物流管理之 7-12供应链

1、.KelloggKellogg Graduate School of Management Northwestern UniversityOperationsLogistics an Supply Chain Management*;SEVEN-ELEVEN JAPAN CO.1Established in 1973, Seven-Eleven Japan set up its first store in May 1974, in Koto-ku,Tokyo. The company was first listed on the Tokyo Stock Exchange in Octobe

2、r 1979. It is owned bythe Ito-Yokado group which also manages a chain of supermarkets in Japan and owns a majority sharein Southland, the company managing Seven-Eleven in the US. The last ten years have been a periodof phenomenal growth for Seven-Eleven Japan. Between 1985 and 1994, the number of st

3、oresincreased from 2,299 to 5,523; sales increased from 386 billion Yen to 1,282 billion Yen; Net incomeincreased from 9 billion Yen to 46 billion Yen. In 1994, Seven-Eleven Japan ranked first amongJapanese retailers in terms of ordinary profit. The return on equity (ROE) has averaged well over 20%o

4、ver the last ten years. Seven-Eleven Japan is currently Japans largest retailer in terms of operatingincome and number of stores. In 1994, customer visits to Seven-Eleven outlets totaled 1.8 billion,which translates to every person in Japan visiting a Seven-Eleven on average 15 times a year!Company

5、History and ProfileBoth Ito-Yokado and Seven-Eleven Japan were founded by Mr. Masatoshi Ito. He started his retailempire after the second world war, when he joined his mother and elder brother to work in a smallclothing store in Tokyo. By 1960 he was in sole control and the single store had grown in

6、to a $3million company. After a trip to the US in 1961, Ito became convinced that superstores were the waveof the future. At that time Japan was still dominated by Mom and Pop stores. Itos chain ofsuperstores in the Tokyo area was instantly popular and still constitutes the core of Ito-Yokados retai

7、loperations.In 1972, Ito first approached the Southland Corporation about the possibility of opening Seven-Elevenconvenience stores in Japan. After rejecting his initial request, Southland agreed to a licensingagreement in 1973. In exchange for 0.6% of total sales, Southland gave Ito exclusive right

8、sthroughout Japan. In May 1974, the first Seven-Eleven convenience store opened in Tokyo.This new concept was an instant hit in Japan and experienced tremendous growth. By 1979 there werealready 519 Seven-Eleven stores in Japan. By 1984 there were 2001 stores. Rapid growth hascontinued since then as

9、 detailed in Table 1, resulting in 5,523 stores by the end of 1994.On October 24, 1990, the Southland Corporation entered into bankruptcy protection. Southland askedfor Ito-Yokados help and on March 5, 1991, IYG Holding was formed by Seven-Eleven Japan (48%)1This description of Seven-Eleven Japan wa

10、s written after discussions with executives at Seven-Eleven Japan. The timespent by them is gratefully acknowledged. Michael Kligers efforts in setting up the meeting with Seven-Eleven are gratefullyacknowledged. Some of the information used in this case is from a report written by Michael Kliger fo

11、r the GIM Japan class(1995).This note was written by Sunil Chopra, Professor of Operations Management, Kellogg Graduate School of Management,Northwestern University. This writeup has been prepared as a basis for class discussion.Copyright 2000 by Kellogg Graduate School of Management. To order copie

12、s, call (847) 491-3603. No part of thispublication may be reproduced without the permission of the Kellogg Graduate School of Management.Seven Elevenand Ito-Yokado (52%). IYG acquired 70% of Southlands common stock for a total price of $430million.Financial data for the different segments of the Ito

13、-Yokado group demonstrates why Seven-ElevenJapan is worth a detailed study. Even though it contributes under 7% to the groups revenues fromoperations, it contributes over 47% of the groups operating income.Over the last ten years, Seven Eleven Japans revenue has grown on average by 12.6% annually an

14、dits net income has grown by 20.9% annually. Seven-Eleven Japan has managed to improve its returnon sales (RoS) from 11.7% in 1984 to 25% in 1992. Over the last two years, the RoS has decreasedsomewhat to 23.8 % due to the economic recession in Japan.Based on its annual sales, Seven-Eleven Japan is

15、the third largest retailer in Japan. However,measured by ordinary profits, Seven-Eleven Japan is the largest retailer in Japan, even larger than itsparent company, Ito-Yokado itself. With its 5,523 stores, Seven-Eleven is the largest conveniencestore chain in Japan. It is closely followed by Daiei C

16、VS with 5,045 stores.The Convenience Store Industry and 7-ElevenAs in the US, convenience stores in Japan provide customers with a variety of productscarried by general retailers as well as food retailers. As of 1991, the retail structure was as shownbelow.Comparison of retail outlets by sales (bill

17、ion Yen)Comparison of retail outlets by number of storesWhile it is a small part of the overall retail outlets, Seven-Eleven Japan is a significant part of theconvenience store outlets. Its share of this market has in fact grown since 1991. This growth has beenvery carefully planned exploiting the c

18、ore strengths that Seven-Eleven Japan has developed in theareas of Information systems and Distribution systems.2Type of RetailerAnnual SalesRelative Annual SalesRetailer140,633100%Food Retailer41,45229.5%Convenience Store3,0502.2%7-Eleven Japan1,0810.8%Type of RetailerNumber of stores% of total sto

19、resRetailer1,591,186100%Food Retailer622,75139.1%Convenience Store19,6031.2%7-Eleven Japan4,6290.3%Seven ElevenThe Seven-Eleven Franchise SystemSeven-Eleven has developed an extensive Franchise network and plays a key role in the dailyoperations of this network. The Seven-Eleven network consists of

20、both company owned stores andthird party owned franchises. In 1994 the percentage of company owned stores was 29.2%. To ensureefficiency, Seven-Eleven Japans fundamental network expansion policy is based upon a marketdominance strategy. Entry into any new market is built around a cluster of 50 to 60

21、 stores. Suchclustering gives Seven-Eleven a high density market presence and allows it to operate an efficientdistribution system. Seven-Eleven, in its annual report, lists the following as advantages of themarket-dominance strategy:.5.6.Boosts distribution efficiency.Improves brand awarenes

22、s.Increases system efficiency.Enhances the efficiency of franchise support services.Improves advertising effectiveness.Prevents competitors entrance into the dominant area.Adhering to their dominant strategy, Seven-Eleven opened the majority of the 417 new stores in areaswith existing clusters of st

23、ores.However, geographically Seven-Eleven Japan has a limited presence. They have stores in lessthan half (21 out of 47) the prefectures within Japan. However within prefectures where they arepresent, stores tend to be dense. The distribution of Seven-Eleven stores within Japan is contained inFigure

24、 2.Less than 1 out of 100 applicants is awarded a franchise (a testament to their profitability).The franchise owner is required to put 3 million Yen up front. Half of this amount is used forpreparation of the store and training of the owner. The rest is used for purchasing the initial stock forthe

25、store.Seven-Eleven has an active ongoing relationship with the franchises. Forty five percent oftotal gross profits at a store go to Seven-Eleven with the rest going to the store owner. Theresponsibilities of the two are as follows:Seven-Eleven Japan responsibilities:.5.6.7.Development of sup

26、ply and merchandise.Providing the ordering system.Cost of system operation.Accounting.Advertising.Installation and remodeling of facilities.80% of utility costs.Franchise owner responsibilities:1. Operation and management of store.2. Hiring and paying staff.3Seven Eleven3. Ordering.4. Maintaining st

27、ore appearance.5. Customer service.Store Information and ContentsAs mentioned in Table 1, Seven-Eleven had 5,523 stores in Japan and Hawaii, as of 1994. InJapan, each Seven-Eleven store has an average area of 100 square meters. This is about a third thesize of most US Seven-eleven stores. Daily sale

28、s at a store average 700,000 Yen (about $8,000),which is about twice the average at a US store.Seven-Eleven offers its stores a choice from a set of 5,000 SKUs. Each store carries onaverage about 3,000 SKUs depending upon the customer demand in the local area. Each store carriesfood items, beverages

29、, magazines, and consumer items such as soaps, detergents etc. Sales acrossproduct categories from 1990 to 1994 are given in Figure 3. Almost 90% of Seven-Eleven stores inJapan operate on a 24 hour basis and about 40% sell liquor.Food items can be classified in four broad categories: (i) Chilled tem

30、perature (5°C) itemsincluding sandwiches, delicatessen products, and milk; (ii) Hot temperature (20°C) items includingbox lunches, rice balls, and fresh bread; (iii) Frozen items (-20°C) including ice cream, frozen foods,and ice cubes; (iv) Room temperature items including canned food

31、, instant noodles, and seasonings.Fresh food and fast food items from categories (i) and (ii) have been very big sellers for the stores.Towards the end of 1993 Seven-Eleven held a 20th anniversary sale over four stages, to appeal toprice conscious customers and publicize the excellent value of the f

32、resh and fast food products. In1994, Seven-Eleven saw double digit increases of 12.6% for rice products and 10.5% for sandwiches.In 1994 fresh and fast foods contributed about 40% of the total sales at each store (contrast with aconvenience store in the US). In fact rice products alone (rice balls e

33、tc. included in fast foods) weresold worth 208.9 billion Yen in 1994 (this is equivalent to the sales of Japans leading fast foodchain!). In 1994, there were 32 companies with 72 dedicated plants producing original rice dishes andprepared bread products for Seven Eleven Japan. In addition there were

34、 120 companies with 129dedicated plants producing original delicatessen items. Seven-Eleven plans to introduce oven-freshbread products which are also expected to perform well. Seven-Eleven will be the first convenienceretailer to introduce such products.In the beverage category, all stores sell sof

35、t drinks. This includes both brand names as well asprivate label items (developed for Seven-Eleven). Because of the recent liberalization of liquor licenselaws in Japan several Seven-Eleven stores also sell alcoholic beverages (currently 41.1% of the storessell liquor). Private label soft drinks and

36、 alcoholic beverages (here also Seven-Eleven plans to developa private label beer with Philip Morris) have seen an increase in sales.Magazines have also seen a significant growth in sales of 12.7% in 1994. Seven-Elevenexpects this pattern to continue in the near future.Bill Payment ServiceFor custom

37、ers who choose to pay their utility bills in person each month, rather than relyingon the automatic debit system, Seven-Eleven provides a utility bill payment service. With moreconvenient operating hours and locations than banks or other financial institutions, the bill payment4Seven Elevenservice a

38、ttracts millions of additional customers every year. This service was started in 1987 and morethan 10 million bills were paid using this service in 1994. In April 1994, Seven-Eleven began aservice to accept installment payments on behalf of credit companies. The major thrust for offeringthese servic

39、es is to make Seven-Eleven stores more convenient places to shop. The Integrated storeinformation system at Seven-Eleven allows it to offer such information and accounting based services.Seven-Elevens Integrated Store Information SystemFrom its start, Seven Eleven Japan sought to simplify its operat

40、ions by using advancedinformation technology. Seven-Eleven Japan attributes a significant part of its success to acomprehensive store information system installed in every outlet and linked both to suppliers and theSeven-Eleven distribution centers. The first on-line network linking the head-office,

41、 stores andvendors was established in 1979. There was no point-of-sales (POS) information collected at his time.In 1982, Seven-Eleven was the first company in Japan to introduce a POS system comprising POScash registers and terminal control equipment. In 1985, the company developed, jointly with NEC

42、,personal computers using color graphics that were installed at each store and linked to the POS cashregisters. These computers were also on the network linking the store to the head office as well as thevendors. Up to July 1991, head office, stores, distribution centers and suppliers were linked on

43、ly by atraditional analog network. At that point in time an integrated services digital network (ISDN) wasinstalled. Linking more than 5,000 stores, it is today one of the worlds largest ISDN systems. SevenEleven Japan spent 2.4 billion Yen setting up this network.ISDN uses digital technology to sen

44、d voice, data and graphic information through a singleoptical fiber line. The fiber optic line greatly increases the capacity and speed of the transmission ascompared to traditional copper cable. The 64-kilobit ISDN that Seven Eleven uses can send, forexample, 4,000 Chinese characters per second, 30

45、 times faster than he old analog network. The two-way, high speed on-line communication capability of ISDN enables Seven Eleven to collect, process,and feed back POS data quickly. Sales data gathered in each store by 11 p.m. is processed and readyfor analysis the next morning.The current hardware at

46、 a store is as follows:.Graphic order terminals for placing orders linked to the store computer.Scanner terminals to scan deliveries from the distribution center.A store computer that links to the ISDN network as shown in Figure 4.POS registers linked to the store computer.The role of each pi

47、ece of hardware is detailed below.The Graphic Order Terminal is a hand held device, and has a wide screen graphic display that is usedby the store owner/manager to place orders. The items are recorded and brought up in the order inwhich they are arranged on the shelves. The store manager/owner walks

48、 down the aisles and placesorders by item. When placing this order the store manager has access to detailed analysis to POS datarelated to the particular item (from the store computer). A listing of the analysis available is given inTable 5. The store manager then uses this information when placing

49、this order. The order is directlyentered into the terminal. Once all the orders are placed, the terminl is returned to its slot, at whichpoint the orders are relayed by the store computer to both the appropriate vendor and the Seven-Eleven distribution center.5Seven ElevenThe Scanner Terminals read

50、bar code and record inventory. They are used to receive product comingin from a distribution center. This is then automatically checked against a previously placed order andthe two are reconciled. Before the scanner terminals were introduced, truck drivers waited in the storetill the delivery was ch

51、ecked. Currently, the driver simply drops the delivery in the store, and a storeclerk receives it at a suitable time when there are few customers. The scanner terminals are also usedwhen examining inventory at stores.The Store Computer is linked to the ISDN network, the POS register, the graphic ord

52、er terminal andthe scanner terminal. It communicates between the various input sources, tracks store inventory andsales, places orders, provides detailed analysis of POS data (see Table 5), and maintains and regulatesstore equipment.In 1993, Seven Elevens ISDN network handled 200 million bits of sal

53、es data per day or 7 billion bitsover the year. The network completely integrates information among stores, distribution centers,suppliers, and the headquarters (see Figure 4). The information network further improves the orderingprocess, inventory control, merchandising mix, and the efficiency of s

54、tore operations as well as thedistribution system.To better understand the functioning of this information network, consider a sampling of dailyoperations. As soon as a customer purchases an item and pays at the POS register, the iteminformation is retrieved from the store computer and time of sales

55、 automatically recorded. In additionthe cashier inputs the age and sex of the customer. To do this (s)he has five register keys for thecategories: under 13, 13-19, 20-29, 30-49, 50+. This POS data is automatically transmitted on-line toa host computer. All sales data collected by 11 p.m. is organize

56、d and ready for analysis by nextmorning. The data is analyzed on a company wide, district, and store basis.The analyzed and updated data is sent back to the Seven Eleven stores via the ISDN. Eachstore computer automatically updates its product master file to analyze its recent sales and stockmovemen

57、ts. The main objective of the analysis is to improve the ordering process. Table 5 gives acomplete overview of the results of the analysis provided by the store computer. All this informationis available on the Graphic Order Terminal used for order placement.A major benefit of the information system is that it has allowed Seven Eleven stores to bettermatch supply with