Abstract
In this chapter, the supply chain management of Seven-Eleven Japan, the most successful convenience store in Japan, will be taken as a case study. First, the establishment and development of the convenience store industry in Japan (which has always been led by Seven-Eleven) will be described. Next, the characteristics of Seven-Eleven Japan and how it has been accepted by customers will be discussed. Finally, the future prospects of the convenience store industry and Seven-Eleven will be discussed.
TopFeatures Of Convenience Stores
As mentioned earlier, convenience stores are small grocery stores characterized by long hours of operation. This section provides a more detailed explanation of the characteristics and systems of convenience stores.
High-Mix, Low-Volume Inventory
While food supermarkets cater to household demands in daily life, convenience stores are characterized by their product lineups that cater to urgent individual demands. In order to achieve this under the constraint of a small store, a new type of product assortment was established that was not seen in the conventional retailing format of high-mix, low-volume inventory.
A standard convenience store has 3,000 items on a sales floor of about 100 square meters, which is more than three times the number of items displayed per sales floor area than the processed food section of a standard general supermarket (Yahagi, 1994).
The backyard area is also small in addition to the small sales floor, making it difficult for a convenience store to hold a large amount of inventory with many different products. As a result, convenience stores need to reduce the amount of inventory, but this increases the risk of product shortages. An empty shelf leads to missed sales opportunity, which accumulates to a huge loss for the store. In order to solve this problem, the following systems were developed.
Key Terms in this Chapter
Voluntary Chain: A voluntary association of independent retailers working together to achieve economies of scale in buying, advertising, etc.
Supplier Power: In Porter's Five Forces, suppliers have the power to influence resource availability and prices. Suppliers exert the most power when a company is dependent on a supplier and cannot switch to another supplier because of high costs or lack of alternative sources of supply.
Opportunity Loss: Loss of sales caused by the absence of products that should have been sold.
Just-in-Time: A system of production activities that thoroughly reduces inventory by supplying each process with only the necessary items when they are needed, well known as the production system introduced by Kiichiro Toyota of Toyota Motor Corporation.
Oden: Japanese fish cake stew. At convenience stores, consumers purchase it over the counter choosing the ingredients.
Fixed Cost: Fixed amount of costs that are incurred regardless of sales amount, even if no manufacturing, sales, or other operations are conducted, including labor costs, ground rent, utilities, leases, advertising, depreciation, etc.
Book Return System: Under the Japanese bookstore distribution system, retailers can return books that have not sold for a certain period of time to the publishers through wholesalers.
Taspo Card: An adult identification card required to purchase cigarettes from vending machines in Japan, introduced to prevent underage smoking.