7-Eleven's Global Supply Chain Management: A Detailed Analysis

This report provides a comprehensive analysis of 7-Eleven's global supply chain management. It begins with an overview of 7-Eleven's business model, customer segments, channels, customer relationships, key activities, and key partners. The report then delves into the company's global supply chain, highlighting the priorities of establishing a global supply chain, including ensuring product quality, saving inventory costs, efficient ordering, and minimizing inventory quantity. It examines the structure of 7-Eleven's supply chain, detailing the role of distribution centers, suppliers, and the guided replenishment system. The report further analyzes the efficient global supply chain management of 7-Eleven, focusing on its distribution system, including order fulfillment processes from stores to distribution centers and from distribution centers to suppliers. It also emphasizes the importance of the integrated information system, including electronic order booking systems and point-of-sale systems, in optimizing the company's management processes and overall efficiency. This report aims to provide a thorough understanding of 7-Eleven's effective supply chain strategies.

I. Introduction (Ánh)
1. About 7-Eleven
7-Eleven Inc. (stylized as 7ELEVEN) is a Japanese-American international chain
of convenience stores, headquartered in Dallas, Texas. The chain was founded
in 1927 as an ice house storefront in Dallas. It was named Tote'm Stores
between 1928 and 1946. After 70% of the company was acquired by Japanese
affiliate Ito-Yokado in 1991, it was reorganized as a subsidiary of Seven-Eleven
Japan Company in 2005, and is now held by Chiyoda, Tokyo-based Seven & I
Holdings Company
2. Business Model
a. Customer Segments
7-Eleven primarily serves customers through its core 7-Eleven businesses. This
retail chain targets a broad consumer base that includes: Urban consumers,
busy professionals, students and low-income workers, families.
7-Eleven has an extensive global presence, serving customers across 17
countries worldwide, primarily in Asia and the Americas.
b. Channels
Offline channel: In these stores, the company serves its customers directly
through its extensive team of in-store sales and service personnel, who sell
products and services directly to customers.
Online channel: In addition to selling products directly through its stores, 7-
Eleven also offers online shopping through its website at www.7-eleven.com.
This service allows customers to purchase products – including hot snacks and
beverages – and have them delivered to their home via the 7NOW delivery
service. 7-Eleven also provides customers with an app, through which they are
able to access deals, rewards and benefits, and a faster checkout experience.
c. Customer Relationships
The company seeks to establish longstanding relationships with its customers,
by offering and convenient, efficient and pleasant shopping experience.
Customers are served in-store by the company’s sales and service personnel,
who sell products to customers directly.
d. Key Activities
7-Eleven functions as a holding company for various retail assets in Japan and
abroad. Its principal business is the operation of the 7-Eleven retail chain
across Asia and the Americas.

7-Eleven organises its operations into seven business segments: the
Convenience Store segment, through which the company operates a large
network of convenience stores under the 7-Eleven brand through direct
operation and franchising; the Super Store segment, through which the
company operates general supermarkets, food supermarkets and specialty
stores; the Department Store segment, through which the company operates
department stores, notably Sogo & Seibu; the Food Service segment, through
which the company is engaged in the restaurant business, the contract food
business and the fast food business; the Financial-related segment, through
which the company is engaged in the banking service, credit card and leasing
business; the Mail Order segment, through which the company is engaged in
the mail order business and the sale of gift products; and the Others segment,
through which the company is engaged in the IT business, and the gasoline
wholesale business.
e. Key Partner
7-Eleven works closely with a broad range of partners in the operation of its
core 7-Eleven business in Japan and overseas.
These partners can be organised broadly into the following categories.
- Supplier and Vendor Partners: comprising the various food companies
and wholesalers that provide food and beverage products and
merchandise that are sold across the company’s 7-Eleven stores, as well
as third-party providers of various other services;
- Franchise Partners: comprising various companies and business owners
that operate 7-Eleven stores on the company’s behalf;
- Distribution and Delivery Partners: comprising various logistics and
distribution companies that assist in the storage and distribution of
products sold across 7-Eleven’s network of stores, as well as delivery
service providers that support the company’s home delivery services;
- Branding and Marketing Partners: comprising various brands,
companies, and organisations that collaborate with 7-Eleven on various
co-branding, marketing, and business development projects; and
- Strategic Partners: comprising a range of companies and organisations
that work with 7-Eleven on various other community, IT, and business
projects.
- In recent years, 7-Eleven has partnered with WD Partners on ways to
update the look and experience of its stores, and with NEC, as part of a
strategic IT partnership for the global 7-Eleven network.
II. Global supply chain management of 7-Eleven

1. Priority goal of establishing global supply chain of 7-Eleven (Thuỳ Linh)
a. Ensure the quality of the product
The products of 7-Eleven include fresh food such as meat, fish, egg or the
products having short expiry date (milk, fresh bread, fast food, prepared
food, fresh-made daily food,..) so they need to control and handle carefully
to keep the products in the best quality. Therefore, ensure the quality of
products is one of the most important objectives of 7-Eleven.
b. Save inventory cost
Supply chain system of 7-Eleven assists organization with decreasing the
inventory cost. Almost products of 7-Eleven in general have short expiry
date. Therefore, they can save amount of money to carry goods made for
business purposes. Additionally they guarantee their products are fresh
and high quality.
c. Order efficiently
One of the biggest impacts on the supply chain is the in-store ordering.
Because the product is provided and sold every hour daily and to reduce
out-of-stock situations and grant employees more time to manage the
quality of the inventory so the efficient ordering is really necessary.
d. Minimize the inventory quantity
The objective of 7-Eleven in the era of technology is to move toward using
transportation segment brilliantly. They want to keep inventory proximate
to zero and eliminated the necessity for safety stock so that store staff can
adjust the merchandising mix on the shelves according to consumption
patterns throughout the day.
2. Structure of global supply chain management of 7-Eleven: (Nguyệt Hà)
7-Eleven Inc. is the leading name and most prevalent chain in the
convenience retailing industry. 7-Eleven was introduced convenience
retailing to the world more than 90 years ago, it is the world's largest chain
of convenience stores with over 70,000 stores in 17 countries and regions
around the world.
7-Eleven keeps their store shelves stocked by making daily deliveries to
every store using a complex but very effective supply chain. 7-Eleven set up

a sophisticated preparation and distribution system designed to ensure
that the number of daily deliveries to the stores from multiple suppliers is
minimum. Through proprietary handheld inventory and ordering systems;
7-Eleven store operators place their orders by 10 a.m. each day for
deliveries out to the store that same day. The computer system promptly
combines these orders and transmits them to the CDCs, commissaries and
bakeries that support these stores across country.
The system of distribution channel plays the important role that helps 7-
Eleven to reach their goal. 7-Eleven convenience store distribution system
develops from a single wholesaler stage to the intensive development of
the distribution system, then to common distribution system. It delivered
by the manufacturers and suppliers to the distribution channels, and the
distribution channels through the milk run route to stores. Common
distribution system saves transportation costs and reduce the cost of the
store to receive goods. The shop can save less inventory through frequent
replenishment.
In the supply chain of 7-Eleven, there are two main sources of supply
including the suppliers and company itself. The 93 percent of total
products in 7-Eleven store are supplied from 1,200 – 1,500 suppliers.
The left 7 percent are supplied from 7-Eleven groups and the

shareholders. The company has the in-house manufacturer products
which supplies daily products for stores such as chilled food, bakery and
other exclusive food.
=> The global supply chain of 7-Eleven was created for the efficiency
strategy of the company. Firstly, its has several distribution centers
serving several stores area to deliver fresh and quality products with less
lead time. Secondly, the guided replenishment system help to eliminate
the inventories and logistics cost to the whole chain
3. Analyse the efficient global supply chain management of 7 eleven: (Hoàng
Lan)
3.1. Efficient distribution system:
The in-store ordering is one of the most important factors impacting the
supply chain of business. To make the efficiency order fulfillment process,
7-Eleven introduced a guided replenishment system. The system can
shorten the replenishment cycle time and generate an anticipated forecast
of demand based on weighted sales from the previous forecast periods.
That information also recommends an order amount for each item at an
individual store. Moreover, the distribution system also plays an essential
role in the supply chain management of business. Only by creating an
efficient distribution system, can 7-Eleven be flexible to alter the delivery
schedules depending on customers’ demand. The order fulfillment process
operates on a distribution model, which can help 7-Eleven reduce
operating cost by combining delivery systems. They use a single truck to
bring a group of products and visit several stores within a geographical
region. The details are described below:
a. Order fulfillment from stores to distribution centers (DCs):
Each store requires the merchandise to be sold daily with the alternating
purchase orders in product types and volume. These orders are collected
at every store and are consolidated at the 7-Eleven data center in order
to coordinate the functions of the system at the same time such as
product distribution, purchasing, accounting and analysis of the data.
The process of ordering fulfillment following the steps below:
- The staff at the store uses the Electronics Order Booking (EOB) to make a
purchase on items required in the store.
- Data from EOB is transferred to the Store Computer (SC) which
consequently sends the information to the head office before 3.00 am.
The orders placed after 3.00 am will be registered the following day.
- The head office processes the data from each store, consolidates the
data then sends them to the responsible DCs or suppliers in each area.
The data is sent between 4.00 and 5.00 am.

- The DC analyses the purchase orders from the head office and groups up
the store locations to route the shipment. After the order processing
process, the preparations of the products to be transported are done
according to the Picking Slip of each store. The preparations take less
than 3 hours. However, in case the orders are sent directly to the
supplier, the supplier will ship the products to DC in the following day or
send the product directly to the store.
- When the purchase orders arrive at the store, the staff at the store
checks the products and receives the merchandise. In case of
mismatched order or the under-standard item, the store will deny the
item and return it to DC or the supplier right away.
The order fulfillment process of the distribution channel in this case has
a cycle within less than a day of the dry grocery products. However, the
process takes longer time in food or daily products since these products
need freshness. Therefore, the head office will place orders directly to
the suppliers to produce the products and transport them to the DC in
the next day. Subsequently, food, daily products or products or short-life
products would take two days to reach the stores after placing the
purchasing orders.
b. Order fulfillment from DCs to suppliers:
The order fulfillment process in term of 7-Eleven DCs order the products
from its suppliers can be explained by steps below:
- The DCs determine the number of products having to reorder. The
purchase orders will be sent from DCs to the head office where the
orders are checked by the purchasing department at head office.
- Purchasing department verifies the orders and sends the purchasing
orders to each supplier.
- The suppliers receive the purchasing orders and produce the products to
supply the DCs.
3.2. Integrated information system (IS):
At the heart of 7-Eleven’s supply chain management is state of the art
technology. Besides applying an efficient distribution system, the
company also uses the technology on the basis of simplicity to manage
all data related to the accuracy, quantity, convenience and quality of
products and service of 7-Eleven. They apply information technology at
stores, distributions, warehouses, and back offices to optimize their
management process.
a. System at store:
Each store has been provided technology tools by 7-Eleven company.
The Electronic Order booking System (EOB) is the system used in the

store and is the main system. The POS, Store Computer (SC) and EOB
device are the general store information system in 7-Eleven stores.
- Point of Sales system (POS): POS allows the collection and storage of
data when the products are sold. When sales transactions occur, sales
data is stored and transmitted to headquarters through the store
computer. These data can be evaluated on a companywide, district, and
store basis and used in the analysis and planning. The main objective of
the analysis was to improve the ordering process. The information
analyses of POS data includes : sales analysis of product categories over
time, SKU analysis over time, analysis of waste or disposal, ten-week
sales trends by SKU, ten-day sales trends by SKU, sales analysis by day
and, list of slow-moving items, analysis of sales and number of
customers over time, daily product analysis overtime, reconcile data,
publication analysis.
- Store Controller (SC): SC is linked to the POS register, the graphic order
terminal, and the scanner terminal. It communicates between the
various input sources, tracks store inventory and sales, places orders,
provides detailed analysis of POS data, and maintain and regulate store
equipment. SC acts as a system monitoring and processing the internal
store data and bridges to the external network or the head office. The
SC’s functions include: purchasing, receiving merchandise, transferring
merchandise, returning merchandise, updating merchandise data in the
store, generating reports, collecting and consolidating data and send the
data to the head office.
- Electronic Order Booking (EOB): The EOB play the role as same as an
order book. It applies the barcode scanning to collect data. The
purchasing process begins with the staff downloads data from SC then
he or she performs the inventory checking on the item in interest by
scanning the product’s barcode. After scanning barcode, the EOB screen
will show the inventory position of the product on shelf and in store’s
inventory. Then the staff can decide to purchase more items by keying in
the purchase order to the device. Once all the orders are placed, the
device is kept in its slot where the orders are relayed by the SC to both
the appropriate vendors and the DCs through the head office,
a. System at DC and warehouse:
- The system in the distribution center and warehouse focuses on
managing the orders from 7-Eleven stores and relating transportation
activities which requires DC to match the demand with internal
utilization and capacity. This system is called “Warehouse Management
System” or WMS. WMS consists of many sub-systems which helps to
manage transportation at DCs.

a. System at back office:
- The back office system can be divided to three groups: Accounting
System, Merchandise Analysis System (MAS) and Product Information
Management System. These information system help 7-Eleven handle
product information, purchase order system, sales reconciliation, catalog
order, compilation of sales, purchase order, and receive order in the MIS
system, payroll and human resource.
III. Strengths and weakness of supply chain (Gia Phượng)
1. Strengths
a. Competitive Advantage and Strategic Fit within Supply Chain
The differentiated business strategy has been adopted successfully by 7-
Eleven. The firm focuses on its convenience experience of customer store in
the sense of location, diversification of the products, and services. 7-Eleven
chain is planned on the establishment of an effective supply chain to provide
the benefit to the clients. 7-Eleven positions itself towards responsive
measurement to coordinate uncertain demand and product expiry date. The
operation brilliance could be an establishment to run business and 7-Eleven is
moving towards responsiveness to gain sustained competitive advantage. The
core competency' source from the supply chain is troublesome to copy by the
competitors, in this way the firm competitive advantage is more sustained. The
smooth and effective supply chain and flexible product distribution are
contributed to the 7-Eleven's recognition. Data captured from the stores are
used to forecast the fluctuating demand at each store, therefore, to ease the
inventory level and increase the availability of product. By this method, the 7-
Eleven can ensure the "convenience" provided to customers anytime, that in
line with the firm's business strategy and promote a competitive advantage to
win the rivals.
b. 7-Eleven have ability to provide high quality, fresh products.
With the requirements of the highest quality but minimal cost as much as
possible, well-planned preparation and distribution system was developed to
ensure the product's standard. These centralized distribution centers (CDCs)
play an important role in safeguards the highest food quality by shipping from
temperature-controlled docks.
Fresh products are seen as 7-Eleven’s strategic business unit that has shown its
greatest growth ranges and a highlight among other rivals in the same
industry. Therefore, a fast supply chain is critical to 7-Eleven to support that
desire of freshness. For instance, with most of the other convenience stores,
milk is usually fresh for about up to a week after purchase, but for 7-Eleven’s

speedy supply chain, customers can preserve fresh milk up to two weeks. 7-
Eleven has the capacity to exploit the transportation segment wisely and keep
inventory at a very low level. Stores are refilled at least three times per day
and this short lead time eliminated the necessity for safety stock.
c. Outstanding information systems.
An advanced information system plays a strategic role in the chain's stores
management, product development, and distribution process. POS, EOB, and
store controller (SC) are the basic IT tools that applied by 7-Eleven’s chain. The
systems empower real-time tracking of each good sold. Each store follows to
the system to avoid the high inventory lead to high cost. Data that collected by
system is vital to the supply chain's effectiveness. When data is collected, the
operations field counselors (OFC) and store headquarters can receive the latest
data and analysis immediately. Thanks to IT tools, the 7-Eleven's OFC can grasp
the trend of customer' demand and also the price and inventory level of each
stores in the chain. Through the integration of these locations, merchandises,
and real-time data, the headquarters can forecast the sales trend timely every
day to drive flexibility and suitability of the price, tally and distribution
activities. Besides that, the system also push up the learning and developments
process among the chain members and has lifted the chain performance in
accordance with each elements of supply chain.
d. Aligned – goal supply chain relationship
7-Eleven's supply chain management not only plays an essential role in
contributing to the success of retail stores but also provides the mutual
benefits shared across the supply chain. The information-sharing process
between the stores and the suppliers reveals a sign of a well-structured supply
chain that is not suffer bullwhip effect. Each link of chain coordination, divide
roles and share resources with each other to gain the goal of maximizing the
overall supply chain surplus. The synchronization through the supply chain
keeps 7-Eleven advantage away from the imitation of rivals.
e. Intensive distribution convenient supply chain
The benefits from dense stores location are can not deny the devotement to
the effectiveness of 7-Eleven. The firm in this way aimed at economical
distribution, brand recognition, increase new entrant barriers, gain market
share and improved efficiency guiding franchised stores. Moreover, high-
density store networks of 7-Eleven help minimize the transportation costs of
distribution which have a high portion in the cost structure of the supply chain.

2. Weakness
a. Human errors and high rate of employee turnover
Because of the sophisticated of the supply chain process, each step must be
accurate to achieve the optimal result. However, as human beings, the
employees' error is unavoidable. Although distribution centers are mostly
automated, there is still manual work, employees are required to receive
merchandise from the wholesaler and divide them into individual delivery
routes, each of which may serve as many as 20 stores. Moreover, 7-Eleven has
a relatively high employee turnover rate, its mean that it has more people
leaving the job. As result, it comes up with high expenditure on training and
development of employees. This situation can be explained that the workload
per worker is high, puts pressure on employees and lead them to be less
productive. In the long-term, this phenomenon could hurt the chain due to the
shortage of good talent for the company.
b. High transportation costs
The transportation cost is seen as a trade-off to gain a low-inventory policy,
cutting expenses on one side would increases expenditure on the other side.
The transportation cost resides in the nature of this supply chain strategy to be
responsive to customer expectation. However, if the transportation budgets
were not managed at an acceptable level, it would have a negative impact on
the entire supply chain and financial performance.
c. Highly interdependent lead to bottleneck potential.
The interdependent among each linkage of the supply chain is the advantage
but also the " Achilles' heel ". A range of stores depend on just one
distribution center could run the system goes down when the delivery is at DC
go wrong, then all the retail business can be suffered and timely deliveries
might not be possible.
IV. Recommendation (Gia Phượng)
For internal problems with human resources, we would recommend that 7-
Eleven should consider the performance appraisal system to motivate
employees. This can help to leverage the work morale and productivity.
Besides that, provide packages of benefits such as higher wages, promotion
opportunities for employees also encourage them to devote to the company.

In terms of bottleneck effect, 7-Eleven should show its effort on innovation to
avoid, track and fix the problem as fast as possible to minimize the negative
effects on the whole supply chain.
As said above, high transportation cost is the trade-off, the natural
characteristic due to the business and supply chain strategy. However, 7-
Eleven can take full advantage of a dense distribution network by entering the
online market. Especially in the situation of COVID-19 flu is affecting shopping
behavior, consumers want to stay away from the crowd, restrict to go stores,
online shopping will be increasingly developing and attract more and more
customers. The moving toward the online market nowadays is a demand for
breakthroughs when the retail market is becoming saturated. Thanks to strong
brand awareness, 7-Eleven can expand B2C business, use e-commerce
platforms such as mobile phone APP to gain market share. Besides, cross-
industries cooperation also promising. Other industries such as gas stations,
laundries, banks, etc., can go in-hand with 7Eleven to serve consumers with
more diversified and comprehensive experience.
IV. References:
- Chuỗi cung ứng “hình mẫu” của 7-Eleven: Không cần tồn kho vì hàng được
giao chuẩn xác mỗi ngày, đảm bảo tươi sống và không một sai sót
- Supply Chain Technology System at 7 eleven
- Supply Chain Management strategy, 7eleven case
- 7eleven in Thailand
- SCM of 7eleven, risks and strengths
- The Distribution Strategies of Convenience Stores Chain in China from Japan
7-11
- Best Supply Chain Practise
- Supply chain analysis of Seven-Eleven Japan
- Supply Chain Management of Seven Eleven