Responsiveness desired Stock Keeping Unit so the products
Responsivenessknown as the supply chain ability to respond within a proper timeframe towardscustomer demand or changes in the market. There are several ways forconvenience store in order to show their responsiveness to customers as done bySeven Eleven Japan as follow:· Increasethe number of distribution center, vendor, or stores in potential location inorder to expand the market and be able to fulfill more customer needs. Moreover,more facilities would likely reduce the distance of customers into the storeswhich will increase the visiting frequency of customers into the stores. Highcost investment and maintenance cost to build and maintain all the stores werethe risk for this decision.
· Createrapid replenishment (delivery capacity) to meet more customer demands. Despitethe high cost for transport with larger capacity, there are others additionalcost for loading and docking. Another risk is the probability of uncertaintywill increase if the delivery products in huge capacity is kind of food or beverageswhich need special treatment and easily going stale.· Increasethe number of inventory at desired Stock Keeping Unit so the products statuswill always available. Even though this method is quite helpful to maintain theproducts stocks but the inventory cost is quite high and it needs extra spaceof warehouse which may also have a bad impact if the products were kept is aseasonal products or customer will only seek these product on specificsituation. · Develop anintegrated information system between stakeholders (vendor, distributioncenter, store manager, customer) to make the information flow process becomefaster and more efficient. Uncertainty will possibly occur if there is anytechnical problem on the network or the user which lead to incompatibility ofdemand and supplies. Micro-matchsupply and demand strategy using rapid replenishment that Seven Eleven Japanattempt were done within a timeframe with the number of delivery that has beenset by default based on forecasting analysis conducted previously.
The riskoccurs if there is a forecasting error and communication error which makesdemand and supplies are not matched. These problems will make inventoryexcesses or shortages occur. For instance, if suddenly there is high demand occurfrom a group of tourists on holiday season which possible to reduce the storesstock drastically while the replenishment schedule is still need to wait at thetime, which result to the products availability for other customer.Anotherproblem arises if the shipping time were delayed which cause massive complaintsfrom customers as the effect of unsatisfied service and also the next shippingschedule will be chaos.
Seven Eleven Japan choices will beexplained briefly below:· Facility LocationExpansionpolicy with market dominance strategy where Seven Eleven stores Buildaround a cluster consist of 70 to 80 different stores supported by adistribution center and able to fulfill huge number of customer surrounding.The stores location that close to each other will make the shipping facility(such as truck) easier to deliver each stores order.· Inventory ManagementSevenEleven has a rapid replenishment cycle since it is controlled by customersdemand or order. There are only few products stored in the warehouse. The restof products are foods and beverages which needs to be delivered immediately sothat the products will still fresh until customers receive the products.
Thereare also seasonal products that needs to deliver directly by suppliers intoSeven Eleven stores through distributor because if it stored in the warehousefor too long, it will pass the specific season which makes the product will notbe salable anymore.· TransportationSuppliersprovides the products after receiving order from integrated store informationsystem. After going through manufacturing process, the products will bedelivered to distribution center based on the daily, weekly, or monthlyschedule that has been set by Seven Eleven manager in order to achieveeffective responsiveness with minimum cost.
· Information InfrastructureSevenEleven use the Total Information System which connects the head of company,stores, vendors, distribution center, and customers so the supply chain will bemore responsive and effective. This information system matches the supply anddemand data in order to achieve high responsiveness and lower production andreplenishment cost. Distribution center has several important roles forSeven Eleven such as reduce the store manager burden to check, count, andmanage the products transfer from factory to the store, especially when thecompany deliver some small order packages in a rapid cycle that will causetrouble for the manager if it is delivered for a couple of times. In thissituation, distribution center has a role to collect the product packages anddeliver the products to Seven Eleven retail stores so the manager will onlyfocus on maintaining and increasing services for customers. Moreover, themanager is able to handover the Seven Eleven system to distribution center forthem to run the system based on Seven Eleven desired standard. Direct Store Delivery more appropriate when thedelivery actually using the maximum capacity of shipping truck from themanufacturing into the retail store so the transportation cost will beminimized. It also able to be done if the products that were delivered isguaranteed matched according to the number, standard, and safety system thatowned by Seven Eleven itself.
Using Seven-Eleven as a place of inventory of goods aswell as place of goods by customers as a drop off in the nearest area on onlinedelivery system is the concept that 7dream applies. This concept led to thegreat success of 7dream because from the results of surveys conducted oncustomers that collected from the case study, they prefer to take the goodsthey buy in the Seven-Eleven area nearby and shipped with this way rather thandelivered directly to the home address. It also can push the cost delivery package with lower than it does,yet there are also some consideration with this delivering system where thepossibility of customers not picking up the goods as soon as possible which islead to the using up the storage space in there and it needs necessity prettymuch place for the package that are not offset by Seven Eleven store capacity. Interms of supply chain perspective, Japan is slightly more successful than inAmerica. Since Japan apply asystem or concept that use delivery network and frequency of Seven Elevenvisitors and it ensure that the bundles are not involving significant storerack space for quite a while and frequent customer visits to Seven Eleven keepthe goods on the inventory quickly taken.
Use of this existing network inaddition to reducing cost is also a point of 7dream success in Japan. This isprobably not happened in the United States of America due to the cultural differencesand traditions of society. Implementation of Japan’s Seven-Eleven supplychain structure to Seven Eleven America can be done but will not be exactly thesame as its supply chain structure because the supply chain structure of USA cannever be precise as Japan. There will be many handicaps encountered whenimplementing the Japanese Seven-Eleven supply chain in America due todifferences in organizational culture in both regions and most likely supplychain will not run normally.
Otherthan that, there is additionally a distinction amongst Japanese and Americantradition and Seven-Eleven is not just a company that dominates the Americanregion like Japan but there are still companies like Seven-Eleven which likewiserule in the American zone. This is what affects the level of supply chainsuccess depends on many factors.Yet, the implementation of Japan’s Seven-Elevensystem in America is also possible despite of the transportation level inAmerica and Japan is different but it has proven to be a real success in Japan.Hybrid system can be done to adjust the system, which has been done in someareas in America.
Pros: The advantage of having an outsourced distributor that replenishthe stores is at the cost. It decreased costs required for material or itemtransportation and representative financing of labor cost for the distributionsystem. This also greatly affects incredibly influences the plan of themanufactured framework, since it enables the organization to quicken the streamof items, operations, funds and the absence of any third party intervention.
Cons: The most troublesome first thing fromoutsourced distributors is the loss of full control of the flow of products,operations, and assets. And furthermore the troublesome of integration ofsystems that have been built before by the company.