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TitleSeven Eleven
TagsSupply Chain Inventory Supply Chain Management Franchising Convenience Store
File Size138.4 KB
Total Pages22
Table of Contents
                            Seven Eleven
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About This Wiki
Wed5.30pm Leon Class Group C 3 - 7-Eleven
                        
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Page 1

Seven Eleven



TABLE OF CONTENT

1. EXECUTIVE SUMMARY

2. BACKGROUND

3. REASONS OF CHOOSING THIS ORGANIZATION

4. SCOPE

5. CURRENT SITUATION

6. SUPPLY CHAIN FEATURES

7.ISSUES IDENTIFIED

8. ANALYSIS OF CURRENT SITUATION

9. GAP ANALYSIS

10.RECOMMENDATIONS & IMPLEMENTATION

11.DISCUSSION AND CONCLUSION

12. REFERENCES

13.APPENDICES

i. SWOT Analysis

ii. GAP Analysis

iii. Interviews of two Seven Eleven Stores

Page 2

Executive Summary

Seven-Eleven is a worldwide famous brand in the retail area which provides great

convenience for the customers due to its successful performance in Supply Chain

Management (SCM). However, Seven-Eleven itself still has been facing a lot of challenge

such as its competitors have rushed to copy its operation mode. This report focuses on the

SCM of Seven-Eleven and aims to propose potential improvements for its whole supply

chain system. Firstly, it introduces the background of this company by collecting data about

its current situation and investigating for two stores which are located in Melbourne Australia

and identify the issues; then, using the SWOT analysis methodology to analyze its status quo

and using the GAP analysis to make sure the existent issues in the system which prevent it

perfectly performing. According to the reasonable analysis, the proposed recommendations

are as follows:

• Price restructuring

• Better forecasting methodology

• Optimizing distribution system

• Better inventory methodology

• Widening the customer base

• Increasing the average of product and the executive items

• Improving customer loyalty

• Focus on providing more convenience

• Company synergy

Finally, the report proposes some suggestions and implementations which aim to make the

recommendations could be implemented well in practical level.

In conclusion, though Seven-Eleven has led a trend to offer more convenience for customers,

it still needs to improve its supply chain and operation mode consistently then keeping its

leading position in the market. In our research, there still are some limitations in collecting

data due to company’s terms and conditions.

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quality of service,
frequent delivery times
for perishable products
costs high and etc.

The conflict objectives
of each point of the
supply chain.

Supplier relationship
building which make seven-
eleven gains the capabilities
of marketing and original
product development
(Nagayama and Weil 2004).

Long-term development
of relationships with the
suppliers as the fast
changing of industry
environment

Optimization the strategic
relationships with the
suppliers (manufacturers),
expand the original product
development to improve the
competitiveness

The unreliable information
system in forecasting.

The research and
development of
information technology
and more invest in the
technology area

More accurate and
intelligent of information
system

**See Appendix for more details**



RECOMMENDATIONS

1. PRICE RESTRUCTURING:

Australia has very competitive market for retail stores. Recent price wars have led to
consequences that are very clear, on the verge of shutting down or liquidation. Even
consumer adopt careful spending habits.

In Seven Eleven, as expected that the price was reasonably very high due to
transportation cost. It makes customers think many times before entering the store.
Sometimes, they even prefer to waste hours of their valuable time going to nearby
supermarkets rather than shop at Seven Eleven.

However, it can be inferred from the interview that replenishments are not done on daily
or regular basis. Whenever there are shortages of stocks, it can easily be purchased from
nearby C-Store. Hence there is a margin to decrease the profit per item, thereby
increasing the sales leading to better turnover.

Prices may be restructured in two ways:

(1) Comparative lower price to the present price

(2) Different price of the products in normal operating hours and a higher pricing during
closing period of other retail stores.

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2. BETTER FORECASTING METHODOLOGY:
The present forecasting methodology is not enough trustworthy and reliable, which has a
scope of improvement. Store manager does not takes into account much of POS data because
it does not take into considerations variable factors such as season, upcoming new products,
promotions , etc.

Seven Eleven have relatively smaller store size. So the customer pattern can be easily
recorded (age-groups, frequently visiting customers or groups) by the operating store-
person. Later it can be analysed by manager and store-person to understand the causatives of
variation in the demand which thereby will result into better forecasting, eliminating
intuition or guess-work.

3. OPTIMIZING DISTRIBUTION SYSTEM

There are many Seven Eleven franchises located city. They have different delivery timings.

It can take advantage of better technology/IT system to reduce its store clutter, reduce total
delivery thereby improving effectiveness and cost reduction

4. BETTER INVENTORY MANAGEMENT

Seven Eleven store can manage their inventory by taking into consideration "Economic
Order Quantity"model. Total inventory cost can be kept at the minimum, if optimum order
size is calculated. As it can be observed from the figure that total cost constitutes of ordering
cost and inventory carrying cost.



Figure: Inventory Holding and Order cost ( Atrill, P, 2008)

5. WIDENING THE CUSTOMER BASE

Seven Eleven has been unable to target customers other than busy people or youngsters. It
can give certain discounts to pensions or old people. As a result there will be more
circulation of productions leading to increase in its turnover

6. INCREASING THE VARIETY OF PRODUCTS AND THE EXCLUSIVE ITE MS

When someone enters Seven Eleven, he buys two things. So by increasing the variety of
products, Seven Eleven can attract different types of customers.

7. IMPROVING CUSTOMER LOYALITY

It has been observed that most customers purchase when they are really in hurry and have no
other option. Seven Eleven should start loyalty card system by which after certain amount of
purchases they may get certain amount of discounts or privileges. It would attract customers
who are near Seven Eleven and are nearby other stores. It would also help them to study
customer purchasing behavior and better forecasting can be made or Bullwhip Effect could
be decreased.

Page 21

By keeping the store clean, friendly-service, fast service and informing the customers
about latest promotions.


Q13. What kinds of products sells most and which ones least? Name atleast 5 each.

Most: Smokes, Drinks, Chocolates, Slurpy, Milk

Least: Washing Powder, Soaps, Grocery.



Q14. Why don’t you remove the least selling products?

It helps in generating new customers and retaining some. It is required.


Q15. What does he think about exclusive products that are there in 7/11?

Such as ONE DOLLAR COFFEE, it brings the customers inside the store, it gives us the
opportunity to sell them more products.



Q16. Are there any other services that you provide?

a) Metcard; Money-Transfer; ATM; Tats lotto; Mobile Recharges.

b Q17. Do you rely on Point of Sale data to order stocks?



We do not consider much of POS data while ordering our stocks. It has led to confusion in
the past. We also look in to factors such as seasonal demand, past experiences, promotions,
etc.

Q18. Any Suggestions that can improve the business? Do you think that there is margin
to decrease the price considering some of the products that you sell have nearly double
the price of that of Coles or Safeway?

Our primary objective is give our customers a fast and good service. We are also open 24
hours a day. Since we are the only players some of these times, we would like to improve our
profit. Else, I think the best practice is going on.

(2) Seven-eleven (King Street, Melbourne)

INFERENCE FROM THE INTERVIEW
(a) They have delivery for three times per week which are Monday's, Tuesday's and Friday's
evening. It can avoid the rush hour which may reduce the time and cost. On Monday and

Page 22

Friday, the supplier deliver many drinks, milk, sandwiches, fresh fruit which are sold well.
On Tuesday, they just supply newspaper and magazine. When some items are close to be
stock out, the manage will order them and they will come in this three days. Using this
methods, the manager can effectively control the quantity of each item and the phenomenon
of stock out is difficult to happen.
It is notable that in public holiday, there is no delivery. The stock out is easy to happen in
these days.
(b) According to expired items, they have own method. They will scan the items and then
return them to the suppliers. If the item is fruit or other fast food, they all need to be scan and
thrown away. When the item almost expires, the staff will decrease the price to try to sell. It
is a good sales promotion.
(c) 7-11 has more than 100 items in each store. Drinks, pie, chips and slurpee are sold well
and 1 dollar coffee is best-sell which shows two things:1, the target of customers are young
people and business man; 2, the price is an important fact of people's choice. The unsalable
items are living items because they have higher price than supermarket, although it depend on
location.





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• Creation Date: 04/08/11 16:05

Wed5.30pm Leon Class Group C 3 - 7-Eleven

• Group Report Peer Evaluation
• Seven Eleven



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