Organizationshave adopted various strategies in trying to reposition themselves inthe market or get a competitive advantage over other entities. Inparticular, when one examines the strategies that have been adoptedin the Japanese market by Seven-Eleven since its introduction inDecember 1973, he/she will realize that the organization has chosenstore concentration in a particular market segment as its primarymarket penetration tool. Moreover, the organization has adoptedfranchise system in its operation as it continues to open variousstores in USA and Japan through the integration of technology anddistribution systems, which make its operations easy. Thus, for anyorganization to operate effectively in its stores, it needs awell-integrated information system and distributor centers.
Purposeof the Study
Thepurpose of this paper is to examine by analyzing Japansupply-chain operations and determine if it can be applicable in theUnited States.
Scopeof the Study
Thestudy concentrated in analyzing the operations and development of in the Japanese market by examining the organizationsconvenience stores, infrastructure, and operations in efforts toincrease efficiency.
Limitationof the Study
Thestudy looked into the operations of in the Japanesemarket and the possible implication of adoption those strategies inthe USA.
Aconvenience store can try to increase its responsiveness by emulatingwhat Seven-Eleven is doing. It can do this by adopting variousinitiatives which are
An organization can incorporate vertical integration of its store keeping units. This is where the organization still operates its chain stores and has franchised others to increase the efficiency of the organization. This process enables an organization to penetrate and serve more customers than it would if it was operating as a single entity without franchising units. However, this arrangement has various weakness. The original owner loses control of the organization and cannot standardize services. Moreover, failure in franchising units can greatly affect the reputation of the whole organization.
Furthermore, an organization can adopt the use of technology in its chain supply. In , the organization has integrated its store information system to increase efficiency and reduce time wastage. The departments, store outlets, distribution center and headquarters were connected, such data could be collected, shared easily and be effected upon. Thus, it was easy to control inventory and match supply with demand. Major, risks associated with the installation of such system would be its failure. In case such a scenario takes place, the organization’s operations will be crippled leading to losses as the system is also expensive to implement and maintain. Moreover, the use of online systems, which are not secure also subjects the organization to potential hackers.
The organization has also increased its own store outlets, and rapid replenishments, which makes sure that customers are sufficiently served just as it had adopted franchise system. The issues that are associated with adopting of these strategies have been demand uncertainty coupled with an increase in cost in replenishment, technology, and store outlets (Wang, Li, & Cheng, 2016). Assuming that demand changes negatively, it would mean that the convenience stores will be left serving little demand, thus incurring a lot of operational costs. Moreover, multiple operations can be halted if an employer relocates or shuts down. The increase in store units can result in obsolete inventory and the need for more space (Wang, 2016).
Micromatching supply and demand using rapid replenishment operates underthe assumption that each store will replicate the same demand patternon a routine basis. Assume that a company operates or offers bustours and one person comes and buys all the bus slots this wouldmean that the regular customers will not enjoy the services that theyhave been receiving causing operational difficulty. The implicationof this is that the regular consumers will move to other stores ofSeven-Eleven to make their purchases. The risk of this is that thedemand might change or shift leading to replenishment, which isinsufficient in one site or excess in another. Another issue that canresult from this strategy is that there might be delays in transportor delivery of services(Sohel, Osman, Abdul Manaf, Abdul Halim, & Solaiman, 2016).An organization like , which involves itself in theselling rice balls, for instance, will incur a lot of cost. It isimportant to note that micro matching supply and demand using rapidreplenishment relies heavily on well-established infrastructure anddistribution channels. Thus, for this system to be viable, theorganization needs to make a lot of revenue to compensate for itsoperation and maintenance.
SevenEleven organization has adopted a highly responsive operation(Chopra, 2005).This is because they have decided to concentrate their chain storesin particular areas making it easy and cheap for them to deliver andsupply or replenish their store with inventory in easy as distance toone store to another is close(Chopra, 2005:Huang, Chen, Huang, & Ma, 2016).The market strategy has adopted the use of third partyfranchises and owned stores and where they penetrated the market,they did it with a cluster of 50-60 stores supported by elaboratedistribution system. Moreover, this quality makes it easy for theirconsumers to locate Seven-Eleven stores. Furthermore, theorganization has adopted information infrastructure, which allowsdata to be communicated directly from stores to the distributioncenter and supplier. It has integrated its suppliers, stores,distributor centers, and headquarters. The hardware system iscomprised of graphic order terminals for placing orders, scannerterminals, store computers, and point on sale register. This systemallows information to flow efficiently and it lets goods and servicesto be produced as they are used or delivered or sold. This, in turn,it enables the organization to be able to place orders by utilizingand analyzing consumption information (Chopra,2005). Thus, the organization transport and information infrastructure,inventory and facility management are structured in a way that theyare flexible to increase responsiveness while achieving efficiency.
Thereare various advantages of using an organization’s own distributioncenter, which is that an entity assumes complete control of aggregatedemand, the system, and reduces disruptions at retail stores(Shockley, Plummer,Roth, & Fredendall, 2014).Frequent disruptions by distributors in a retail store can alter thedaily operation of consumers to receive services and the store’smanager duties. Thus, is able control the quality of itsproducts increasing efficiency. Moreover, having one’s owndistribution center enables an organization to be able to conduct itsduties in a responsible way especially in cases where products cannotbe produced immediately as it allows an entity to store in bulkenabling it to use them in a time of need without inconveniencingproduction and operations of an organization(Shockley et al., 2014).Moreover, this system maximizes storage and reduces spoilageincreasing efficiency in stores. Direct store deliveryis usually appropriate in cases where Seven- Eleven has a supplierwho is consonant and provides large quantities, there is specialhandling needed, and there is no need for a product to be broken intosmaller units. Therefore, the adoption of this system increasesefficiency and quality control of products as there is minimal timewastage and spoilage proving to be advantageous in organization.
The7dream strategy utilized by Seven-Eleven has proven to be meaningfulas local Japanese customers are willing and happy to receive theirgoods at convenience stores. This is because it utilizes the internetto conduct its business as consumers can purchase and make ordersonline. This system has proven to be successful as it reduces orderand waiting time between making a demand and being served. Thisconcept can prove to be useful in areas where there is highpopulation or security issues for delivery(Zhang, B., Zhang, H., & Zhang, J, 2015).Moreover, what has made this strategy to be meaningful for SevenEleven is the fact that customers are willing and prefer to visitconvenience stores despite making orders online. Thus, stores arestocked with only what is necessary. On the other hand, this systemcan prove to be challenging in USA suburbs where people prefer homedelivery and visiting large stores. People would avoid it as it is aninconvenience. However, it can be adopted if home delivery is notpossible and large stores are not possible to operate.
Itis important to note that the market structure of USA and Japandiffer considerably. Thus, there is a likelihood that supply chainstructures will not exactly be similar, but can be close. This can beattributed due to cultural differences. Nevertheless, despite theadoption of this system being beneficial, it has various demerits,especially in the USA. For it to work, it must be coupled with adelivery system. This is because in the USA there are variouscompetitors who offer home delivery and adoption of 7dream strategywould mean the loss of potential customers(Hortaçsu & Syverson, 2015).What would work thus in the USA is a hybrid approach, whichincorporates both home delivery and store service taking inconsideration the metrics of population and consumer preferences. Onthe contrary, in Japan, the approach has proven to be cost effectiveand easy to operate. In Japan, the adoption of this system hasenabled the organization to reduce some cost especially associatedwith warehousing. Moreover, there is sufficient and in time deliveryin between distribution centers and stores. Thus, stores arecontinually replenished increasing the ease with which stores serve customers efficiently. This in turn will help theorganization have a high number of repeat customers. However, inJapan, the application of this would mean that an organization like needs to establish many stores, which requires heavyinvestment. Moreover, large numbers of stores will require elaboratedistribution channels. Above that, the incorporation of detailsonline also demands for more personnel who are keen and efficient intheir work as failure in one side can cripple the organization.
Theimmediate advantage of one replenishing someone’s store is thathe/she will incur primary cost such as transport, labor, and materialhandling cost saving the owner. However, the owner loses control andfaces challenges in integrating information from various centers(Christopher, 2011).Additionally, the owner organization will incur cost associated withoutsourced distributor. Moreover, an organization needs to factorthat there other entities the distribution center serves and thus, itmight have challenges of insufficient stock due orders by othercorporations. On the other hand, when an organization manages itsstores, it can maintain operational control and manage itsproduction. Thus, it will be able to offer convenient services andserve its customers at best than if the distribution was outsourced.
The should continue to increase efficiency of the stores bymaking sure that the information system is consistently updated andmaintained as the whole operation of the organization depends on itsfunctionality. Moreover, in markets like USA, shouldadopt a delivery system, which is applicable to the consumers orgeographical segmentations to penetrate the market successfully andmaintain it.
Thus,from the case one can learn that operating conveniencestores effectively, one needs the integration of technology andproper distribution channels above having ready operational stores. have managed to succeed in the market as it hasincorporated these activities in a synergetic way increasingefficiency and sales, which has boosted its revenues.
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