KELO SEVEN-ELEVEN JAPAN CO seasonal demand and part to new products. When a new product was introduced, the decision whether to continue stocking it was made within the first three weeks. Each item on the shelf contributed to sales and margin and did not waste valuable shelf space Seven-Eleven's distribution System The Seven-Eleven distribution system tightly linked the entire supply chain for all product categories. The Seven-Eleven distribution centers and the information network played a key role in that regard. The major objective was to carefully track sales of items and offer short eplenishment cycle times. This allowed a store manager to accurately forecast sales corresponding to each order Since March 1987, Seven-Eleven had offered three-times-daily store delivery of all rice dishes(which comprised most of the fast-food items sold ). Bread and other fresh food were delivered twice a day. The distribution system was flexible enough to alter delivery schedules depending on customer demand For example, ice cream was delivered daily during the summer but only three times a week at other times. The replenishment cycle time for fresh and fast-food items had been shortened to less than 12 hours. a store order for rice balls by 10: 00 a.m. was delivered before the dinner rush As discussed earlier, the store manager used a graphic order terminal to place an order. Al tores were given cut-off times for breakfast, lunch, and dinner ordering. When a store placed an order, it was immediately transmitted to the supplier as well as the distribution center. The supplier received orders from all Seven-Eleven stores and started production to fill the orders The supplier then sent the orders by truck to the distribution center. Each store order was separated so the distribution center could easily assign it to the appropriate store truck using the order information it already had. The key to store delivery was what Seven-Eleven called the combined delivery system. At the distribution center, delivery of like products from different suppliers(for example, milk and sandwiches) was directed into a single temperature-controlled truck. There were four categories of temperature-controlled trucks: frozen foods, chilled foods room-temperature processed foods, and warm foods. Each truck made deliveries to multiple retail stores. The number of stores per truck depended on the sales volume. all deliveries were made during off-peak hours and were received using the scanner terminals. The system worked on trust and did not require the delivery person to be present when the store personnel scanned in the delivery. That reduced the delivery time spent at each store This distribution system enabled Seven-Eleven to reduce the number of vehicles required for daily delivery service to each store, even though the delivery frequency of each item was quite high. In 1974, 70 vehicles visited each store every day. In 1994, only ll were necessary. This dramatically reduced delivery costs and enabled rapid delivery of a variety of fresh foods As of February 2004, Seven-Eleven Japan had a total of 290 dedicated manufacturing plants throughout the country that only produced fast food for Seven-Eleven stores. These items were distributed through 293 dedicated distribution centers(DCs)that ensured rapid, reliable delivery None of these DCs carried any inventory; they merely transferred inventory from supplier trucks to Seven-Eleven distribution trucks. The transportation was provided by transfleet Ltd,a company set up by Mitsui and Co. for the exclusive use of Seven-Eleven Japan. The outline of the combined distribution system is shown in Exhibit 5 KELLOGG SCHOOL OF MANAGEMENTKEL026 SEVEN-ELEVEN JAPAN CO. seasonal demand and part to new products. When a new product was introduced, the decision whether to continue stocking it was made within the first three weeks. Each item on the shelf contributed to sales and margin and did not waste valuable shelf space. Seven-Eleven’s Distribution System The Seven-Eleven distribution system tightly linked the entire supply chain for all product categories. The Seven-Eleven distribution centers and the information network played a key role in that regard. The major objective was to carefully track sales of items and offer short replenishment cycle times. This allowed a store manager to accurately forecast sales corresponding to each order. Since March 1987, Seven-Eleven had offered three-times-daily store delivery of all rice dishes (which comprised most of the fast-food items sold). Bread and other fresh food were delivered twice a day. The distribution system was flexible enough to alter delivery schedules depending on customer demand. For example, ice cream was delivered daily during the summer but only three times a week at other times. The replenishment cycle time for fresh and fast-food items had been shortened to less than 12 hours. A store order for rice balls by 10:00 a.m. was delivered before the dinner rush. As discussed earlier, the store manager used a graphic order terminal to place an order. All stores were given cut-off times for breakfast, lunch, and dinner ordering. When a store placed an order, it was immediately transmitted to the supplier as well as the distribution center. The supplier received orders from all Seven-Eleven stores and started production to fill the orders. The supplier then sent the orders by truck to the distribution center. Each store order was separated so the distribution center could easily assign it to the appropriate store truck using the order information it already had. The key to store delivery was what Seven-Eleven called the combined delivery system. At the distribution center, delivery of like products from different suppliers (for example, milk and sandwiches) was directed into a single temperature-controlled truck. There were four categories of temperature-controlled trucks: frozen foods, chilled foods, room-temperature processed foods, and warm foods. Each truck made deliveries to multiple retail stores. The number of stores per truck depended on the sales volume. All deliveries were made during off-peak hours and were received using the scanner terminals. The system worked on trust and did not require the delivery person to be present when the store personnel scanned in the delivery. That reduced the delivery time spent at each store. This distribution system enabled Seven-Eleven to reduce the number of vehicles required for daily delivery service to each store, even though the delivery frequency of each item was quite high. In 1974, 70 vehicles visited each store every day. In 1994, only 11 were necessary. This dramatically reduced delivery costs and enabled rapid delivery of a variety of fresh foods. As of February 2004, Seven-Eleven Japan had a total of 290 dedicated manufacturing plants throughout the country that only produced fast food for Seven-Eleven stores. These items were distributed through 293 dedicated distribution centers (DCs) that ensured rapid, reliable delivery. None of these DCs carried any inventory; they merely transferred inventory from supplier trucks to Seven-Eleven distribution trucks. The transportation was provided by Transfleet Ltd., a company set up by Mitsui and Co. for the exclusive use of Seven-Eleven Japan. The outline of the combined distribution system is shown in Exhibit 5. KELLOGG SCHOOL OF MANAGEMENT 7