QUESTION ONE:

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 forecast sales corresponding to each order accurately.

From March $1987,$ Seven$-$Eleven, offered three times$-$a$-$day 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.

The store manager used a graphic order terminal to place an order. All stores were given cutoff 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 produced only 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.

Source: Adapted from Chopra, S$.,$ & Meindl, P$.(2007).$ Supply chain management$-$strategy, planning and operation. New Jersey $($USA$)$: Person Education.

Required:

a$.$ Based on the case, what supply chain design strategy$($ies$)$ best describe Seven$-$Eleven supply chain. $(6$ marks$)$

b$.$ What type of warehousing methodology was the distribution system using, based on the case? Justify your answer. $(3$ marks$)$

c$.$ Briefly discuss the benefits and challenges of using this type of warehousing methodology according to the case. $(8$ marks$)$

d$.$ What role did information and communication technology play in supporting the supply chain of Seven$-$Eleven? $(8$ marks$)$