Operations and Supply Chain Management: Seven-Eleven Japan Report

This report provides a comprehensive analysis of Seven-Eleven Japan's operations and supply chain management, addressing key aspects such as rapid replenishment strategies, associated risks (including system, collaboration, and management risks), and the company's approach to facility location, inventory management, and transportation. The report evaluates the benefits of Seven-Eleven's distribution center policy and considers the potential of direct store delivery. Furthermore, it examines the 7dream concept from a supply chain perspective, assessing its suitability and potential challenges. The report also delves into risk management, defining its importance in improving operational performance and exploring the causes of failure, along with preventative measures and mitigation strategies. Finally, the report emphasizes the importance of improvement in operations management, discussing key elements like supply, efficiency, quality control, and adaptability, and it presents two approaches to managing improvement: daily huddles and standard work.

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Seven-Eleven Japan Operations and Supply Chain Management
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Question 1
Seven-Eleven’s supply chain strategy in Japan can be described as attempting to micro-
match supply and demand using rapid replenishment. Discuss the risks associated with this
choice.
Using advanced distribution and information systems has enabled Seven-Eleven Japan to
replenish its stores 3 times per day; and this result to constant changes of the available products
during the day (Sunil and Peter, 2013, p. 6). Seven-Eleven Japan response to orders is very
prompt, whereby the company’s store manager focus on placing replenished orders in below 12
working hours prior to getting supplies delivered. Matching supply and demand has made Seven-
Eleven Japan very responsive. But, this supply chain strategy is associated with some risks which
include:
Risks on systems: According to Chopra and Meindl, (2016, p. 55), rapid replenishment requires
sharing of information within the chain of supply, which requires integrated information systems
support. As a matter of fact, the initiation, running and maintenance of information system needs
technical knowhow/ staff and funds; thus this would raise the expenses. Nevertheless, supposed
the systems develop some fault, this would contribute to trade secrets leakage to competitors.
Collaboration risks: Rapid replenishment of orders requires collaboration within all supply chain
levels to ensure that no mistakes get made within the whole process. At the moment, rapid
replenishment forces suppliers to replenish quickly and this contributes to huge transaction
charges (Meindl, 2016, p. 9). Also, multiple uncontrollable issues such as road congestion and
natural disasters increase the risk.
Risks associated with management: Rapid replenishment needs committed, experienced, and
adaptable staff. For instance, truck drivers who should stay alert and standby all times to deliver
products to their designated destinations without any delay (Meindl, 2016, p. 11). This increases
managerial costs, labor expenses and transportation costs.
Out of stock risk: Factors such as road traffic/jam and natural disasters affect rapid replenishment
process. Where there is no rational and prompt treatment, this may contribute to merchandise

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shortage and then tarnish the corporate reputation the company thus loss of key customers/
clients (Talluri et al., 2013, p. 258).
Evaluate what Seven-eleven has done to support its supply chain strategy in Japan
regarding facility location, inventory management, and transportation and information
infrastructure.
Seven-Eleven Japan has made the decision of running an intensely responsive operation and
selected a chain of supply design that is in support to this strategy. The choice on their facility
location is saturating a zone with its retail stores, thus simplifying the process by which
customers shop and also uses their self-owned trucks to replenish inventory from one store to
another (Sunil and Peter, 2013, p. 2). The company’s inventory system is operated using an
information system which transmits directly to the supplier and distribution center; products get
made utilizing a pull system in order to cover what has already been disposed in a given period
of inventory delivery. The system of transportation is flexible in order to maximize delivery
responsiveness and at the same time achieving efficiency.
Seven-Eleven does not allow direct store delivery in Japan but has all products flow
through its distribution center. Explain the benefits of this policy and consider whether
direct store delivery would be more appropriate.
The advantages of Seven-Eleven Japan’s delivery using their distribution center strategy are
full/total control over their delivery system, reduced disruption to all its retail outlets across
Japan and aggregation of market demand. If various suppliers attempted to make between 2-3
deliveries in one day, this would detract the ability of store managers to offer the anticipated
customer service (Pal and Byrom, 2013, p.520). All suppliers at their individual level have
likelihood to prefer using their self and unique approach of getting operations done, their own
stock system and size of truck measures; this may complicate issues for Seven-Eleven Japan
distribution center strategy/ system. It would be better to share the production and demand data
across all suppliers instead of residing on the company’s system from cradle to grave. For
products which cannot get ready in a short time, pull production may not be reliable in giving
Seven-Eleven Japan the responsiveness it anticipates (Jaca et al., 2014, p. 148). In reference to
Seven-Eleven Japan case, distribution center policy allows inventory pooling something which

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raises the company’s whole entire service level while lowering overall system inventory/ stock
for these products.
Discuss the 7dream concept for Seven-Eleven Japan from a supply chain perspective.
According to Jacobs, Chase, and Lummus, (2014, p. 80), the 7dream concept enables e-
commerce website to make proper use of Seven-Eleven Japan stores as the collection and drop-
off points for all e-commerce customers in the country. The 7dream concept has incredibly a
success; recent survey by Jacobs, Chase, and Lummus, (2014, p. 86) showed that 92% of
customers for a single e-commerce business chose their ordered products to get shipped using
this approach. There is a high likelihood the 7dream concept would suit only in the densely
populated urban zones. I presume that this concept would be initiated in congested and less-
secure urban zones in services like packages delivery. In the U.S., sub-urban customers will find
this concept very inconvenient and distance themselves from it unless Seven-Eleven Japan stated
that homes delivery was impossible and the only alternative was picking the packaged item in
their local store office (Talluri et al., 2013, p. 260).
Question 2
Explain what risk management is in the context of improving operations performance
According to Jaca et al., (2014, p. 150), risk is a threat that signals a possible failure and thus
must be treated with due care, diligence, and utmost importance. In the context of improving
operations performance, risk management is the act of taking preventive measures that prevent
risks from occurring. Operations risk management entails setting aside policies, strategies,
techniques, and approaches of managing risks. The most common risks in management include
massive resignation of employees, failure to meet the set target, system errors, labor strikes,
fraud, misappropriation of funds, and employee errors among others (Jaca et al., 2014, p. 152). In
this context, operations risk management helps in the improving of business operations reliability
and a higher certainty of success, prompt identification of dangerous acts by the stuff or labor
unions, lowering of losses that result from poorly-identified risks, and strengthening the process
of decision making where most risks get involved.
Assess the potential causes of and risks arising from failure.

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Failure in business/ operations management is caused by many factors. The main potential
causes are poor leadership where the operations manager makes poor decisions. The other
potential cause is lack of value and uniqueness of the product or services offered by the business
to the target market (Norrman and Jansson, 2014, p. 434). Another potential cause is not valuing
key stakeholders such as customers, employees, and investors. Last are poor management of
finances and adoption of unprofitable business model. The risks associated with failure include
business failure, employee vs management conflicts, poor credit worthiness to financiers, poor
implementation of decisions, endless wrangles, and ultimate losses.
Discuss how failures can be prevented and how operations can mitigate the effects of
failure
Failures can be prevented using various approaches. These approaches includes avoidance of all
activities that are considered to have a potential to cause operations failure, combating the risks
as identified at source, doing an evaluation of risks that cannot get avoided in order to technically
combat them, instructing the staff on what to do and what not to do, and replacing the risky
activity with the less dangerous one (Shin et al., 2016, p. 720).
According to Hofmann et al., (2014, p. 170), operations can mitigate the effects of failure by
adopting various techniques. The researcher states that risk mitigation helps in minimizing the
severity of risks of failure. These failure mitigation approaches include risk avoidance,
transference, acceptance, and limitation. In general terms, risky projects should be avoided by
the management to avoid incurring pure financial and physical losses (Hayes, 2016, p. 8).
Acceptance of risks requires the operations team to consider the projects whose risk is can be
withstand. Reduction and risk control involves lowering the probability that a risk would occur.
Last is transference by using an insurance company.
Question 3
Explain the importance of improvement in operations management.
According to Hayes, (2016, p. 10), operations management improvement entails a process-
oriented approach that focuses on realizing the desired outcomes on an incremental basis.
Improvement in operations management increases a company’s efficiency and productivity level.

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This is because continuous improvements eliminate inefficiencies and making team members
more productive and motivated to achieve the set targets.
Second, improvements in operations management results to improved product and services
quality. According to Cooper and Ellram, (2015, p. 20), operations management improvement
accelerates projects and the quality of commodities delivered by a company. For instance, via
deploying the right testing methods, organizations get more assured that their products and
services would be of utmost performance, integration, quality, and other benefits.
Third is that it raises customer loyalty and satisfaction level. Improvements in operations
management ensures that the products produced are of top quality and are timely delivered hence
satisfying customers to the desired levels (Giannakis and Papadopoulos, 2016, p. 460). Also,
improvements raise the working environment and thus improve workers morale. The end results
of operations management improvement are gaining a competitive edge against the competitors
in the market.
Discuss the key elements of operations improvement.
According to Da Fonseca, (2015, p. 40), operations management is the main facet of a company
in which most direct labor occurs. The key elements of operations management include supply,
efficiency, quality control, reliability and adaptability as discussed below.
Supply: In business operations improvement, a company is entitled to introduce a supply to work
with from a certain set point. For example service oriented firms where this supply is primarily
data. According to Bateman, (2015, p. 270), this supply must be cost efficient and dependable.
Efficiency: Business operations must make efficiency to be a key goal. One goal of operations
improvement is to improve efficiency and productivity, and this satisfies it as a major element.
Reliability and adaptability: These two elements work interchangeably and provide a substantial
pressure or tension in business activities. According to Aqlan and Lam, (2015, p. 5640),
operations improvement activities must be reliable. Also, companies require sufficient
adaptability to transform with technology that is being used in the market.

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Quality control: The business needs to assess its operations at the end of all production
processes. The final product will be examined using quality control and this ensures that
products offered to the target market have no defects.
Discuss any two approaches to managing improvement.
Daily huddles: This approach is prevalent in the firms dedicated to ensure continuous
improvement. In this approach, teams gather around a huddle board in order to discuss the
ongoing projects and come up with strategies to achieve and solve problems (Da Fonseca, 2015,
p. 40).
Standard work: This approach is considered to be the bedrock of improvement. According to Da
Fonseca, (2015, p. 44), standard work consists of a document containing the current/ emerging
best practice for any given operational task or process. People come up with the standard which
gets maintained continuously to enhance compliance and accuracy.

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References
Aqlan, F. and Lam, S.S., 2015. Supply chain risk modelling and mitigation. International
Journal of Production Research, 53(18), pp.5640-5656.
Bateman, N., 2015. Sustainability: the elusive element of process improvement. International
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Chopra, S., and Meindl, P., 2016. Supply Chain Management Strategy, Planning and Operation.
Sixth Edition. New York, NY: Pearson
Cooper, M.C. and Ellram, L.M., 2015. Characteristics of supply chain management and the
implications for purchasing and logistics strategy. The international journal of logistics
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Da Fonseca, L.M.C.M., 2015. ISO 14001: 2015: An improved tool for sustainability. Journal of
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Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management
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Hayes, R., 2016. Operations, strategy, and technology: pursuing the competitive edge. Strategic
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