Seven-Eleven Japan Co., Ltd. is considered to be one of the world’s largest chains of the retail convenience stores. The network of its shops is located in 18 countries and includes over 48,300 stores in Japan, the USA, Sweden, Mexico, Canada, Denmark, Singapore, Australia, China, Indonesia, the Philippines, Hong Kong, Taiwan, Malaysia and Thailand (Armental). However, it should be mentioned that the largest number of SE stores is placed in Japan (Armental). To be precise, 17,491 of the more than 50,000 stores around the world are situated in Japan, while more than 1,500 of them are located in Tokyo (Armental). The merchandise in the Japanese stores is different from the US stores in the variety of goods and services. They offer not only food, drinks and magazines but also a large selection of CDs with games, music, and movies.
Being established in 1973, the first Tokyo store was opened in 1974 (Chopra), and the following period has proved to be the period of SEJ’s phenomenal growth and development. Nowadays based on the estimation of the operating income as well as the number of stores, some say that Seven-Eleven Japan is the largest retailer in Japan. Essentially, it has been estimated that each citizen of Japan visits Seven-Eleven stores approximately 15 times in a year (Chopra). The following paper is aimed to provide the overview of the key advantages of Seven-Eleven chain, defining the SEJ approaches to the company’s development and improvement. Additionally, the paper will cover the competitive advantages of the company’s supply management in the spheres of material handling, process design, information systems as well as of the value-added services.
Competitive Advantages of Seven-Eleven Japan
The extensive development of Seven-Eleven chain is proven to be a result of its efficient franchise strategy, as in regards to the main company as to the franchised stores owned by the third party companies. As such, the operational strategy of Seven-Eleven is based on the dominant approach. The company’s market presence and the efficient distribution system are built with the usage of the 50 to 60 stores` cluster approach.
Thus, the main competitive advantages of Seven-Eleven chain would include:
- The high level of the awareness among the potential customers.
- The efficient logistics and distribution.
- The high rate of advertising activities.
- The limited access of the competitors into the areas dominated by Seven-Eleven.
In addition, the competitive advantages of Seven-Eleven refer to the functionality of the company’s responsibilities towards the franchises. Seven-Eleven assures the efficiency of the merchandise and supply development, the operation of the franchises’ cost systems, advertising, accounting and activities related to the remodeling and installation of facilities. Also, Seven-Eleven covers 80% of the franchises’ utility costs. Thus, the abovementioned as well as the assortment of more than 3,000 SKU’s allows the stores of Seven-Eleven Japan to hold the leading position on the convenience stores’ market (Chopra).
Since the moment of the company’s establishment, Seven Eleven Japan has strived to simplify its supply management operations through the implementation of the advanced information technologies. Consequently, the usage of the comprehensive store information system in each store was supposed to be one the keys to the company’s success. The Integrated Services Digital Network (ISDN) is the information system of Seven Eleven Japan that links suppliers with the distribution centers, meanwhile increasing the efficiency of the internal and external operations. The system links more than 5,000 stores in the united network and each year Seven Eleven Japan spends significant financial resources to assure its constant modernization and improvement. The usage of ISDN helps Seven Eleven Japan immediately collect and receive data related to the changes at the points of sale (POS). In addition, the modern range of the informational technologies used at Seven Eleven Japan includes the graphic order terminals (Harrison et al.), the scanner terminals, the main store computer linked to the ISDN as well as the POS registers.
All of those devices and services are computer-operated and allow the company to collect information received from the customers as well as predict the likelihood of the further orders and customers’ trends.
The modified distribution system of Seven-Eleven is based on the precise linkage of the supply chain to the specific product categories. Due to the fact that the information system is based on the ISDN, the distribution centers of Seven-Eleven manage and track sales of the offered products and provide the replacement of the necessary products in the shortest periods. The usage of the such a system helps forecast the sales and assure the appropriate timing of the delivery. At the moment, Seven-Eleven provides the three-times-a-day delivery of all most popular products such as rice, bread, and other daily products. In other words, the flexibility of the distribution system helps the company schedule the delivery according to the customers’ demands. Moreover, the system of delivery and material handling assists Seven-Eleven Japan in avoiding unnecessary warehousing and decreasing the costs related to the overstock or oversales. In addition, the usage of the efficient material handling system allowed Seven-Eleven to use only 11 vehicles required for daily delivery of each store, significantly reducing the delivery costs. So to say, the distribution centers allow the company to assure the total control of the outgiving process with the minimal cost.
The range of goods of Seven-Eleven stores is located in more than 3,000 stock keeping units (SKU). The range of the SKUs differs in regards to the specifics of the customers’ demand in the local area. 90% of Seven-Eleven stores are characterized by 24 hour basis of work. Each SKU provided by the store is assigned into the specific category, which assures its appropriate usage and delivery. For example, due to the required food temperature, the classification defines the chilled temperature (5°C) items, the hot temperature (20°C) items and the frozen items (-20°C). The usage of these categories provides the timely delivery of the high quality products to the customers (Chopra).
The performance of Seven-Eleven stores is characterized by the constant desire of the company to diversify the range of the products and services offered by the chain through the introduction of the additional value-added services.
Nowadays, the company can be characterized by the availability of the following value-added services:
- The provision of the customers with the international calling cards.
- The availability of the UPS Express services.
- The usage of the cash cards.
- The provision of the photo developing services.
- The proposition of the parking coupons, Transitlink Cards, Phone Cards (local & IDD use) etc.
The constant analysis and control of the company performance is an important part of the efficient management. The implementation of the analytical approach to the company’s productivity control can assure the understanding of the key factors that influence the position of company in the market and define the probability of its success. The constantly changing market environment and challenging customers` requests require the non-standard decisions and specific services based on the coordinated work of the whole team. The provided overview of Seven-Eleven Japan performance proves that the company’s success is significantly contributed by the efficient system of logistics, including material handling, process design, information systems as well as the availability of the value-added services. The efficiency of the performance of Seven-Eleven Japan is the result of the company’s orientation on the expansion as much as on the in-depth development. Basing on the forecast of the customers’ demand, the company provides the narrowing of the product range along with the increase of its quality performance. Seven-Eleven Japan constantly introduces and implements the structural rationalization activities, including the implementation of the modern distribution structure through the joint ownership of information. Its productivity can be considered as the unique alliance of the production, distribution and marketing. Basically, the key to the successful operation of Seven-Eleven Japan lies in the business transition from the logic of the seller to the logic of the buyer, meaning the maximum orientation of the business operations onto the customers’ demand and needs. The company sets the priority of quality to quantity through the implementation of the flexible and well-developed information system and the effective system of logistics, production and delivery. All in all, Seven-Eleven Japan has created the unique corporate values aimed to assure the highest level of distinctiveness from other companies.
Hence, Seven-Eleven Japan Co., Inc appears to be the perfect example of the successful performance based on the efficient logistics and supply chain management. The implementation of the updated and innovative approaches to the supply and distribution of goods helped the company avoid the costs related to the overstock or oversales. In fact, Seven-Eleven Japan represents the perfect interaction between production, distribution, and marketing.