1. A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risks in each case?
There There are are many many ways ways to make make a conv conven enie ienc ncee store store be resp respon onsiv sivee towa toward rd customers customers follow on their need and what are their seeking for. There There many different different ways that a convenience convenience store supply supply chain can be responsive eventhough eventhough there there are some risks for each case. Firstly Firstly,, they they are bringi bringing ng produc products ts closer closer to the custom customers. ers. What makes makes it differences is customers can get the item or buys an item close-by compare than ordering that must be waiting for a few days. Examples, when an increased demand for close-by,convenience stores! ,"even Eleven felt that besides bringing stores to new areas, it could also continue to open stores in densely populated urban areas such as Tokyo,#agoya and $saka.%ut, the risk might be incurred between the variety of demand demand that cannot cannot be fulfil fulfilled led altoge altogethe therr at the same same time. time. The The custom customers ers also also possibility change their mind toward the same thing to others. "econdly "econdly,, offering variety variety of services services toward customers. The offers offers that "even Eleven list such as ski lift voucher pass, payment of mail order purchases, internet shopping, a meal service delivery, automatic teller machines installation in each store, pick up online services, services , electronic money service that allow customers to t o prepay and use a card or cell phone to make payment. $n the other side, the system might be break down for some time due the weather or the system failure to play well. Thirdly, offering a flexible system to the customers. For examples, "even Eleven have established of operating hours to some customers due their respective needs and easy to use beside the close-by locations for their purchases. The risk is some of customers may be can and cannot use an e-commerce well, it might be hard for them. Then, the service are not fully utili&ed by the customers. Fourthly, an establishment of e-commerce '(dream.com). The goal was to exploit the existing distribution system system and the fact that stores were were easily accessible to most *apanese population.+t is cause there is no extra charge for customers while their make an order order throug through h the web provid provided. ed.The The custom customers ers also can pick pick up their their online online purchases at the local convenience store. The problem might occurred when time of delivery is over the date stated, the trust of customers become an issue. There might be fraud of system that involved the person in charge charge in the chain.
astly, information and communication that were represent to the customers. cknow cknowled ledge ge the inform informatio ation n well well about about the demand demand trends trends for custom customers ers in a particular area and addressing them. %eside, check on availability of stock to store owners to enable them make any further process at the ease. For examples, each store in "even "even Eleven Eleven case carried carried about about ,/// ,/// "01s "01s on averag average,d e,depe ependi nding ng on local local customer customer demand demand and emphasi&ed regional regional merchandisin merchandising g to cater precisely to local preferences. $n the other hand, it might be some problem within the time, weather and others that cannot be avoid and the item cannot be reach by customer on time. +t cause some costs if the customers cancle the order to return back the parcel on the store.
2. Seven-leven!s supply chain strate"y in #apan can be described as atte attem mpt ptiin" to micr icro-mat -match ch supp supplly and and de dem mand and usin usin" " rapi rapid d replenishment. What are some risks associated with this choice?
There are many risks for "even-Eleven2s supply chain strategy in attempting to micro-match micro-match supply and demand using rapid replenishment. replenishment. %ut the main risk or the biggest risk that would happen is the potentially high cost of transportation and receiving at "even-Eleven stores. +t is a fact that when rapid replenishment happened, it would finish off all inventory in stock. For this reasons the inventory need to be deliver fre3uently, maybe several times a day. These deliveries would increase the tran transp spor orta tati tion on cost cost by a lot. lot. There here is anot anothe herr reas reason on for for the the incr increa ease se of the the transportation cost which is the location of the stores. The suppliers and factories are centrally located but the "even-Eleven stores are scattered all across the city. The effort that "even-Eleven took to supply inventories several times a day to all the stores would definitely increase the cost of transportation. +t is also possible for the increase of customers dissatisfaction. This is because when the inventory for the store need to be restock several times daily, it will reduce the store efficiency. For example it would reduce the store services and fre3uent disruptions would occur and thus increase the customers dissatisfaction. The next risks of micro-match supply and demand for "even-Eleven using rapid replenishment are the dependence of information system is high. lthough using information technology would give a great advantage to the business but it would also give give grea greatt disa disadv dvan anta tage ges. s. When When a comp compan any y rely relyin ing g too too much much on info inform rmat atio ion n technology, they are risking having a break down if the system fails. "even-Eleven *apan attributed a significant part of its success to the Total +nformation "ystem installed in every outlet and linked to head3uarters, suppliers and the distribution centers centers.. The The hardwa hardware re system system that was used used by the store store includ includee graphi graphicc order order terminal, scanner terminal, store computer, and 4$" register. This is a prove that "even-Eleven relying too much on its information system. ny sudden breakdown of the information system would halt the entire system of the stores, the distribution centre, centre, and the suppli suppliers. ers. +nform +nformati ation on system system is also also used to forecas forecastt custom customer er demand. When system failure occur, the situation of mismatch of stocks and demand are sure to happen where there will be a mismatch between the customer needs and the goods supplied. This situation would result in too many inventory or less in the case where customer needs are inconsistent. When attempting to micro-match supply and demand using rapid replenishment, it would cause the unmatched of supply and demand and this would cause the excesses and shortages of inventory. +t is a basic knowledge that forecasts are the most accurate for aggregate products. Therefore, forecast accuracy is crucial to micromatch supply and demand. When the information ordering and replenishment systems are able to respond 3uickly to changes the customer demand to account for forecast errors, this will increase the risk of insufficient capacity, and cause the transportation costs to increase.
$. Wh What at has has Se Seven ven- -le leve ven n done done in its its ch choi oice ce of faci facili lity ty loca locati tion on,, inventor tory mana"eme ement, transportatio tion, and informatio tion infrastructure to develop capabilities that support its supply chain strate"y in #apan?
"even-Eleven *apan has chosen to operate a highly responsive operation and has chos chosen en a supp supply ly chai chain n desig design n that that supp suppor orts ts this this strat strategy egy.. "eve "evenn-El Elev evan an *apan *apan emphasi&ed regional merchandising to cater precisely to local preferences. Each store carried food item, beverages, maga&ine and customer items. Their facility location choices are to saturate an area with stores, thereby making it easy for customers to shop and their own delivery trucks to move from store to store to replenish inventory. inventory. For inventory management, they have dedicated manufacturing plants to produce fast food, and classify inventory according to four separate categories to assist in transportati transportation. on. lthough lthough related to their information information system, system, they manage manage inventory inventory through their graphic order terminal and receive inventory using the scanner terminal. The system that transmits directly to the supplier and distribution centre, goods are produced using a pull system to replace what has been sold during that delivery period. Their 4$" register also tracks inventory at a very detailed level. The The transpo transporta rtatio tion n system system is flexibl flexiblee to maximi maximi&e &e respons responsive iveness ness while while also achieving efficiency. The key to store delivery was what "even- Eleven called the combin combined ed delive delivery ry system system.. There There were were four four catego categories ries of tempera temperatur tures es of truck, truck, fro&en foods, chilled foods, foods, room-tempe room-temperature rature processed foods, and warm foods. Warm and chilled foods were delivered three to seven times a week, depending on the weather. Each truck made deliveries to multiple retail stores. ll deliveries were made during off-peak hours and were received using the scanner terminals. The The transpo transporta rtatio tion n system system is flexibl flexiblee to maximi maximi&e &e respons responsive iveness ness while while also achieving efficiency. "even- Eleven *apan attributed a significant part of its success to the Total +nformation "ystem installed in every outlet and linked to head3uarters, suppliers, suppliers, and distributio distribution n centers. centers. "even-Elev "even-Eleven en became the first company in *apan to introduce a 4$" system 5omprising, 4$" cash registers and terminal control e3uipment. n integrated services digital network '+"6#) was installed. inking more than 7,/// stores, it became one of the world2s largest +"6# system at the time. process and feedback 4$" data 3uick to get with the two-way, high speed online communication capability of +"6#. "ales data gathered in each store by 88.// p.m. were processed and ready for analysis the next morning. "even- Eleven also have hardware system included 8. 9raphic order terminal for placing orders were linked to the store computer, :. "canner Terminal deliveries from the distribution center, . "tore 5omputer were linked to the +"6# network, and ;. 4$" register were linked to the store computer. The information system allowed seven- eleven stores to better match and supply with demand
%. Seven-leven does not allow direct store delivery in #apan but has all products flow throu"h its distribution center. What benefit does Seven-leven derive from this policy? When is direct store delivery more appropriate?
The benefits that "even-Eleven derive from this policy are <
6ecreasing the number of vehicle used for transportation. +t would directly reduce the handling. +t also reduced the holding cost, delivery cost and less time is used for the company. The company can concentrate more time on their core activities. Total control of the system. +f "even-Eleven asked several suppliers to do deliveries every day, it would detract the store manager2s ability to provide custo custome merr servi service. ce. "eve "evenn-El Elev even en also also need need to shar sharee thei theirr deman demand d and and production data with the suppliers.
6irect "tore delivery more appropriate when <
store places or customer who orders with high volume= low volume, but with high value. +f a store place or customers makes large orders and covers a profitable percentage of the company2s company2s monthly profit, then a direct store delivery is a great way to deliver the order. The delivered items don2t need any bulk broken at a 65 or it re3uires a special handling. The The supp suppli lier er has has a cons conson onan antt syste system. m. For For exam exampl ple, e, a daily daily news newspa pape pers rs delivery.
&. What do you think about the ' dream concept for Seven-leven #apan #apan? ? (rom (rom a supp supply ly ch chai ain n pe pers rspe pect ctiv ive, e, is it like likely ly to be more ore successful in #apan or the )nited States? Why?
The concept of "even Eleven *apan is allows e-commerce sites to use "even Eleven Eleven stores stores as drop-o drop-off ff and collectio collection n place place for onlin onlinee items items by e-comm e-commerce erce customers. +t has been success while the customers are satisfied with their product being shipped to the local convenience store rather than walk in. "o, the best option to be use is (dream.com. >efer on the recent survey revealed that ?: percent of the custo custome mers rs of e-co e-comm mmerc ercee comp company any more more prefe preferre rred d to have have thei theirr item item by this this way.ccording to logistics, online deliveries can be copy by using "even Eleven2s current distribution network in *apan as a role model .The online delivery helps supplier sort the items more efficiently for the store. 6oing so will increase the utili&ation of transportation which gives "even Eleven the opportunity to offer a lower cost alternative alternative to having a package package carrier deliver deliver the product product in house.@owe house.@owever, ver, if more demand of online purchased, "even Eleven will use up storage space and re3uire the store to keep the items well before the time of collection by customers. +ts seems this concept concept more suitable suitable for the citi&en who are living living in urban areas in *apan. +t is cause the main goal that has been set to exploit the existing distribution system and the fact that stores were easily accessible to most *apanese.Aoreover, the the fre3uen fre3uency cy of visits visits by custom customers ers to "even "even Eleven Eleven2s 2s *apan more more encour encourage aged d the successful of the convenience store within online delivery links with existing network provided.
*. Seven-leven is attemptin" to duplicate the supply chain structure tha th at has succeeded in #apan in the )nited States tes with with the introduction of ++s. What are the pros and cons of this approach? eep in mind that stores are also replenished by wholesalers and S by manufacturers.
The supply chain structure for 1nited "tates will be not operates smoothly like on *apan, there are pros and cons of this approach < ros /
5onsolidation of deliveries because the distribution system was linked each other and entire supply chain for all product categories. When a store placed an orde order, r, it was was imme immedi diat ately ely trans transmi mitt tted ed to the the supp suppli lier er as well well as the the distributor center and when the supplier received orders from all "even-Eleven
stores and started production to fill the orders. Aonitor and control for product and and supply chain which are at 565 deliveries of product like from different suppliers such as milk and sandwiches sa ndwiches were directed into a single temperature-controlled truck. With practice this 565, 565, the 3uality 3uality of the product product suppli supplied ed along along the supply supply chain chain can be
verified and control from the single centers. 5an reduces the workload at the stores when the inventory is delivered only once a day, this shall make life easy for staff as they shall have schedule time to spend on inventory management, hence they can provide much of their remain remaining ing time time comple completely tely focusi focusing ng on the custom customer er need need and custom customer er satisfaction. With this distribution system enabled "even-Eleven to reduce the number of vehicles re3uired for daily delivery service to each store, even though the delivery fre3uency of each item was 3uite high.
+ons /
+ncreasing the wages of staff by sorting to delivery to stores every night because they need to deliveries re3uest from the store manager were sent
to the nearest 565 and by the 8/.// p.m. 6ifficulty to manage the new systems, introducing the new systems is not easy to do because its need an adBustment, especially for middle manager and employees who are familiar with the old distribution systems
6ifficult to control effectively, even overall 565 is very effectively in distributing the product but it was very hard to control effectively because its depends on distributions center
'.0he )nited States has food service distributors that also replenish conv conven eniien ence ce stor storees. What hat are are th thee pr pros os and and cons cons to havi havin" n" a dist distri ribu butor tor repl repleni enish sh conve conveni nien ence ce stor stores es vers versus us a comp compan any y like like Seven-leven mana"in" its own distribution function?
The first pros in having a distributor replenish convenience the stores are related to cost. When someone else is replenishing stores, it would cost less in transportation and and mater material ial hand handli ling ng.. This This is becau because se the the cost cost depe depend nded ed on how how supp supply ly and and reordering operations are designed. +t is possible that the distributors perform the aggregation or demand smoothing function with minimal intervention compared by the individual "even-Eleven franchise. @aving a distributor replenish the store also means that they do not have to invest anything in distribution centres, fleet, personnel or trucks to perform this task. The second pros in having a distributor replenish convenience stores are it added value. value. We could say that that a distri distribut butor or brings brings much more more value value to 1nited 1nited "tates "tates compared to *apan because considering the lower density of stores, a distributor is able able to aggreg aggregate ate delive deliverie riess across across numero numerous us competi competing ng stores. stores. This enable enabless a distributor to reach levels of aggregation that cannot be accomplish by a single chain such as "even-Elev "even-Eleven. en. 6istributor replenish replenish convenienc conveniencee stores are value added also because they understand customer demands very well. The third pros are it will help the company to focus on their core business. 5reat 5reatin ing g a comp compan any y is hard hard but but to deve develo lop p it is hard harder er.. +f the the comp company any hire a distributor distributor replenish convenience convenience stores, they can push that problem aside and focus more on how to make their company become stronger. The cons of having a distributor replenish convenience stores are the lack of contro controll and responsiv responsivene eness. ss. This This is becaus becausee there there is no direct direct link link betwee between n the company, the convenience stores and the customers. The level of service consistency cannot be monitored or controlled fully by the company. When When operati operation on contro controll is lackin lacking, g, it would would decreas decreasee the direct direct relatio relationsh nship ip between the company and the customer. c ustomer. This is because all the business between the company and customers need a third person between them which is the distributor. +t would be better if the company able to communicate with their customers themselves without any third party. $ther than that, the cons of having a distributor replenish convenience stores are the inability to exploit having large number of stores. +t is certain that getting the Bob done through the distributors has "even-Eleven subsidi&e deliveries because they are competing with smaller chains that may also be using the same distributor.
