Iqra University

ISLMABAD


NAME:
JUNAID KHALID


ID NO.
19205


SUBJECT:
DISTRIBUTION AND CHANNEL MANAGEMENT


DATED
27/01/2014
7-ELEVEN
7-ELEVEN provides efficiently delivering goods at different temperature levels to all the stores and
thereby creating a new model in the distribution industry. To preserve the freshness of different
products, merchandises are sorted professionally into five different categories according to their
attributes.

When considering a distribution network design for 7-Eleven 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.
A chain like 7-Eleven aims to provide its 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 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 is 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.
7-Eleven also allows customers to pick up online orders at ta designated stores. In this approach,
inventory is stored at the manufacturer or distributor warehouse but customers place their orders
online or on the phone then come to designate pickup points to collect their orders. Orders are
shipped from the storage site to the pickup points as needed.

7 Eleven Japan, the marginal increase in transportation cost is small because trucks are already
making deliveries to the stores and their utilization can be improved by including online orders.
7-Eleven stores are that they are not equipped to accept and process returns for products not sold
at the stores. From a transportation perspective, however, return flows can be handled using the
delivery trucks. For customers, returning a product will be easy because they have a physical
location to bring it to. Overall, returnability is fairly good using this option.

Wal-Mart
Wal-Marts highly-automated distribution centers, which operate 24 hours a day and are served
by Wal-Marts truck fleet, are the foundation of its growth strategy and supply network.
In the United States,the company has more than 40 regional distribution centers for import flow
and more than 140 distribution centers for domestic flow.
When entering a new geographic arena, the company first determines if the area will be able to
contain enough stores to support a distribution center.
Each distribution center supports between 75 to 100 retail stores within a 250-mile area. Once a
center is built, stores are gradually built around it to saturate the area and the distribution
network is realigned to maximize efficiencies through a process termed reoptimization
The trickle-down effect: trucks do not have to travel as far to retail stores to make deliveries,
shorter distances reduce transportation costs and lead time, and shorter lead time means holding
less safety inventory.
If shortages do occur, replenishment can be made more quickly because stores receive daily
deliveries from distribution centers.
The companys hub-and-spoke distribution network utilizes a system of manufacturer storage
with customer pickup. No inventory is stored at Wal-Marts distribution centers.
Wal-Marts fleet of 6,500 dedicated trucks and over 50,000 trailers are used to pick up goods
directly from manufacturers warehouses, thus eliminating intermediaries and increasing
responsiveness.
The use of trucks raises transportation costs but is justified in terms of reduced inventory.
Merchandise brought in by truck to distribution centers is sorted for delivery to stores within 24
to 48 hours. However, certain goods, such as automotive and drug products, are delivered
directly to stores by suppliers.
Wal-Mart, a pioneer in the logistics technique of cross-docking, also has store-specific orders
packed and shipped directly to the store by the manufacturer.