Operation anagement - Essay Example

Operation Management 7-Eleven the convenient store that never sleeps and has a 5,300 convenient store worldwide is adopting a new system of their inventory. A hybrid inventory system is being used by 7-Eleven to be able to help them in their inventory. In inventory systems, when a shortage occurs, incoming demands are handled either by emergency orders (or lost sales) or backorders. However, the backorder costs are usually time-dependent, hence it is costly to backorder early in the lead time.

On the other hand, it is obviously expensive to fill the shortages with emergency orders alone. As the convenience market has changed over the years. 7-Eleven has retained its competitive edge by continually refining inventory to meet the changing needs to its customers. Today, stores sell everything from fresh deli sandwiches to prepaid telephone cards, and store managers closely monitor inventory to see how fast each product is moving off the shelves. Ultimately, the inventory in any given store is determined by customer demand at that specific location.

7-eleven manages its store inventory through a centralized item master that maintains price and product information for every item its stores sell. The information is being forwarded to 7-eleven's suppliers to enable buyers and vendors to more easily communicate electronically. The item master with a larger enterprise system, manage prices on each item, in every store, in real time, allowing the company to respond quickly to changing market conditions. 7-Eleven is also using a e-procurement for store equipment and other supplies.

Previously when the company wanted to upgrade or replace equipment, it would contact a few known vendors, request a price, and choose the lowest offer. Today 7-eleven is implementing the use of the Procurement solution. It enables 7-eleven to reach literally dozens of global suppliers with a single detailed Request for Proposal form, and then hold an online auction that determines the absolute best available price. It's a far cry from selling eggs and milk from a loading dock, but this process represents how dramatically the convenience store industry that 7-eleven helped invent has been changed by technology.

Today, customer can walk anytime ,day or night, and get the products and services they need at the right price. Because of this system 7-eleven remains the convenience store to walk in thru. For me, the system being implemented by 7-eleven has helped them a lot in their inventory system. They allow them to properly monitor their stocks without sacrificing the quality of their items. There are some cases that the convenience store would have lost a customer because they don't have what he needs, but for 7-eleven they where able to adopt a system that monitors and orders stock directly thru their supplier.

Proper inventory of stocks would help a firm to increase its sales and profit with a low cost and expenses. Reference: 1. www.7-eleven.com2. www.systemtransformation.com/TMinventanalysis.htm