Supply chain helps keep 7-Eleven open 24/7

Virtual and physical supply chain is at the heart of the convenience store's growth and success

If your organisation has close to 400 locations across the country and is adding up to 25 new ones a year, you can bet the supply chain a and tight grip on internal IT compliance are important.

And indeed it is for 7-Eleven Stores Pty Ltd, the local arm of the global 7-Eleven convenience store behemoth.

According to CIO, Dennis Lewis, being a highly distributed business hasn’t become a nightmare thanks to the running of a highly compliant IT model among the company’s 392 stores.

“The technology at the store level is the standard corporate technology — there is no negotiation,” he says. “Part of the agreement when the franchisee comes into the business is that we provide the technology.”

The company has also made clever use of its size by negotiating a deal with its point of sale (POS) systems vendor to do much of the IT leg work, Lewis says.

“When we do a new store opening, our point of sale vendor does the implementation in-store for us,” he says. “So with all the hardware and software already installed, we then just run all the necessary updates over the network to that store to bring them up to date and in line with us. It’s a fairly straight forward process to open a new store.”

Supply chain has also been a major, and continuing, focus for the organisation, Lewis says.

Back in 2005/06 7-Eleven began a sizable project with SAP to go from a completely distributed supply chain to one in which about 90 per cent of stock can now be automatically replenished.

Under the old system, every store would order from an agreed-upon list of suppliers and all the stock would be delivered directly to the store. The stores then sent the invoices to 7-Eleven headquarters for payment.

Under the new system, 7-Eleven HQ generates store orders, which are reviewed by the stores via an SAP portal so that adjustments can be made. The consolidated orders then run through a centralised supply chain.

“It has been a massive change for us,” Lewis says. “We get all the sales data by item from the store system and update SAP with that every three hours. All the other inventory management that’s done by the store in real time via the SAP portal, so we have a very accurate perpetual inventory.”

The organisation more recently introduced what it calls a ‘virtual supply chain’ to enable it to sell more value-added services.

It integrated the POS with software from Touch Networks to enable access to services in areas such as gaming (lottery tickets), transport (bus, tram and train tickets) and financial services in early 2009.

“We see that that area of services — particularly in gaming, transport and financial services — is a big growth area,” Lewis says. “Given our convenient locations and 24-hour business, we see services as an opportunity, for sure.”

But things aren’t all rosy — the widespread adoption of the EMV standard for credit and debit payment cards, and higher merchant and interchange fees for non-compliance with the standard, have meant that 7-Eleven has had to replace its whole EFT infrastructure.

“The system we are currently running doesn’t meet Visa, MasterCard and the banks’ new security standards so we were faced with either doing a massive upgrade of some quite old equipment or go for a new solution,” Lewis says. “So we went for the latter.”

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