I THUMBS UP AND LEAVE POSITIVE FEEDBACK FOR THE ANSWERS TO STUDY QUESTIONS 1-7!
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I THUMBS UP AND LEAVE POSITIVE FEEDBACK FOR THE ANSWERS TO STUDY QUESTIONS 1-7!
SUPPLY CHAIN MANAGEMENT
THE STUDY QUESTIONS 1-7 ARE WHAT I NEED ANSWERED
19,000. Globally, the firm had more than 60,000 conve- nience stores by September 2016 and was the world's largest chain in terms of retail outlets. Global revenues for Seven&i from convenience store operations were 2,675 billion yen in 2016 with an operating income of 352 billion yen. The firm opened over 1,600 new stores in Japan in 2016. Customer visits to Seven-Eleven out- lets averaged more than 1,000 per store per day in 2013 TABLE 3-4 Stores and Annual Sales for Seven- Eleven Japan Number of Stores Annual Sales (billion yen) Year 1974 1979 1984 Company History and Profile Both Ito-Yokado and Seven-Eleven Japan were 989 founded by Masatoshi Ito. He started his retail empire 1994 after World War II, when he joined his mother and elder brother and began to work in a small clothing store in Tokyo. By 1960, he was in sole control, and the single store had grown into a S3 million company. After a trip to 2009 the United States in 1961, Ito became convinced that superstores were the wave of the future. At that time, Japan was still dominated by mom-and-pop stores. Ito's 2,299 3,954 5,905 8,153 10,826 12,753 13,232 14,005 15,072 16,086 16,319 17,491 109.8 386.7 780.3 1,392.3 1,963.9 2,440.8 2,784.9 2,947.6 ,280.5 3,508.4 3,781.2 4,008.2 1999 2004 2010 chain of superstores in the Tokyo area was instantly popu 2012 lar and soon constituted the core of Ito-Yokado's retail operations 2013 2014 2015 In 1972, Ito first approached the Southland Corpo- ration about the possibility of opening Seven-Eleven convenience stores in Japan. After rejecting his initial Source: "Based on Seven Eleven Japan website http://www.sej.co request, Southland agreed in 1973 to a licensing agree- ment. In exchange for 0.6 percent of total sales, South- land gave Ito exclusive rights throughout Japan. In May Southland's common stock for a total price of 1974, the first Seven-Eleven convenience store opened in $430 million Tokyo. This new concept was an immediate hit in Japan, and Seven-Eleven Japan experienced tremendous through a stock transfer combining Seven-Eleven Japan, growth. By 1979, there were already 591 Seven-Eleven Ito-Yokado, and Denny's Japan. In 2015, convenience stores in Japan; by 1984, there were 2,001. Rapid growth store operations from Seven-Eleven Japan and other continued (Table 3-4), resulting in 19,166 stores by 2016. subsidiaries in North America and China contributed jp/company/en/s.growth.html In 2005, Seven & i Holdings was established On October 24, 1990, the Southland Corporation entered into bankruptcy protection. Southland asked for Ito-Yokado's help, and on March 5, 1991, IYG Holding was formed by Seven-Eleven Japan (48 percent) and Ito-Yokado (52 percent). IYG acquired 70 percent of 44.3 percent of total revenues from operations and 88.6 percent of operating income for the Seven & i Holdings Company (see Table 3-5 for details). The relative perfor mance of convenience stores within Japanese operations was even more dominant. The discrepancy between TABLE 3-5 Financial Figures for Seven & i (2013-2015) For Fiscal Years Ending February 28/29 Total revenues (billion yen) Total operating income (billion yen) Convenience store revenues (billion yen) Convenience store operating income (billion yen) Source: Based on Seven& i Annual Report 2016. 2013 4,991.6 295.7 1,899.5 2014 5,631.8 339.6 2,727.8 276.7 2015 6,038.9 343.3 2,675.9 304.1Explanation / Answer
1. Being responsive involves a lot of challenges and risks. The store has to be depending on the supply chain for functioning with full responsiveness. A great uncertainty is involved in such a strategy. To face those uncertainties certain strategies can be adopted. Local capacity can be organized wherein the cooking of food can be done on the customer's demand. The inventory used for such cooking can be stored in form of raw materials The risk associated with this method is that the capacity will be decentralized which can lead to poor utilization. Another way can be rapid reloading of stock and supplies at the stores as and on demand. This method will allow centralization and less inventory but the risk associated with it will be the cost of immediate replenishment and lack of organization in the process. Another way can be arranged to keep all the inventory stored at all the times. This will allow centralization and won't have any hassle of immediate replenishment but the large inventory storage will require more space and strong safety measures to store the inventory without damage.
2. The main risks associated with this replenishment approach of meeting supply and demand is the high costs that occur in the transportation and delivery of inventory at the stores. The inventory will be supplied in small lots as per the demand. This will require a regular process of ordering, supplying, transporting and delivering the stock at the store. This process, when done on a continuous basis, will be very costly for the company. Also, it will require a proper management and organization at every step. Even a small flaw can lead to a failure of the process. The supply chain management will have to work efficiently at every step.
3. The choices made by Seven Eleven in its infrastructure and facility and inventory management are for the smooth and economical management of rapid replenishment. The centralization of facilities has allowed it to get capacity aggression to the maximum and lower its transportation cost of supplying inventory from manufacturing unit to the distribution center. The sorting of inventory as per temperature helps it to reduce the transportation cost of outbound deliveries as collective deliveries can be done to multiple suppliers. Information infrastructure has helped the store managers to analyse the consumption, prepare data according to it and order inventory based on it. The information infrastructure also helps in the delivery of inventory from the manufacturing unit to the distribution center to the store.
4. Getting all the products from the distribution center instead of direct store delivery helps Seven Eleven to manage the inventory efficiently. Direct delivery will increase the volume of deliveries hence making it difficult for the store to manage it. The receiving cost at the stores will also be high with this method. Direct store delivery is appropriate when the stores are large and have more storing capacity. In that case, big trucks fully loaded with supplies can be delivered at the store directly without the involvement of distribution centers.
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