1. Supply Chain Management Introduction

2. Outline What is supply chain management?
A supply chain strategy framework
Components of a SCM
Major obstacles and common problems
Seven Eleven Japan
Notes:

3. Traditional View: Supply Chains in the Economy (1990, 1996)
Freight Transportation $352, $455 B
Transportation manager in charge
Transportation software
Inventory Expense $221, $311 B
Inventory manager in charge
Inventory software
Administrative Expense $27, $31 B
Logistics related activity 11%, 10.5% of GNP
Transportation and inventory managers
Notes: Traditionally logistics and supply chain management have been measured in terms of transportation and inventory costs and the administration required to manage both. Traditionally firms would have an inventory manager and a transportation manager. This view is very narrow and causes significant problems in the proper functioning of the supply chain.
$898 B spent domestically for SC activities in 1998.
$1,160 B of inventory in the US economy in the early 2000s.

4. Traditional View: Cost breakdown of a manufactured good
Profit 10%
Supply Chain Cost 20%
Marketing Cost 25%
Manufacturing Cost 45%
Profit
Supply Chain
Cost
Marketing
Manufacturing
Notes: Key message here is that logistics costs are a significant fraction of the total value of a product. The problem here is that this a purely cost based view of the supply chain and drives a firm to simply reducing logistics costs. This is an incomplete picture.
Effort spent for supply chain activities are invisible to the customers.

5. What can Supply Chain Management do?
Estimated that the grocery industry could save $30 billion (10% of operating cost) by using effective logistics and supply chain strategies
A typical box of cereal spends 104 days from factory to sale
A typical car spends 15 days from factory to dealership
Faster turnaround of the goods is better?
Laura Ashley (retailer of women and children clothes) turns its inventory 10 times a year five times faster than 3 years ago
inventory is emptied 10 times a year, or an item spends about 12/10 months in the inventory.
To be responsive, it relocated its main warehouse next to FedEx hub in Memphis, TE.
National Semiconductor used air transportation and closed 6 warehouses, 34% increase in sales and 47% decrease in delivery lead time.

6. Magnitude of Supply Chain Management
Compaq estimates it lost $0.5 B to $1 B in sales in 1995 because laptops were not available when and where needed
P&G (Proctor&Gamble) estimates it saved retail customers $65 M (in 18 months) by collaboration resulting in a better match of supply and demand
When the 1 gig processor was introduced by AMD (Advanced Micro Devices), the price of the 800 meg processor dropped by 30%

7. Importance of SCM understood by some
AMR Research:
"The biggest issue enterprises face today is intelligent visibility of their supply chains-both upstream and down"
Forrester Research:
"Companies need to sense and proactively respond to unanticipated variations in supply and demand by adopting emerging technologies such as intelligent agents. To boost their operational agility, firms need to transform their static supply chains into adaptive supply networks”
Gartner Group:
“By 2004, 90% of enterprises that fail to apply supply-chain management technology and processes to increase their agility will lose their status as preferred suppliers”
Open ended statement. Agility can be increased continuously.

8. Top 25 Supply Chains
AMR research publishes reports on supply chains and other issues.
The Top 25 supply chains report comes out in Novembers.
The table on the right-hand side is from The Second Annual Supply Chain Top 25 prepared by Kevin Riley and Released in November 2005.

9. SCM Generated Value Minimizing supply chain costs
while keeping a reasonable service level
customer satisfaction/quality/on time delivery, etc.
This is how SCM contributes to the bottom line
SCM is not strictly a cost reduction paradigm!

10. A picture is better than 1000 words
A picture is better than 1000 words! How many words would be better than 3 pictures?
- A supply chain consists of
Supplier
Manufacturer
Distributor
Retailer
Customer
Upstream
Downstream
SUPPLY SIDE
DEMAND SIDE
- aims to Match Supply and Demand, profitably for products and services
- achieves
The right
Product
Higher
Profits
Time
Customer
Quantity
Store
Price = +

11. Detergent supply chain:
P&G or other
manufacturer
Third
party DC
Albertson’s
Supermarket
Customer wants
detergent
Plastic cup
Producer
Tenneco
Packaging
Chemical
manufacturer
(e.g. Oil Company)
Notes:
Supply chain involves everybody, from the customer all the way to the last supplier.
Key flows in the supply chain are - information, product, and cash. It is through these flows that a supply chain fills a customer order. The management of these flows is key to the success or failure of a firm. Give Dell & Compaq example, Amazon & Borders example to bring out the fact that all supply chain interaction is through these flows.
Chemical
manufacturer
(e.g. Oil Company)
Paper
Manufacturer
Timber
Industry

12. Flows in a Supply Chain Supplier Customer Material Information Funds
The flows resemble a chain reaction.

13. SCM in a Supply Network
Supply Chain Management (SCM) is concerned with the management and control of the flows of material, information, and finances in supply chains.
Supply
Demand
Products and Services
Cash
Supply Side OEM Demand Side
THAILAND INDIA MEXICO TEXAS US
N-Tier Suppliers Suppliers Logistics Distributors Retailers
Information
The task of SCM is to design, plan, and execute the activities at the different stages so as to provide the desired levels of service to supply chain customers profitably

14. Importance of Supply Chain Management
In 2000, the US companies spent $1 trillion (10% of GNP) on supply-related activities (movement, storage, and control of products across supply chains). Source: State of Logistics Report
Tier 1 Supplier
Manufacturer
Distributor
Retailer
Customer
Inefficient logistics
High stockouts
Ineffective promotions
Frequent Supply shortages
High landed costs to the shelf
High inventories through the chain
Low order fill rates
Glitch-Wrong Material, Machine is Down – effect snowballs
Eliminating inefficiencies in supply chains can save millions of $.

15. A Generic Supply Chain Sources: plants vendors ports Regional
Warehouses:
stocking
points
Field
Warehouses:
stocking
points
Customers,
demand
centers
sinks
Supply
A customer is a supplier for some other company. A supplier is a customer for some other company. Not all pieces of a supply chain belongs to the same company.
Inventory
Purchase
Inventory
Transportation

16. Cycle View of Supply Chains
Customer Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Any cycle
0. Customer arrival
1. Customer triggers an order
2. Supplier fulfils the order
3. Customer receives the order
The supply chain is a concatenation of cycles with each cycle at the interface of two successive stages in the supply chain. Each cycle involves the customer stage placing an order and receiving it after it has been supplied by the supplier stage.
One difference is in size of order. Second difference is in predictability of orders - orders in the procurement cycle are predictable once manufacturing planning has been done.
This is the predominant view for ERP systems. It is a transaction level view and clearly defines each process and its owner.

17. Push vs Pull System
What instigates the movement of the work in the system?
In Push systems, work release is based on downstream demand forecasts
Keeps inventory to meet actual demand
Acts proactively
e.g. Making generic job application resumes today (e.g.: exempli gratia)
In Pull systems, work release is based on actual demand or the actual status of the downstream customers
May cause long delivery lead times
Acts reactively
e.g. Making a specific resume for a company after talking to the recruiter

18. Push/Pull View of Supply Chains
Procurement,
Customer Order
Manufacturing and
Cycle
Replenishment cycles
PUSH PROCESSES
PULL PROCESSES
In this view processes are divided based on their timing relative to the timing of a customer order. Define push and pull processes.
They key difference is the uncertainty during the two phases.
Give examples at Amazon and Borders to illustrate the two views
Customer
Order Arrives
Push-Pull boundary

19. Examples of Supply Chains
Dell / Compaq
Dell buys some components for a product from its suppliers after that product is purchased by a customer. Extreme case of a pull process
Zara, Spain’s answer to Italy’s Benetton
Sells apparel with a short design-to-sale cycle, avoids markdowns.
Toyota / GM / Volkswagen, in the course notes
McMaster Carr / W.W. Grainger, sell auto parts
Amazon / Barnes and Noble
Frozen food industry/Fast food industry/5 star restaurants
Internet shopping: Webvan / Peapod
Dell has three production sites worldwide and builds to order. Compaq does both. Consider some decisions involved - where to locate facilities? How to size them? Where is the push/pull boundary? What modes of transport to use? How much inventory to carry? In what form? Where to source from?

20. SCM Strategy

21. Mission-Strategy-Tactics-Decisions
Mission, Mission statement
The reason for existence of an organization
Strategy
A plan for achieving organizational goals
Tactics
The actions taken to accomplish strategies
Operational decisions
Day to day decisions to support tactics

22. Life Strategy for Ted Mission: Live a good life
Ted is an undergrad. He would like to have a career in business, have a good job, and earn enough income to live comfortably
Mission: Live a good life
Goal: Successful career, good income
Strategy: Obtain a master’s degree
Tactics: Select a college and a concentration
Operations: Register, buy books, take courses, study, graduate, get a job

23. Linking SC and Business Strategy
Competitive (Business) Strategy
Product Development Strategy
Portfolio of products
Timing of product introductions
Marketing Strategy
-Frequent discounts
-Coupons
Supply Chain Strategy
New
Product
Development
Marketing
and
Sales
Operations
Distribution
Service
Competitive strategy: a set of customer needs that a company emphasizes and concentrates on while producing / servicing. Compare Wal-Mart, 7 eleven, Sam’s club.
Finance, Accounting, Information Technology, Human Resources

24. Strategies: Product Development
It relates to Technologies for future operations (via patents) and Set of products/services
Be the technology leader
IBM workstations
Offer many products
Dell computers
Offer products for locals
Tata’s Nano at $2500= rupees
Production at Singur, West Bengal, India;
l x w x h=3.1 x 1.5 x 1.6 meters;
Top speed: 105km/hr;
Engine volume 623 cc;
Mileage 50 miles/gallon;
Annual sales target 200,000.

25. Strategies
Marketing and sales strategy relates to positioning, pricing and promotion of products/services
e.g. Never offer more than 40% discount
e.g. EDLP = every day low price
At Wal-Mart
e.g. Demand smoothing via coupons
BestBuy
Supply chain management strategy relates to procurement, transportation, storage and delivery
e.g. Never use more than 1 supplier for every input
e.g. Never expedite orders just because they are late
e.g. Always use domestic suppliers within the sales season not in advance.

26. Fitting the SC to the customer or vice versa?
Understand the customer Wishes
Understand the Capabilities of your SC
Match the Wishes with the Capabilities
Challenge: How to meet extensive Wishes
with limited Capabilities?

27. Achieving Strategic Fit: Consistent SCM and Competitive strategies
Fit SC to the customer
Understanding the Customer
Range of demand, pizza hut stable
Production lot size, seasonal products
Response time, organ transplantation
Service level, product availability
Product variety
Innovation
Accommodating
poor quality
Implied (Demand)
Uncertainty for SC
Implied trouble
for SC

28. Contributors to Implied Demand Uncertainty
Commodities Detergent
Long lead time steel
Customized products High Fashion Clothing
Emergency steel,
for maintenance/replacement
Price
Customer Need
Responsiveness
Low
Implied Demand Uncertainty
High
Short lead times, product variety,
distribution channel variety, high rate of innovation and
high customer service levels all increase
the Implied Demand Uncertainty

29. Understanding the Supply Chain: Cost-Responsiveness Tradeoff
Responsiveness (in time, high service level and product variety)
High
Efficiency frontier
Inefficient
Impossible
Fix responsiveness
Inefficiency Region
Low
Cost in $
High
Low
Why decreasing slope (concave) for the efficiency frontier?

30. Achieving Strategic Fit: Wishes vs. Capabilities
Responsive (high cost) supply chain
Gourmet dinner
<High margin>
Responsivenesspectrum
Zone of Strategic Fit
Lunch buffet
<Low margin>
Efficient
(low cost)
supply chain
Certain demand
Implied uncertainty spectrum
Uncertain demand

31. Loosing the strategic fit: Webvan
Webvan started a merger with HomeGrocer in Sept 2000 and completed in May 2001.
Declared bankruptcy in July Why?
“Webvan was so behemoth that could deliver anything to anyone anywhere that it lost sight of a more mundane task: pleasing grocery customers day after day”.
Short to midterm cash mismanagement. Venture capital of $1.2 B run out.
Merger costs: duplicated work force, integration of technology, realignment of facilities.
Peapod has the same business model but more focused in terms of service and locations. It actually survives with its parent company Royal Ahold’s (Dutch Retailer) cash.
Delivers now at a fee of $6.95 within a day.

32. Top 10 Retailers Reported in 2008 – First 4
Source

33. Top 10 Retailers Reported in 2008 – First 5-10

34. Big retailers’ Strategy
Wal-Mart: Efficiency
Target: More quality and service
Carrefour: International, ambiance
K-Mart: Confused.
Squeezed between Target and Wal-Mart
Reliance on coupon sales
Do coupons stabilize or destabilize a Supply chain?
K-Mart and Sears merged in November Now called Sears Holdings.
K-Mart gets cash
Sears gets presence outside malls

35. Other Factors
Multiple products in a SC. Multiple customers for a given product
Separate supply chains or Tailored supply chains
e.g. Barnes and Noble: Retailing and/or e-tailing
Product and/or customer classes
e.g. UTD library loans books for 6 months (2 weeks) to faculty (students)
Customer segmentation by pricing
Competitors: more, faster and global
UTD online programs compete globally
Product life cycle (shortening)
SCM strategy moves toward efficiency and low implied uncertainty as products age
e.g. Air travel is becoming more efficient
e.g. Southwest airlines lead the drive for efficiency
e.g. Airbus announced A380 accommodating people on Jan 17, 2005.
e.g. Flat screen TV producer of AU Optronics of Taiwan was looking for ways to make its SC more efficient in June 2004.
Replacement sales
Selling to replace broken units.
e.g. AC replacement is about 50% of the market.
Macroeconomic factors for visibility
Forecasting Home Depot sales from S&P 500 price index.
Positive correlation is detected.

36. Achieving Strategic Fit over a Lifecycle
Responsive (high cost) supply chain
Zone of Strategic Fit
Efficient
(low cost)
supply chain
Certain demand
Uncertain demand

37. Integration Integration is the central theme in SCM
Building synergies by integrating business functions, departments and companies

38. Strategic Scope Suppliers Manufacturer Distributor Retailer Customer
Competitive Strategy
Product Dev. Strategy
Supply Chain Strategy
Strategic scope must cover all boxes, at least at the supply chain end. Each stage must have fit across its vertical boxes and supply chain strategy spanning all players. This fit allows the countering of multiple owners and helps avoid local optimization.
Marketing Strategy

39. Supply Chain Drivers and Obstacles

40. Drivers of Supply Chain Performance
How to achieve
Efficiency
Responsiveness
Supply chain structure
Inventory
Transportation
Facilities
Logistical
Drivers
How does a supply chain make the efficiency / responsiveness tradeoff and position at the appropriate point - using Inventory, Transportation, Facilities, and Information decisions.
Cross-
Functional
Drivers
Information
Sourcing
Pricing

41. 1. Inventory Convenience: Cycle inventory
No customer buys eggs one by one
Unstable demand: Seasonal inventory
Bathing suits
Xmas toys and computer sales
Randomness: Safety inventory
20% more syllabi than the class size were available in the first class
Compaq’s loss in 95
Pipeline inventory
Work in process or transit

42. Little’s law Long run averages = Expected values I = R . T
I=Pipeline inventory;
R=output per time=throughput;
T=delay time=flow time
Flow time? Thruput? Pipeline (work in process) Inventory?
10/minute
Spend 1 minute

43. 2. Transportation
Air
Truck
Rail
Ship
Pipeline
Electronic

44. 3. Facilities Production
Flexible vs. Dedicated
Flexibility costs
Production: Remember BMW: “a sports car disguised as a sedan”
Service: Can your instructor teach music as well as SCM?
Sports: A playmaker who shoots well is rare.
Inventory-like operations: Receiving, Prepackaging, Storing, Picking, Packaging, Sorting, Accumulating, Shipping
Job Lot Storage: Need more space. Reticle storage in fabs.
Crossdocking: Wal-Mart

45. 4. Information Role in the supply chain
The connection between the various stages in the supply chain
Crucial to daily operation of each stage in a supply chain
E.g., production scheduling, inventory levels
Role in the competitive strategy
Allows supply chain to become more efficient and more responsive at the same time (reduces the need for a trade-off)
Information technology
Andersen Windows
Wood window manufacturer, whose customers can choose from a library of 50,000 designs or create their own. Customer orders automatically sent to the factory.

46. Characteristics of the Good Information
Strategy
Analytical Models
$$$
Information
Accurate?
Accessible?
Up-to-date?
In the Correct form?
If not, database restricted ability. How difficult is it to import data into SAP?

47. Quality of Information
Information drives the decisions:
Good information means good decisions
IT helps: MRP, ERP, SAP, EDI
Relevant information?
How to use information?

48. Information Technology in a Supply Chain: Legacy Systems

49. Information Technology in a Supply Chain: ERP Systems
Strategic
Planning
Potential
ERP
Potential
Operational
ERP
ERP
Supplier
Manufacturer
Distributor
Retailer
Customer

50. Information Technology in a Supply Chain: Analytical Applications
Strategic
SCM
Planning
APS
Transport & Inventory
Dem Plan
Planning
Supplier
Apps
CRM/SFA
Transport execution &
MES
WMS
Operational
Supplier
Manufacturer
Distributor
Retailer
Customer

51. ERP Systems Wider focus
Push (MRP) versus Pull (demand information transmitted quickly throughout the supply chain)
Real-time information
Coordination and Information sharing
Transactional IT
Expensive and difficult to implement
About 25% of ERP installations are cancelled within a year
About 70% of ERP installations go over the budget

52. IT Push

53. Supply Chain Software Push See Top 100 under /articles.html
Source Kanakamedala,
Ramsdell, Srivatsan (2003).
McKinsey Quarterly, No 1.

54. 5. Sourcing Role in the supply chain Role in the competitive strategy
Set of processes required to purchase goods and services in a supply chain
Supplier selection, single vs. multiple suppliers, contract negotiation
Role in the competitive strategy
Sourcing is crucial. It affects efficiency and responsiveness in a supply chain
In-house vs. outsource decisions- improving efficiency and responsiveness
TI: More than half of the revenue spent for sourcing.
Cisco sources: Low-end products (e.g. home routers) from China.
Components of sourcing decisions
In-house versus outsource decisions
Supplier evaluation and selection
Procurement process:
Every department of a firm buy from suppliers independently, or all together.
EDS to reduce the number of officers with purchasing authorization.

55. 6. Pricing Role in the supply chain Role in the competitive strategy
Pricing determines the amount to charge customers in a supply chain
Pricing strategies can be used to match demand and supply
Price elasticity: Do you know yours?
Role in the competitive strategy
Use pricing strategies to improve efficiency and responsiveness
Low price and low product availability; vary prices by response times
Amazon: Faster delivery is more expensive
Components of pricing decisions
Pricing and economies of scale
Everyday low pricing versus high-low pricing
Fixed price versus menu pricing, depending on the product and services
Packaging, delivery location, time, customer pick up
Bundling products; products and services

56. Considerations for Supply Chain Drivers

57. Major Obstacles to Achieving Fit
SC is big:
Variety of products/services
Spoiled customer
Multiple owners (Procurement, Production, Inventory, Marketing) / multiple objectives
Globalization
Local optimization and lack of global fit

58. Major Obstacles to Achieving Fit
Dealing with Multiple Owners / Local Optimization
Information Coordination
Information sharing / Shyness / Legal and ethical issues
Contractual Coordination
Mechanisms to align local objectives with global ones
Coordination with (real) options
Rare in the practice
Without coordination, misleading reliance on metrics:
Average safety inventory, Average incoming shipment size, Average purchase price of raw materials, Revenue

59. Major obstacles to achieving fit
Instability and Randomness:
Increasing product variety
Shrinking product life cycles
Customer fragmentation: Push for customization, segmentation
Fragmentation of Supply Chain ownership: Globalization
Increasing implied uncertainty

60. Common problems
Lack of relevant SCM metrics: How to measure responsiveness?
How to measure efficiency, costs, worker performance, etc?
Poor inventory status information
Theft: Major problem for furniture retailers.
Transaction errors: Retailers with inaccurate inventory records
for 65% of SKUs
Information delays, dated information, incompatible info. systems
Misplaced inventory: 16% of items cannot be found at a major retailer
Spoilage: active ingredients in the products are losing their properties
Product quality and yield
Lack of visibility in SCs
Do you know the inventory your distribution centers hold?
Do you know the inventory your fellow retailer holds?

61. Common problems Poor delivery status information Poor IT design
Not knowing the order status
Poor IT design
Unreliable, duplicate data
Security problems: too much or too little
Ignoring uncertainties
“The flight from uncertainty and ambiguity is so motivated that we often create pseudocertainty.”
Nitin Nohra, HBR February 2006 issue, p.40.
Internal customer discrimination
Giving lower priority to internal customers than external customers
Poor integration
Elusive inventory costs
Accounting systems do not capture opportunity costs
SC-insensitive product design

62. Summary Supply Chain Introduction
Competitiveness / Business strategy / SCM strategy
Components
Inventory, Transportation, Facilities, Information, Sourcing, Pricing
Challenges

63. Seven Eleven Japan (SEJ)
A Case Study

64. Factual Information on Seven Eleven Japan (SEJ)
Largest convenience store in Japan with market value of $95 B. The third largest retail company in the world after Wal-Mart and Home Depot.
Established in 1974.
In 2000, total sales $18,000 M, profit $620 M.
Average inventory turnover time days.
Stock value increased by 3000 times from 1974 to 2000.
In 1985, there were 2000 stores in Japan, increasing by per year.
Return on equity 14% over
A SEJ store is about the half the size of a US 7-eleven store,
that is about 110 m2.
Sales:
Products
32.9% Processed food: drinks, noodles, bread and snacks
31.6% Fast food: rice ball, box lunch and hamburgers
12.0% Fresh food: diary products
25.3% Non-food: magazines, ladies stockings and batteries.
Services: Utility bill paying, installment payments for credit companies, ATMs, photocopying

65. More on SEJ More factual info:
Average sales about twice of an average US store
SKU’s offered in store: Over 3,000 (change by time of day, day of week, season)
Virtually no storage space
No food cooking at the stores
Japanese Images of Seven Eleven:
Convenient
Cheerful and lively stores
Many ready made dinner items I buy
Famous for its great boxed lunch and dinner
- On weekends, when I was single, I went to buy lunch and dinner
SC strategy:
Micro matching of supply and demand (by location, time of day, day of week, season)

66. Seven Eleven - Number of Stores
1999: 8,027
2004: 10,356

67. Seven Eleven - Net Sales (B Yen) Sales 1,963 B Yen in 2000

68. Seven Eleven - Pre tax Profit (B Yen)

69. Seven Eleven - Inventory turnover (days)

70. Information Strategy
Quick access to up to date information (as opposed to data):
In 1991, SEJ implemented Integrated Service Digital Network to link stores, headquarter, DCs and suppliers
Customer checkout process
Clerk records the customer’s gender, (estimated) age and purchased items. These Point of Sales (POS) data are transmitted to database at the headquarters.
Store hardware: Store computer, POS registers linked to store computer, Graphic Order Terminals, Scanner terminals for receiving
Daily use of the data
Headquarters aggregate the data by region, products and time and pass to suppliers and stores by next morning. Store managers deduce trend information.
Weekly use of the data
Monday morning, the CEO chairs a weekly strategy formulation meeting attended by 100 corporate managers.
Tuesday morning, strategies are communicated to Operation Field Counselors who arrive in Tokyo on Monday night.
Tuesday afternoon, regional elements (e.g. weather, sport events) are factored into the strategy. Tuesday nights, field counselors return back to their regions.

72. Information Analysis of POS Data
Sales for product categories over time
SKU (stock keeping unit)
Waste or disposal
10 day (or week) sales trend by SKU
Sales trends for new product
In the early 1990s, half-prepared fresh noodle sales were going up,
new fresh noodle products were quickly developed
Sales trend by time and day
Different sales patterns for different sizes of milk at different times of the day results in rearrangement of the milks in the fridge. Extreme store micromanagement.
Let us speculate: Flavored milks are put in front of the pure milks in the evening (or the morning?).
List of slow moving items
About half of 3000 SKUs are replaced by new ones every year

73. Facilities Strategy
Limited storage space at stores which have only m2 space
Frequent and small deliveries to stores
Deliveries arrive from over 200 plants.
Products are grouped by the cooling needs
Combined delivery system: frozen foods, chilled foods, room temperature and hot foods.
Such product groups are cross-docked at distribution centers (DC). Food DCs store no inventory.
A single truck brings a group of products and visits several stores within a geographical region
Aggregation: No supplier (not even coke!) delivers direct
The number of truck deliveries per day is reduced by a factor of 7 from 1974 to Still, at least 3 fresh food deliveries per day. Goods are received faster with the use of scanners.
Have many outlets, at convenient locations, close to where customers can walk
Focus on some territories, not all: When they locate in a place they blanket (a.k.a. clustering) the area with stores; stores open in clusters with corresponding DC’s.
844 stores in the Tokyo region; Seven Eleven had stores in 32 out of 47 prefectures in No stores in Kobe.
Success rate of franchise application <= 1/100

74. The Present and the Future
Is food preparation a good idea at 7-eleven locations?
e.g. Compare microwave heating vs. salad preparation.
Why SEJ does not allow direct delivery from suppliers to retailers?
Point out which of the following strategies can also be used in US (or Taiwan)
Information strategy
Facilities strategy
Discuss the differences between the Japanese and US (or Taiwanese) consumers with regard to
Frequency and amount of grocery purchase
Use of credit cards vs. cash for purchase
7-eleven inventory turnover rate is 50 in Japan and 19 in the USA.
7-eleven growing rapidly in the US so it aims to be a web depot in both the US and Japan. Does this make sense from a supply chain perspective?
Cost vs. Responsiveness
Business strategy
What is the risk of micro-matching strategy?
No direct deliveries to SEJ, what is the potential risk of this strategy if used in the USA?

75. Deloitte 2008 Global Retailers Survey
Excerpts from
Downloaded on Jan 30, 2008.