Q1. Background information of 7-11

Seven-Eleven Japan Co., Ltd. (7-11) is an international brand that spreads more than 10 counties and owns more than fifty-thousand chain stores. You can browse the huge network below.

7-11 found on November 20, 1973. Up to early 2013, it has recruited more 6,000 employees. 7-Eleven, Inc. , SEVEN-ELEVEN(HAWAII), INC. , SEVEN-ELEVEN(BEIJING)CO.,LTD. , SEVEN-ELEVEN(CHINA) INVESTMENT CO., LTD. , SEVEN-ELEVEN(CHENGDU) CO., LTD. and Seven-Meal Service Co.,Ltd. are the major subsidiaries of 7-11.

Although 7-11 is an international brand, it associated with various styles and became localized to provide different kinds of services and products vary country by country. Say in Hong Kong, the size of 7-11 store seems smaller than that of Japan. However, it would provide products favorable to HongKongers, just like the fish meat shaomai, barbecued pork buns and some contonese restaurant’s style lunchboxes.

On the other hand, we can see some different products are offered in Shanghai.

The own brand drinks for 7-11.

The below products are found in Japan.

In fact, 7-11 applies the competitive strategy to provide a high-availability of diverse products with reasonable price and quality. To take advantages of high market share, 7-11 engaged to open convenirnt stores with high density. These convenient stores are combined with both the own and franchisee stores.

source:
http://www.sej.co.jp/company/en/g_stores.html

http://www.7-11.com.tw/shanghai/page02.htm
http://www.sej.co.jp/index.html

Q1. Find out more about the company background of FedEx

FedEx provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. FedEx offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 300,000 employees to remain absolutely, positively focused on safety, the highest ethical and professional standards and the needs of their customers and communities.

1. Business model

- Government-to-Business (G2B)

- Business-to-Business (B2B)

         E.g. DELL, CISCO

- Business-to-Consumer (B2C)

FedEx’s intranet included more than 60 Websites, created for its end users and in some cases by its end users.

       - Consumer-to-Consumer (C2C)

2. Competitors

The four leading companies in the international courier business were DHL, FedEx, UPS and TNT. Between them they held more than 90 per cent of the worldwide market. 

- UPS

UPS was founded in 1907 and headquartered in U.S. with larger market share in Europe and a larger share of its revenues comes from Europe. UPS is running with the B2C E-commerce market and lead in residential delivery services. UPS's primary business is the time-definite delivery of packages and documents worldwide. In recent years, UPS has extended its service portfolio to include less than truckload transportation (primarily in the U.S.) and supply chain services. UPS reports its operations in three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations.

- DHL

In 1993, DHL announced a four-year US$1.25 billion worldwide capital spending programme aimed at investing in handling systems, automation, facilities and computer technology. DHL dominated the UK market and is the main competitor in the airfreight market which competing overnight delivery service.

- TNT

The headquarters of TNT is in Netherlands. TNT launched a Web Collection facility on the Internet and the world’s first global Price Checker service on its Website that allowed customers to calculate the price of spending a consignment from one place to another anywhere in the world. Besides, TNT launched QuickShipper and the express industry’s first dedicated customer extranet, Customised Services environment.

3. Customers

- General public

- Government

- Company (from large to small scale)

 4.  Service and products offering

FedEx combined the functions of materials management and physical distribution which concerned with inbound as well as outbound material flow, within companies as well as the movement of finished goods from dock-to-dock.

 a) Transportation

1.      Physical transportation (no matter document, small package or heavy freight to send)

2.      Coordination and control of storage

3.      Control the movement of parts and finish goods

b) Logistics (valued-added activities)

1. Order processing
2. Distribution centre operations
3. Inventory control
4. Purchasing
5. Production and customer and sales services (E.g. pack the shipments by using FedEx packaging, schedule the pickup, tracking the shipments)

Source: http://about.van.fedex.com/company-information

http://images.fedex.com/downloads/newcustomer/hk_english/serviceguide.pdf

Q2. List out the benefits of a virtual supply chain

1. Definition of Virtual supply Chain (VSC)

It is the Linkage of information and cash flow. Virtual means the connection of chain or network via electronic link, and it represents an organizational structure, which facilitates efficient and effective flows of both physical goods and information in the supply chain management. 

2. Systems

FedEx improve the virtual supply chain through different systems and technologies, the benefit bring form those systems and technologies are as follow:

a. Power ship programed
Power ship programed improve the efficiency and proprietary online services.It also provides some additional services, for example, storing of frequently used address, label printing, online package pick up request

b. Customers Operations, Service, Master on-line system, COSMOS
It has placing bar code (point of pick-up). The system also manage on-time information to different stakeholders, for instance, vehicle, people, package, routes and the others. It also can integrated information flow of shipped goods and transportation mode. These systems can improve the delivery cycle efficiency, shorten the cycle time and evaluating customer service levels.

c. EDI

EDI can build up one-to-one relationship with their customers. It will follow the points of raw materials and Provide management services, such as, order processing and related distribution. Interconnect and distribute information to all roles in supply chain linking to other parties in supply chain to improve the sources and procurement strategy. Improving, tightening and synchronizing inventory out of the system can squeeze the time so that can increases in customer loyalty and in customers. And also can raise the barriers to entry for competitors.

d. Global Operations Command Centre
It Provides efficient gathering & dissemination of real-time data and predict with greater accuracy the amount of inbound traffic. It prioritizes the hundreds of variables. It provides current & accurate information so as to reduce failure in the business.

3. Benefits

a. Costs reduction 
The cost to customers of using FedEx in 1999 was lower than it was 25 years ago. In 1999, they handled 60 million transactions per day, and saved FedEx the cost of 200,000 customer service employees. They had a virtual relationship with suppliers and the companies so that it can reduce administrative costs, payroll costs and switch to companies-(fixed cost) that provide low labor costs and a quality product. Also the resources and assets among the system suppliers will be contributed jointly under the direction of a supply chain captain and a coordinating team.

b. Speed up
It speeds up the product flows through the supply chain as they send new designs to suppliers and suppliers send these parts to the assembly companies. Finally, ship the finished products to distributors’ worldwide so that can reduce time required from the initial design, to production and then distribution and allow resources to be treated as commodities that can be lent, borrowed or traded. They can thus be flexibly consolidated, apportioned and allocated.

c. Diversity of suppliers
VSC allows a company to search for and use a wider range of suppliers. Although geography may separate them, they can still communicate electronically. It can benefit the company because more multiple suppliers means you can avoid emergencies in your supply chain and the more suppliers are available. It can high the flexibility.

Q3. Discuss the role of IT in FedEx’s Business Strategy

IT facilitate the globalization of business which could provide advantages to customers in the international market. The role could be considered as internal, external and global aspects.

For internal

1.      IT creates more business opportunities in Logistics Management

With the integration of internet and intranet system, company could redefine themselves to re-engineering the supply-chains and associate with e-tailing and business-to-business e-commerce. For instance, information sharing between departments in company or between organizations could enhance efficiency and reduce costs. Also, it enabled company to integrate with customer supply-chains which could improve customer services.

2.      Provide real-time information

FedEx has a Global Operations Command Centre which is a worldwide central nervous system of FedEx’s. It enabled the company to provide efficient gathering and dissemination of real-time data. When new information was entered to the system by FedEx or customer via the Net, related database was updated instantly and automatically with 24-hour, seven-day operation. With system, FedEx could further differentiate itself by generating high operational efficiency and provide excellent customer services.

For external

1.      Enhance relationships with customers

With IT, relationship between FedEx and customers could be enhanced by increasing the customers’ loyalty and switching cost. PowerShip System is a technology to provide add-value services. It provides additional services to the customers such as storing of frequently used addresses, label printing, on-line package pick-up requests or package tracking. These activities highly improve the efficiency and control for on-line services. Electronic data interchange (EDI) would be another useful technology. It helps to build one-to-one relationships with their customers. More benefits are matching supply to demand without wastage, providing management services and one-point access for customers. All these services could improve the customer relationship.

For Global Market

1.      Provide new service

FedEx Home Delivery is a new services which arose by the use of IT. The services could facilitate business-to-consumer e-tailing. Customers around the world could place order and raise requests online. Also, order checking number are given to customers to check parcel situation online easily by themselves. Moreover, customers could also receive an electronic signature receipt through the internet.

2. Expand the market

After acquiring Calibers system, market could be expanded by forming five subsidiary companies.

3. Allow global sourcing

IT allow global sourcing and choose alternatives parties in the global market. It lower the costs a lots.

Q4. Discuss the virtual integration of the supply chains without ownership

I.            The definition of virtual integration of the supply chains without ownership:

ü   Standardizes the system for the whole supply chain

ü   Eliminate the boundaries in the supply chain among the suppliers, manufactures and customers

ü   Seamless the Supply Chain

ü   Improving, tightening and synchronizing the various parts of supply chain

II.          The Technological systems & Applications:

III.        Benefits from the virtual integration of supply chains without ownership

1.          Ability to interconnect and distribute information to all the players in a supply-chain

Ø   Differentiate FedEx’s products & service

2.          Outsourcing the supply chain management function from FedEx

Ø   More partnership arrangement

Ø   Help partner to redefine sources and procurement strategies

Ø   Link other parties in the supply chain

Ø   Become FedEx core business

3.          Raise barriers to the entry for competitors

Ø   Increase customer loyalty and customers’ switching costs

4.          Control the movement of goods:

Ø   A product movement planner scheduled the order

Ø   more efficient and convenient

5.          Information:

Ø   Automatically up-date

Ø   real time, more accurate (e.g. movement of trucks & aircraft, inbound traffic, weather patterns

Ø   gathering and disseminating real-time data

Q5. What are the factors that put pressure on FedEx to consolidate its operations, while remaining customer-focused?

Rising fuel prices

Rising fuel price had severely impacted upon the Company’s net income. Cost of fuel charges large proportion of the variable cost of transportation. It affects the operating income a lot. According to the Annual report of FedEx, the average fuel cost per gallon kept rising from 2010 to 2012. Fuel expense increased 19% during 2012 primarily due to price increases. 

It put pressure on the Company to re-think its business strategy.

You can also check the most current price at this website:

http://www.GasBuddy.com/gb_retail_price_chart.aspx?city1=USA%20Average&city2=&city3=&crude=n&tme=96&units=us

The Internet Market and e-Tailing

The Internet changed the basis for competition for most businesses. 

Its low cost and high diversity of applications made it appealing and accessible. The expectations of its customers, the size of the company was of no significance. 

The impact of the Internet on FedEx was twofold. Firstly, it opened up opportunities in logistics management for FedEx as businesses were using the Internet to re-engineer their supply-chains. So long as customers were satisfied, it really did not matter whether the goods were warehoused or not, whether the goods came directly from a factory in some distant location or whether the goods had been made to order. 

Intensive Competition

The industry was loaded with companies, local and global, that provided a myriad of transportation services to a wide range of businesses. Although FedEx pioneered the Web-based package-tracking system, such systems became the industry norm rather than a competitive advantage.

Minimizing duplication of work &Customer Confusion

FedEx was trying to promote five different subsidiary companies with completely unrelated names and business logos under the FDX banner through distinctly separate sales and customer service teams. By consolidation, information could be shared across the business units and hence minimize  the duplication of work and better serve customers.

Reflection

Internet and IT systems did help FedEx to integrate the customer services and supply chain activities. The case study keep our awareness of the importance of IT systems and how it could contribute to a company's operations. Other than that, integrate the supply chain not only help to cut down the cost but also help to enhance customer satisfaction   

Yakult Visit (24 March 2014)

                   

                        Yakult (orginal flavor)                     Yakult                                    Yakult Tea
                                                               (high fibre and low sugar)          (drink during having meal)

Total has around 2000 Yakults' bottle
                                           


1. In HK, Yakult only have one to two products. Will Yakult consider using its unique existing technology to diversify itself and expand the market? For example, adding new product lines to sell related healthy products such as yogurt or Yakult sweet or others.

It’s because Hong Kong does not have enough place to produce more production line as we all know Hong Kong’s land are limited so that Yakult only can product two products.

2. From the news of HKET, nutritionists claim that even a light Yakult contain more sugar than a Coke. Facing the criticism and challenges, how do Yakult deal with the negative public opinion?

It is not doubt that Yakult contain many sugar and it also affected the sales amount but it is necessary to add in sugar since the acid bacteria must need sugar to be their food to maintain their life so that it is a must to add in sugar. However, Yakult spread this message to public to explain the facts to public. Now the sales amount is being controlled.

3. As Yakult contains the milk powder which makes it a dairy product, it is harder to preserve than the other kinds of drinks. How does Yakult manage to preserve their products with such a large amount of them are being sold in the market? How does Yakult manage to control the inventory as the demand is sometimes hard to predict?

They always do the survey to predict the demand of sales. Since Yakult just only can drink within one month, the product will be deposed after one month so that the prediction of the demand is needed.

4. Yakult has been increasingly putting focus on Guangzhou such as building a second manufacturing facility. With improving transport infrastructure at Pearl River Delta, does your company have the intention to move the production plant from Hong Kong to Guangzhou? Why or why not?

The production plant in Hong Kong cannot move to China. It is because there is an expiry date for the product with one month. Time is needed for the delivery period. The quality of the product would be ensure if it can produce in Hong Kong. It can also avoid any uncertainty cause by the delivery from China.

5. To deal with the large demand in mainland China, what is the reason for Yakult not to build up the sales network in China?

Yakult has already had some production plant in Guangzhou, Tianjin etc. There isn’t any intention to move out the plant because Hong Kong’s product supply for Hong Kong and Macau. And the delivery time are also important for delivery product since it can’t store for a long time so they should send Yakult to market as soon as they can.

6. It is observed that the rumor to Yakult products in China such as preventing cancers, whitening faces leading to the rising demand on Yakult? Are there any benefits and drawbacks caused by the rumor? Are there any follow up actions to deal with this rumor?

It is doubtless that the Chinese purchase large dose of Yakult products in Hong Kong due to the rumor. The rising demand gives high productivity for Yakult. However, the rumor is not true. So, Yakult would hold some company visits to tell the visitors the truth. Meanwhile, the visit would help people to know more about the benefits of Yakult products.

Different products of Yakult

Two cute doll for decoration in factory

different products

different country's Yakult

                                     

souvenirs of visiting Yakult's factory in Tai Po( file & key ring)

After visited Yakult's factory, we understood more the process of producing Yakult and history of Yakult. They explained the history and the invention of Yakult. Then introduce Yakult's ingredient and the advantages of drinking it. Also we had tasted their products immediately. We could see the process of producing Yakult. That was funny since we could see how the Yakult bottle produce (it works 24 hours), second filling in Yakult, use machines to cover the opening, then packing and checking are also needed. Finally was sorting and packing all Yakult to deliver to the market. This products need to distribute to local and Macau. We can understand the whole supply chain of Yakult and the logistic about deliver the product.

reference 

 

http://www.yakult.com.hk/img/product/landing/yakult_pic.gif

http://www.yakult.com.hk/img/product/landing/lt_pic.gif

http://www.yakult.com.hk/img/product/landing/tea_pic_form_off.gif

 https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcT68-N4iVZPoElK-eXguKjHX67qznk7TEhylxMjK23MCjkhX6wIEw

https://www.youtube.com/watch?v=Cz-j5VWhrUQ

 

Kerry Logistics Visit (3 March 2014)

Brief introduction of Kerry Logistics:

Kerry Logistics is a premier logistics service provider which is based in Hong Kong. With the core value of Value Creation, Openness, Integrity, Commitment and Excellence, they continues the innovative process to differentiate itself. Their understanding in the uniqueness of the Asian market help them to become a leading logistics service provider in Asia.Their core business encompasses integrated logistics, international freight forwarding and supply chain solutions.

We found that Kerry Logistic has agile market sense which can be revealed from their core value. On 3 March, our class visited Kerry Logistics’ headquarter situated at Kerry Cargo Centre in Kwai Chung. This was a great opportunity to see how this leading logistic company operate. 

1. It seems that Kerry Logistics has put more focus at Thailand (e.g. headquarter of KART, Kerry Siam Seaport) when compared with other Southeast Asian countries. What are the major factors of putting the focus at Thailand? Does the recent anti-Thaksin movement affect the company business?

Kerry logistic has put more focus on Thailand because Thailand has historical advantage since it has many companies there before. And it is well developed. Also, Thailand also has the geographical advantage as it is on the middle part of Asia so that it can easy to develop in Asia. Moreover, Thailand is political stable too. The recent anti-Thaksin would not affect the company business.

2. Kerry Logistics often makes use of inter-modal transportation. How do Kerry Logistics effectively communicate and corporate with different transportation modes' partners in order to deliver the goods to the destination efficiently and take advantage of inter-modal transportation?

Firstly, all the deliveries of Kerry are well-planned in advance, including the route, the delivery time and the resources included. It is very crucial for the well-organization before each delivery and it is not the work can do at the last minute before the delivery. Indeed, the corporation between each mode of transportation is linked with the qualified system developed by Kerry Logistics. Meanwhile, the inter-modal transportation provides large flexibility for Kerry Logistics in order to provide excellent solution for delivery.

3. Last year, Kerry Logistics has secured a major contract with ASOS to support the on-line fashion and beasty retailer’s push into the China market. It reveals that foreign companies always choose Kerry as their partners to explore market in China. What are the key factors that make Kerry attractive to your business partners?

The manager told us that the business environment in China is much about “Guan Xi”. It would be a large problem for the foreign companies to knock the door of different departments in China rather than take advantages by the well-developed relationship of Kerry. At the same time, the competitive advantages for Kerry is attributed to the fully spread warehouse distributions rather than the coastal focused distribution of rivals in China. Lots of the competitors only focus on the coastal areas, however, the business opportunities in China is indeed moving to the west. Thus, the facilities of Kerry Logistics are well-established and distributed throughout China. It is also beneficial for those foreign countries to penetrate faster into the China market. Besides, having a great network in China, Kerry also has the following competitive advantages:

a) Reasonable price:

Compare with their competitor, the price of using Kerry Logistic not very high. Due to Kerry logistic is a multinational corporation, they can enjoy the advantage of economies of scale that their competitor in China do not have, such as lower renting cost, and it allows Kerry to offer a relative low price to their customer. Also, in order to provide a stable/good services quality, Kerry has a professional operation team which cannot offered by their competitor. Therefore, under the same service quality level, Kerry Logistic has a lower operation cost, and it allows them to provide a reasonable to their customer.

b) Good financial situation and reputation:

As I mention before, Kerry Logistic is a multinational corporation, so it is not difficult to find their financial situation. According to the financial report of Kerry Logistic in 2012, we can see their financial situation is very well, their net profit in 2012 is 216 million. Also, the history background of Kerry Logistic makes them have a great reputation, which is useful for a foreign company to enter a new market and attractive business partners, especially in China. And those kinds of evidence give a great confidence to their customer and business partners.

4. As we know, “KerrierVISION” is the own IT system of Kerry Logistics. It provides many services to meet individual needs of customers. What kinds of services or technologies that you differentiate from your competitors?

KerrierVISION is the platform designed to meet the individual needs for every customer. Just in Hong Kong, there are 50 programmers conduct operation for the system to understand the needs of customers. And in Mainland China, there are more than 100 programmers to run the system. Kerry Logistics have invested a lot of resources to the IT department. The rich and professional IT human resource is the main way that Kerry differentiates themselves against other competitors. The system is more feasible and effective for their clients.

5. Kerry has many in-house customized systems, such as KerrierVISION, KBOS.  Could you tell us more about the benefits toward the company after implementing these systems? 

As a logistics company, IT development behaves as the core element to outperform within the industry nowadays. In particularly, speed is emphasized for logistics industry as well as the reliability. The main point is that advanced technology helped to facilitate the service provided to the customers with higher speed and reliability. Just like the in-house customized systems which can definitely help customers to monitor the whole process delivery; at the meantime, help Kerry Logistics to surveil the distribution efficiency and effectiveness. Accurate information is also acquired through the system which is important for the database establishment.

6. What are the major competitive advantages of Kerry logistics to differentiate itself from other logistics companies like FedEx and DHL Express, UPS to maintain its competitiveness in Asia?

The major competitive advantages of Kerry Logistics are including the distribution capability and the reliability given. Firstly, Kerry Logistics is good in financial health. Besides, the whole distribution operation also supported with lots of security measurements. The manager mentioned they are not hesitating to invest in the assets such as the well distributed distribution center throughout different countries. They have developed a good network on road. For example, as mentioned above, the distribution capability of Kerry is enlarged with the west of China while the competitors mainly focused on the coastal area only. Totally, it is a tradeoff between good service and cost.

Learning reflection:

Kerry is not an ordinary logistics provider! In the past, I think that logistic company only provide service of storing and distributing. After visit, I realize that company should continue think of new services to increase its competitiveness. Being a customer-oriented company, services must satisfy customers’ need or even beyond their needs and expectation. Kerry logistics’ strategy wider our eye and change our understanding about logistic industry. 

References:

http://www.kerrylogistics.com/
http://www.kerrylogistics.com/eng/OUR_NETWORK/Greater_China/images/Greater%20China_Dec13.pdf

https://www.kerrylogistics.com/eng/OUR_EXPERTISE/IndustrySolutions/electronicstechnology/images/ElectronicFlyer(Mar2011).pdf
http://www.kerrylogistics.com/eng/INVESTOR/analyst/Kerry%20Logistics%20First%20Glance_Pure%203PL%20play_17Dec13-2.pdf