Different Ways and Risks of a Convenience Store Supply Chain
In order to become responsive, a supply chain for convenience stores can be organized using three main models: the dependence on distribution centers, the direct provision of goods, and the local production of fresh foods. A supply chain that includes distribution centers is effective when it is necessary to provide many stores with a certain amount of products regularly.
As a result, a convenience store is responsive because it guarantees the provision of many facilities with the necessary amount of goods in the most efficient manner. Seven-Eleven Japan uses this system (Chopra 7). Still, risks are in changes in demand.
If demand decreases unexpectedly, there are many products in a distribution center that should be sold. Direct store delivery is another approach that is used in small local convenience stores that do not belong to chains, and risks are in delays and inability to address demand. The third approach to developing a responsive system is the local production of goods. However, this system is not appropriate for stores where the flow of consumers is extremely high because of the limited capacity related to producing fresh and cooked foods.
Seven-Eleven Japan: Choice of Facility Location, Inventory Management, Transportation, and Information Infrastructure
Facility locations of Seven-Eleven Japan are selected with reference to the principle of market dominance. More new stores appear in those areas where there is a cluster of Seven-Eleven Japan stores to guarantee the effective distribution and rapid provision of products. Inventory management and transportation are based on the work of distribution centers and the provision of many goods. In this context, regional merchandising guarantees a focus on customers’ needs.
The company works to decrease the number of used vehicles, but the increase in productivity is observed (Chopra 7). Organization of the work of stores, suppliers, manufacturers, and distribution centers, and transportation are based on the implemented Total Information System. This network allows for ordering and communicating between store managers and distribution centers.
Distribution Centers and Direct Store Delivery
While using distribution centers in order to control the delivery of products, Seven-Eleven Japan guarantees that all stores will be provided with goods on time, the delivery will be properly scheduled, and customers’ needs will be addressed. It is important to use distribution centers for chains that include many convenience stores because of the necessity to organize deliveries several times a day (Chopra 6-7). Direct store delivery can be selected when a store needs certain products to be provided only a few times a week or when small stores choose to cooperate with local suppliers. In this case, it is almost impossible to address the problem of delays and increasing demands.
Seven-Eleven Supply Chain Structure with the Introduction of Cdcs
The benefits of using combined distribution centers are in possibility to control the whole supply chain and organize it according to the store’s needs, to monitor the amount and quality of goods, and to increase the productivity related to the workload and transportation. Furthermore, combined distribution centers allow for focusing on the particular needs of customers because of the ability to regulate the amount of proposed fresh products, cooked products, or manufactured goods.
However, the disadvantage of such an approach are in the necessity to adapt the distribution system applied in Japan to the requirements of the US market (Chopra 8). It is possible to state that combined distribution centers are more difficult to manage in comparison to centers organized in Japan. Furthermore, combined distribution centers in the context of the US market can be discussed as less appropriate than the direct store delivery system.
Works Cited
Chopra, Sunil. Seven-Eleven Japan Co. Battle Creek: Kellogg School of Management, 2005. Print.