposal

� Sales trends for new product

� Sales trend by time and day

� List of slow moving items.

Scanner terminal

� It reads bar codes and records inventory

� Used to receive productsv coming in from

DCs.

� This is automatically checked against a

previously placed order and the two are

reconciled.

Store Computer

� Linked to the whole network, the POS

register, the graphic order terminal and the

scanner terminal.

� Communicates among all input services,

tracks store inventory sales

� Places orders

� Regulates store’s equipment

POS Register

� Each product sale is recorded and the time

of sale too, the product is retrieved from the

store computer

� The age and the sex of the customer are

recorded by the cashier

� This POS data is transmitted to a host

computer.

� All sales data is evaluated on a company-

wide, district and store basis.

The United States

� Seven-eleven is growing rapidly in the US.

� 5798 stores in the US

� It works very hard to inntoduce new fresh-

food items to compete with Starbucks and

with traditional gas station food marts.

� A significant improvement in North American

performance: in 1992, inventory turned

around 12 times.

References

� 1-7-Eleven world's largest chain store

� 2-Former 7-Eleven CEO Thompson dies. (Top of the News).(John Thompson)(Obituary) | National Petroleum News | Find Articles at BNET.com

� 3-"News Room: Fun Facts & Trivia", 7-Eleven, Inc.

� 4- 7-Eleven, Inc. - Company History

� 5- Howard Bear, Jacci. "24-Hour Convenience Stores: It Started in Austin Texas at 7-Eleven", About.com.

� 6-"News Room: Background Information: Open around the clock", 7-Eleven, Inc.

� 7- COMPANY NEWS; Southland Holders Approve Buyout. Associated Press.

� 8- Frank, Peter H.Southland Buyout Hits Snag. The New York Times.