Seven Eleven Case Study

SEVEN ELEVEN CASE STUDY

When considering a distribution network design for 7-Eleven in the United States one must consider the measures that influence the structure of that network. These measures are: response time, product variety, product availability, customer experience, time to market, order visibility, and returnability. The latter three are of less relevance when consider the function of a convenience store chain.

A chain like 7-Eleven aims to provide it's customers with a small variety of essential items (motor oil, over the counter drugs, maps, etc.) at a higher cost along with a wide variety of convenience items (drinks, snacks, cigarettes, etc.) at a reasonable cost. This implies that when choosing a distribution network design one must select one or a combination of a few designs that provide high response time, reasonable product availability, and high customer experience. Since most companies are better served by a combination of distribution network; it seems that the most appropriate distribution design for 7-Eleven in the United States is a combination of Retail Storage with Customer Pickup and Distributor Storage facilities. This combination allows for good response time and product availability because items are stored locally or are replenished daily from the distribution center. The distribution center acts as the main storage facility so the retail facilities would utilize most of their space to display more products. Since deliveries from the distribution center can be made daily, this provides for a better response time. It also allows for better product variety as new items can be introduced to the retail location relatively easy while slow moving items are rotated out. As for customer experience, the effects will vary with this design. Customers that are willing to pay higher prices for convenience will have a more positive customer experience; while others that place less value on convenience will have a less positive experience. Another advantage to this design is the lower transportation cost since manufactures deliver to the distribution sites and items are aggregated then delivered to the retail site. Lower transportation cost can be translated to lower prices that can be passes on to the customer thus possibly improving customer experience.