7 eleven presentation...printable version
TRANSCRIPT
Group C: Jesus Garcia, Paola Moreno,
Sebastian LaRoche, Miguel Caballero,
Mº Gabriela Cabral
About us: • History and Business Model
Industry Analysis: • Porter 5 forces and KSF.
Marketing Strategy:• Consumers• Competitors• 4 P´s
Supply Chain and Business Process: • Distribution Strategy• Concepts: Agility, Adaptability, Aligment
Agenda1.
2.
3.
4.
• Founded in 1927 by the Southland Corporation in Dallas, USA. They invented the Convenience Store concept.
• In 1962 they started to experiment with the 24 hour schedule.
• By 1980 they already had more than 6,000 outlets.
• In 1980 the company ran into financial difficulties, and was rescued from banckruptcy by Ito-Yokado, its larges franshisee.
• The Japanese company gained a controlling share of 7-Eleven in 1991, during the Japanese asset bubble of the early 1990s. Ito-Yokado formed Seven & I Holdings Co. and 7-Eleven became its subsidiary in 2005.
• At present,7-Eleven is the world’s largest operator, franchisor and licensor of convenience stores (largest convenience retail chain), with approximately 6,000 stores the company operates and franchises in the United States, which more than 4,700 are franchised. Overseas, 7-Eleven licensees and affiliates operate more than 29,700 (including Japan, Taiwan, Thailand, South Korea, China, Hong Kong, Malaysia, Mexico, Singapore, Australia, Philippines, Indonesia, Norway, Sweden and Denmark.)
About Seven Eleven7-Eleven, Inc. (7-Eleven) is a retailer operating convenience stores. It is engaged in franchising and licensee
business of convenience stores globally. The product line of the company includes gifts, beverages, electronics
accessories, movies, international calling cards, video and computer games as well as services including pre-
paid tax filling card, financial services such as issuing cash cards, money orders and credit cards, etc.
• To consistently serve the changing needs of customers for their convenience
Mission
• To be the best retailer of convenience
Vision• Servant Leadership
• The 7-Eleven Way
Culture
Capacity: What you can do to lead.Commitment: What you want to do to lead.Character: What you will do to lead.
I – IntegrityC – Customer FocusA – AccountabilityR – RecognitionE – Excellent ExecutionaboutPeople & Teamwork
7 Eleven: A World Class Organization
Competitors- High-traffic sites
- Very fragmented industry (top 50 Co = 35% sales)
- Major: Circle K, Pantry, Exxon
Substitutes+ Gas stations, grocery stores,
mass merchandisers, warehouse clubs, restaurants (prepared
meals)
Suppliers- Fuel: Supply agreements (volume) Oil Co, refineries, distributors Low
Margin- Non-fuel: Long-Term Contracts
manufacturers, grocery wholesalers, distributors
Customers+ Drive the demand
+ Competitive pricing+ Effective merchandising
+ High-traffic locations
Barriers to Entry+ Large companies advantage in purchasing
and finance- Small companies can compete effectively by
acquiring superior location or offering specialized merchandise
US convenience store industry:• 120,000 stores• $300b revenue
Industry Analysis: Porter 5 Forces
Business Model
Doing Business
• Non manufacturer• Commitment with vendors in order to better meet their customers' expectations• Alignment with suppliers so as to create a three-way wins – for customers, vendors and 7-Eleven
Working Together Online: Web-based way for potential and existing business partners to work easily with 7-Eleven
• Better collaboration and communication of the critical business info• New Vendor/Supplier Application Process• 7-Eleven Project Forum:• Bid, estimate or quote projects• Invoice for projects• Update project timelines• Provide equipment related information
Business Key Success Factors
Reliable and fast Supply Chain
- Demand forecast & Supply Planning through IT systems
- Intensive distribution strategy to keep cost low
- Quick response to demand shifts- Balanced inventory
- Relationships with suppliers- Employee training
Location, location, location
-Traffic- Visibility
- Brand Awareness- Purchase intention
- Convenience - Neighbourhood & Community
involvement
7-Eleven’s Marketing Strategy
Fast and Flexible offer adapted to customer’s changing wants and
needs due to advanced IT systems
Competitive prices compared to the rest of competitors including even
supermarkets (for highly demanded products)
Convenience: Location, opening hours (24hours), assortment,
communications & promotions
“Oh thank heaven for 7 eleven”
“Oh thank heaven for 7 eleven”
7-Eleven’s Consumers
People On The Move
All AgesAll Genders
Look for specific productBuy when need
Represent an accurate sample of society
Purchase can be impulsive, last minute &/or urgent
“7-Eleven® stores are part of the neighborhood and committed to serving the changing needs of customers”
4P’s: Product assortment
Around 2.000 new products as 70% of Merchandise will be replaced within 1 yearIn response to customer’s taste and needs shifts
3.000 products a all year IT Integrated Multimedia System allow managers to know:-What, How, When, To Whom- Products sold together And to shorten lead-time from HQ decision to each store
4P’s: Pricing strategy
Push more profitable private-label products
Competitive prices vs. grocery stores
Aggressive pricing on high-volume everyday items to allay the perception its prices are higher than those at grocery stores
Focus on fresh-food offerings and 7-select own brand
4P’s: Place – Retail Stores
The OUTSIDEIntersections/traffic lights
Medium size outletsParking/High traffic
Involved in a community
The INSIDEComfortable, low
corridorsVisibility
Profitable pathwayProduct display
Critical factor for retailersas it partly determinesthe profitabilityof the business
4P’s: Promotions and Communication
Radio and outdoor when in the carAt the movies and sporting eventsOnline at Facebook, Twitter and slurpee.com To their Mobile phone
Reach consumers wherever they are
Emotionally creative and rational promotions
Kwik-E-Marts – The Simpsons 7-Eleven7-Eleven Road Trip Rally: Reality ShowIron Man 2: “Collect like a super hero. Live like a billionaire”Viral Slurpee on facebook11th of June (7/11 day) Free Slurpee7-Evelen Cycling teamZinga social 7-eleven game
7-eleven´s Product Development
Co-Development with Manufacturers with 7-Eleven Taking the Leadership Role
The advantages for themanufacturers are:
1. Manufacturers’ products are sold extensively in the chain stores of 7-Eleven spread all over the country.
2. Results of product marketing are collectable using the POS (Point of Sales) system.
3. Crucial data of consumers and market which are indispensable for future development of their products are obtainable.
The advantages that 7-Eleven enjoy are:
1. For a period of time, 7-Eleven can sell those newly developed products on an exclusive basis allowing differentiation from competitors.
2. Obtain information from manufacturers prior to other competitors.
7-Eleven Japan also co-developed new products with major food manufacturers. This method is called co-development or team merchandise.
A data repository provides store managers with information on what's selling, but the managers use their own on-the-spot knowledge of the neighborhood to make final ordering decisions.
By adding local control of the ordering process, 7-Eleven takes the opposite approach to Wal-Mart Stores Inc.'s much-heralded replenishment supply-chain model, in which products are automatically reordered once stocks fall below a certain level.
7-Eleven´s in-store ProcessStore Managers:
They oversee store operations, expenses and profits, organization, employees and inventory, backed by assistant managers who ensure that the customer environment is clean and friendly day to day.
1.
Employees:
They are trained to be representatives of 7-Eleven to the eyes of the costumer in terms of costumer service and functions to be performed.
2. They receive the merchandise from vendors or from seven eleven’s distribution center, and immediately allocate them in the corresponding area.
Products position in shelves are changed 3 times a day because different products are demanded in different times of the day.
Orders for fresh-food items are aggregated at 7-Eleven headquarters and transmitted to third-party commissaries and bakeries, which prepare them for delivery the next day by one of the company's 22 distribution centers around the country.
7-Eleven´s Logistics Process
The system connects stores to McLane Company Inc., 7-Eleven's primary wholesale distributor, and to the commissaries and bakeries that provide fresh-food products. They work closely with 7-Eleven and the suppliers to come up with the most efficient distribution process we can.
Store managers enter orders into workstations or handheld computers by 10 a.m. daily.
1.
By 11 a.m., orders have been consolidated by EDS (Electronic Data System) and dispatched to 7-Eleven's suppliers.
2.
Through a systemized " distribution plan " , all goods from more than 100 suppliers are handled by the distribution center centrally.
3. With this method, suppliers find it easier to handle the distribution of 7-ELEVEN products. Stores are also able to have minimal stock and enhance management of store space.
Truck drivers carry cards with bar codes that are scanned into store computers when they arrive with a delivery.
If a driver is often late, the operator will review his route and might add another truck to lighten the load.
4.
Main supporters of 7-Eleven´s Logistics System
Information System:1.
Seven-Eleven’s new technology gave it four advantages.
The first was in monitoring customer needs, Instead of pushing products on to customers, companies were being pulled by customer needs.
Second, Seven-Eleven uses sales data and software to improve quality control, pricing and product development. Thanks to its systems, the company can collect sales information from all its stores three times a day, and analyse it in roughly 20 minutes.
Third, technology has helped to predict daily trends. As customers become more fickle, product cycles are shortening. Wheather is also taken into account.
Finally, Seven-Eleven’s electronic investment has also improved the efficiency of its supply chain. Orders flow quickly. Those sent in by 10am, for delivery after 4pm, are electronically processed in less than seven minutes.
Main supporters of 7-Eleven´s Logistics System
Store
•Ordering•Sales Analysis•Accounting, Cash, Reports, Payroll, etc.•Training.
Vendors
•Joint Distribution•McLane•Direct Store Delivery (DSD) Vendors.
Headquarters
•Merchandising
•Information Systems
Field Office•Accounting
•Market Office
•File transmissions•Software distribution
Information System (continued): 1.
Main Supporters of 7-Eleven´s Logistics System
Joint Delivery System2.
o7-Eleven wanted to be recognized as the company who provided the convenience of one-stop shopping: you can find all the products you want to buy in the store. oFor this purpose, 7-Eleven Japan had to create a system of small lot delivery and high
frequency delivery.
Advantages:
1. It is possible to shorten the delivery distance and time.
2. Reduction of the number of delivery vans.
3. Delivery volume to the store per delivery increases and the efficiency of the loading capacity improves.
Main Supporters of 7-Eleven´s Logistics System
Joint Delivery System (continued):2.
In order to keep the taste and freshness of foodstuff at the highest level, an appropriate temperature for all foodstuff must be maintained during delivery.
Main Supporters of 7-Eleven´s Logistics System
Dominant Strategy3.
Seven eleven basically focuses their operation in certain areas which then are crowded with multiple stores.
The main advantage of this strategy are:
Reduced Costs: because of shorter distances.
Reduced Delivery Time.
Reduced advertising expenses: because of less covered area.
Better store management from corporate: as Field Office Managers can go around the stores more often giving out crucial advice and support to store managers.
• Agility1. Real-time systems detect changes in costumer preference and track data on sales and consumers at every store. 2. Collaborative relationships with suppliers.3. Dependable logistics systems.
• Adaptability1. Joint Distribution.2. Expansion of the types of vehicles from trucks to motorcycles, boats and helicopters.
• Alignment1. Exchange of information freely with vendors.2. Equitable share risks, costs, and gains of improvement initiatives.
7-Eleven´s Triple-A Supply Chain Strategy
• Quick changes in demand.Due to:1. Weather fluctuations.2. Activities in the nearby areas.3. Impulsive behavior.
• Delays in distribution.Due to:1. The spread of stores in key locations.2. continuous replenishment requirements.
• Challenges of Virtual Integration:
Aligning interests of SE with those of 3rd parties.
The Challenge
Source: The triple-A Supply Chain. HBR, Hau L. Lee.
The strength of 7-Eleven resides in its endless efforts to develop “innovative business processes” such as “consistent production, distribution and sales systems”, “team merchandising” and “joint delivery”.
The innovation of processes creates differentiation from others and builds up its advantageous position among its competitors.
7-Eleven lavishly invests in the construction of the infrastructure supporting “innovative business processes”, the “information systems”, which help to connect departments organically and enhance the management efficiency of the whole organization.
7-Eleven relays heavily on the input or formulation of hypothesis by the store employees in order to get accurate information on “demand by item”.
Conclusions
Backup Slides
7-Eleven Competitors
Compete on: LocationOpening hoursPriceProduct assortmentBrand awareness
Compete with: 24 hours convenience storesSupermarkets chainsSingle-storesGas station stores
7-Eleven´s Intensive Delivery System.
Source: The Success of 7-Eleven Japan.
Example of the intergrated system of production, distribution, and sales: Ice Cream
Source: The Success of 7-Eleven Japan.