7 Eleven Case Study free essay sample

There is an important difference between the strategies of 7-Eleven Japan and 7-Eleven USA. Due to the high-population density in Japan, 7-Eleven Japan makes use of the market-dominance strategy. This implies that many small stores are opened in a new area supported by a distribution center. Trucks could be filled at the distribution center and sent to multiple shops on a route, which is the main success of the logistical system of 7-Eleven. This clustering thus allowed for an efficient distribution system, but also improved brand awareness, advertising effectiveness. Moreover, the high-density market presence pushed away any competitors from the area. The same strategy was not effective for the USA. Because of the lower population density, the inhabitants preferred bigger stores in which they can purchase all their daily needs at once. In the US, stores are supplied using direct store delivery by producers and by wholesalers (Dullaert, W.E.H. Feldberg, J. F. M., 2013). The different cultural views of convenience stores in Japan and the USA play an important role. Most US customers consider the 7-Eleven stores as regular stores during gas-refill or for last-minute visits. In comparison, the Japan customers see the conveniences stores as what they call konbini (Konbini: Japan’s all-in-one, 2009). It is considered as an important way of life and the stores have a positive image among the customers. The Japanese 7-Eleven business model tries to maintain this positive image and loyalty by gathering data about their customers and use this data to create knowledge. In this way 7-Eleven becomes an innovative business with constant new challenges and new services for customers. Examples of these innovative services are that inhabitants of Tokyo, Japan could pay their electricity- or telephony bill at the 7-Eleven store, but they could also send their products, which they ordered online, directly to a near convenience store. In March 2007 7-Eleven Japan introduced Otoriyose-bin. This service gives consumers the opportunity to order products online and pick them up in a selected nearby store. The next level for 7-Eleven is to implement a new home shopping experience. This new service offers customers the opportunity to order their groceries online and have it delivered to their home at their desired time. The implementation introduces new factors that affect the current way of working. These factors affect the important key logistics components that come across by implementing the home shopping experience: efficiency and responsiveness. Efficiency, on the one hand, implies the execution of a service or operation using as less time and money as possible. In the case of 7-Eleven, there must be a balance between a quick delivery and minimizing transportation costs. Responsiveness, on the other hand, suggests the respond and accompanied actions on the customer’s demand. After an online order, the customer wishes to receive his or her goods as soon as possible. The customer demands a preferred time frame, because he or she cannot be at home all day. The objective for 7-Eleven is to satisfy both needs without losing their efficiency. There are many sources of modern technology that can add value in implementing and improving this new service, like mobile devices, big data and social media. The impact of the latter, we will analyze in this report. Problem description For the new home shopping experience service, several logistical consequences will occur during the implementation of this service. 7-Eleven will need an additional transportation service to provide the delivery from the distribution point to the customers. This transportation service can be provided by 7-Eleven or outsourced by a transportation firm, which both will increase the logistical costs of 7-Eleven. Another main logistical consequence for 7-Eleven is to keep track of all the new information flows from this new service, for example orders from the customers, preferred delivery time and location of delivery. A new or updated IS is required to systematically process this data of information flows. To integrate a new IS into 7-Eleven’s current system can be challenging and also the start-up cost is high. The main logistic issue discussed in this report is the movement of information flows. It is crucial for 7-Eleven to be efficient in processing the additional information flows generated by the new home shopping service. If, for example, the customer is not at home during the first delivery, the cost of delivery for 7-Eleven is doubled. Therefore, the information flow between the customer and 7-Eleven is of great importance. There should be a new information flow between the home-shopping service and its suppliers, carriers, distribution centers and customers. This concept is known as the supply chain. With all the new generated information flows from the home shopping service, it will be difficult to process this huge amount of additional data. One of the possible solutions to support this logistical issue and improve this process is through the use of social media. Over the years social media has become an interesting and powerful tool for companies to improve the information flows between customers and producers. Social media is powerful, because it is an information channel used by the majority of the modern society on a daily basis. It allows the company to communicate better with the customers. It also provides the company additional services. These services can support existing products, but is also a place for feedback and knowledge exchange. For example, the 7-Eleven home-shopping experience may provide extra information via Facebook or Twitter. For customers this suggests a direct track of their delivery and extra support. Beside this, the most important factor is the reach of many people with the single click on a button. If the platforms are updated continuously and are enhanced well, social media can be extremely beneficial to a company. Social media is evolving quickly and can make or break a company. By using social media, the information flow between the customers and 7-Eleven will be improved, but more importantly, 7-Eleven could also apply this improved communication as an opportunity to forecast the demand. For example, social media is the main medium used for an individual to express its preferences and whatever he or she thinks is ‘hot’ at the moment. Social media such as Twitter for instance, analyzing the so-called ‘trending topics’ on Twitter tells you instantly what the most important developments are in the world. This will help 7-Eleven to better indicate when and how much to restock their inventory. It could also be used to find out new trending products to sell. So using social media to forecast demand will be beneficial to the whole supply-chain of 7-Eleven. Problem statement The main goal of this consultancy report is to emphasize the importance of the flow of information and how social media can enhance the information exchange between customers and 7-Eleven so that 7-Eleven can use this information to forecast demand. Therefore our problem statement will be: How can social media support 7-Eleven’s home-shopping experience in forecasting demands? Outline of the report In this consultancy report, a thorough analysis will be done on already proven theories on social media and its power to enhance business processes. These theories will be applied to our specific 7-Eleven case and a conclusion will be made. A best scene scenario will become the base of our recommendation and implementation.