The Times 100 Business Case StudiesEdition 16

Competitive advantage through efficiency

Aldi

Introduction to AldiRetailer in international markets since 1913Over 7,000 stores worldwideTakes a distinctive approach to retailingBusiness focuses on principles of lean productionSavings passed on to customersReinvestment of profits enables business growthCore purpose = to provide value and quality to customers

Aldi core valuesSimplicityFewer varieties of brands/products offered at value pricesConsistencyAll stores have same simple designResponsibilityActive role in the supply chain ensures improvementTraining and developing employees drives quality customer service

Lean productionTechniques most often used in manufacturing industriesPrinciples equally apply to service industriesLean avoids waste or duplicated effortFocuses on using resources efficientlyMinimise costSave timeReduce waste

Reducing costs and eliminating wasteContinuous improvement All employees focus on qualityStaff trained to become multi-skilled Allows flexibility across tasks and rolesTime-based management60% of Aldis fruit & veg sourced locally, reduces fuel milesEfficient till operations increase speed of checkoutStore opening hours shorter Sales contained in less time, so staff costs lessReduced use of power/heating etc

Reducing costs and eliminating waste (cont)Just-in-time productionStock only bought when neededReleases working capital Eliminates storage costs Ready-to-display cases reduce handling in storesTotal quality management - Right first timeEmpowering staff improves motivationStrong relationship with suppliersImproves product offeringsHelps suppliers meet international standards

Benefits of lean productionAldi differentiates itself from competitorsAchieves cost savings across the organisationCustomers benefit from keen pricesSavings put back into business and CSR activities