Business Strategy definition as success factor:
7-E Japan (7EJ) designed a business strategy focused on Japanese customer’s behaviors for household goods requirements. The responsiveness level, transparency and agility of 7EJ SC was based on a business model strategy which designed storages location, inventory levels and transportation strategy supported by technology (Chopra & Meindl, 2007).
Companies should design business strategy for success on SC implementation (Chopra & Meindl, 2007; Sethi, Yan & Zhan, 2005). Proper capabilities evaluation with regular audit process reduces risk and prevent problems on day-to day operations (Willianson et all, 2011) increasing agility in the SC ...view middle of the document...
A wrong procedure will end up on lack / excess products in the franchise store increasing inventory cost, obsolesce and extra space requirements. 7EJ solution was to ensure minimum stock at all stores levels by increasing efficiency on transportation activities with IT solutions. Franchise stores connected networks provided detail data for each product. Knowing demand, storage centers planned distribution, considering different types of trucks adapted for products requirements as main transportation system. The geographical location of the storage centers simplifies the truck routes activity using mass techniques optimizing truck transportation for cost reduction (Chopra & Meindl, 2007). Outsourcing transport activities converted fix cost into variable cost increasing performance by mass product truck transportation procedures (Sethi, Yan & Zhan, 2005).
The stores centers and franchise stores kept minimum inventory level. The SC strategy was focus on reliable suppliers. This strategy generates risk of product shortage when demand increases for unpredictable factor such as natural disasters or special events (Chopra & Meindl, 2007). But in general the precision of demand forecast based on detail data coming from interconnected system supports the main 7EJ objective of stores providing what clients need every day.
IT-Technology increasing SC visibility:
7-E implemented a complex IT system increasing transparency among suppliers, storage centers and franchise stores by sharing data. Franchise stores requested orders by the system and the automatic process verify the information before trucks were loaded at storage centers. The investment on technology for developing an interconnected network that not only fulfill orders but also identify profit margins by products allowed 7-E to redefine strategies about performance selecting profitable exclusive products (only available at 7-E franchise stores). Additionally the data collected from final customers allowed stores to developed other type of activities such as services, following the main business strategy based on customer demand (Chopra & Meindl, 2007).
The forecast procedures supported by detail data identifies Price Products and Promotions, Lot Sizes, New Products and Confirmed Orders automatically including reception of products using POS and ISDN systems (Chopra & Meindl, 2007; Sethi, Yan & Zhang, 2005).
The success 7-E SC strategy did not necessarily works in all geographical business environments. For example the household store concept followed values applicable to Japan Society were different for other societies. For example UK or USA customers prefers to buy on big stores areas or home delivery rather than small convenience stores (Willianson et all, 2011).
The transportation strategy required logistics for trucks and mass procedures for optimizing truck delivery activities at lower transport and inventory cost. In some Latin America countries lower inventory...