BT Demand Chain Issues
When 7-Eleven went about selling the BT program as a way to “simplify processes” at the store level, it sounded promising and maybe even too good to be true. Franchisees went along with our business partner on this endeavor, because franchisee store sales performance is directly impacted by how efficiently the demand chain works. As it turns out, distribution centers and DSD systems—the channels we use to get merchandise from manufacturers to the point of sale, our stores—care about their profitability at all costs, just like we as franchisees do.
Now that we are more than a year into using BT, I can make the following observations:
- In some cases, we are finding our demand chain partners will reduce frequency of deliveries but set minimum delivery quantities to get the same quantity in one delivery. For the franchisee this means a larger quantity of excess product that stores are expected to cycle, count, clean, rotate and stock. While this may be a cost savings for that vendor partner, it actually increases the cost to the franchisee.
- Our vendor partners have been able to cut their labor costs to make more revenue with the roll out of BT, a sales point I’m sure 7-Eleven used to get them on board. Our contract with CDC, McLane and Coremark now calls for “honor” check in, because now they do not have to pay drivers to check the product in with our sales associates. This saves manufacturers money, not the stores.
- With these “simplifications” stores are finding service from vendor partners almost non-existent. Remember the days when a rep would come in your stores weekly, take your orders, rotate the product and take care of your credits? Now we are lucky if we see a rep once a quarter, leaving stores to take care of all this on our own, which increases payroll and frustrations at the store level. It appears the franchise community is lacking support from our distributers, while our competitors like mom ‘n pop stores receive a better quality of delivery service.
- As a 7-Eleven franchisee one of our basic business fundamentals is to be able to meet our customer’s needs on a daily basis. Customer needs are met through fast, friendly service, including being in stock on whatever the customer wants, when they want it and how much of it they want. The start point to meet these customers’ needs is getting the right product for them in the first place. We as franchisees are held to a high standard in regards to OOS (out of stocks). Every empty space is counted daily and documented during weekly QVs. But more importantly to a franchisee, OOS means lost sales and disappointed customers.
- Since BT has come to the area, there is no hiding how many OOS there are per delivery, and it is starting to cost everyone money. Instead of holding the vendor accountable, franchisees have to go back and re-verify the OOS and open a case and track it to get our credits.
- When it comes to CDC, McLane, and Coremark on the West Coast, we are having to accept multiple “Manufacturer Out,” mis-picks or shorted products. Obviously, distribution’s logistics and forcasting are not working right. If we as store operators are expected to forecast right, why does 7-Eleven lower their expectations for vendors to forecast and deliver accurately? It always surprises me when I see these “manufacturer outs” and walk into a competitor and they are fully in stock of that very product.
- Maybe I shouldn’t be shocked, but all these things have complicated rather than simplified the distribution process and have created new problems for the stores. Items set up incorrectly or cost discrepancies are regularly identified at the store level meaning 7-Eleven does not have the right checks and balances in place to prevent such errors before they even hit the store. Leaving the store to report these issues week in and week out is no resolution to the problem.
Have we really simplified the process or have we just shifted the labor and responsibility to the franchisee? In this competitive environment we can’t afford these problems. We must roll with a perfect demand chain, not one that costs franchisees time and money.