Supply Chain Management in ALDI: Complexity, Risk Management, and Sustainability

This report discusses the supply chain management in ALDI, including its complexity, risk management, and sustainability. It provides an overview of the organization and its supply chain, analyzes the complexity of the supply chain, evaluates risk management strategies, and offers recommendations for improving supply chain performance. The report also explores the future of supply chain management in ALDI.

MBA strategic
supply chain
management

EXECUTIVE SUMMARY
Supply chain management is related to the management of flow of good as well as
services and also involve procedure of converting raw material within final products. In other
words, supply chain management is broad activities needed for planning, controlling and also
execute products which flow from raw material to finished product till its distribution within
possible economical manner. This report is based on ALDI which is an common brans of two
German family owned discount supermarket chains. ALDI is part of retail industry which was
founded in 1913 by Karl and Theo Albrecht. This report has been conduct discussion about
organisation and its supply chain. Along with this, critically analyse supply chain complexity,
risk management and sustainability. Furthermore, recommendation will be provided for
improving performance of supply chain and its future in company also.

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of organisation and its supply chain ..........................................................................1
Critical analysis and evaluation of supply chain complexity, risk management and
sustainability...............................................................................................................................3
Recommendation for improving supply chain performance ......................................................5
Supply chain of the future...........................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Supply chain management is the management related to flow of goods as well as services
and it involve procedure which convert raw material within final products. In simple terms,
supply chain management is broad range of activities which needed within organisation for
planning, controlling and execution flow from materials to production till distribution within
most economical manner (Chen, Preston and Swink, 2015). Supply chain management operates
at three levels mainly i.e., strategic, tactical and operational. Moreover, at strategic level
management of business firm makes high level strategic supply chain decisions which are related
with entire company.
This report is based on ALDI which is an common brans of two German family owned
discount supermarket chains. It have more than 10,000 stores within 20 countries as well as
estimated combined turnover approx. €50 billion. ALDI is part of retail industry which was
founded in 1913 by Karl and Theo Albrecht. Products offering by them are Grocery and
household essentials. Respective assessment will going to give overview of organisation and its
supply chain. Along with this, critically analyse supply chain complexity, risk management and
sustainability. Furthermore, recommendation will be provided for improving performance of
supply chain and its future in company will also discuss.
MAIN BODY
Overview of organisation and its supply chain
ALDI is part of retail industry which have more than 10,000 stores within 20 countries
and its estimated combined turnover is approx. €50 billion. In, 1913 ALDI was founded by Karl
and Theo Albrecht. Business has been divided within two groups in 1960, which later on become
Aldi Nord, headquartered in Essen as well as Aldi Sud Headquartered in Mulheim. Aldi's Grman
operations consist Ald's Nord's 35 individual regional organisation which have approx. 2500
stores in western, northern and eastern Germany whereas, Aldi Sud's have 32 regional companies
with 1600 stores in western as well as Southern Germany.
At international level Aldi Nord conduct their operations in Denmark, France, Benelux
countries, Poland, Spain, Portugal and so on. On the other hand, Aldi Sud conducting their
operations in Ireland, Hungary, Great Britain, Australia, China, Italy, Slovenia ad Switzerland.
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Thus, Both Aldi Nord as well as Aldi Sud are operating in united States with approx. 1600 stores
in 2017. Explanation of Ald's mission, vision and core values are mention below :-
 Mission – Aldi emphasizes the intention of company to always distinguish it from other
companies of same sector by enhancing their approaches and setting high standards in
sector. This statement include some components such as improving quality and
expanding its market position.
 Vision – Aldi's vision statement is to enable Australian shoppers to live richer lives for
less.
 Core Values – Aldi's core values comprise responsibility, reliability and simplicity.
Supply Chain Management – It is the procedure as well as activity in which raw material and
components will source that an organisation need for production of products or services and their
delivery to customers. Their is an software of supply chain management whose goal is to
improve performance of supply chain (Fahimnia, Sarkis and Davarzani, 2015). This software
provide timely and accurate information which allow business firm to produce and ship only that
much products which can be sold. Moreover, effectual supply chain system provide assistance to
both manufacturers and retailers in reducing excess inventory. With the assistance of SCM
several cost get decreases such as producing, shipping, storing product which will not sold and
insuring. Apart from this, there are main 6 components of Supply chain management i.e.,
planning, sourcing, making, delivering, returning and enabling.
In context of Asda, the company have been very concerned about the manner in which
raw materials are being procured from different suppliers. The suppliers working with this mega
retailers have always been treated very fairly and at the same time ensures that sourcing is done
sustainability. This approach of sustainable procurements assists this organisation in making sure
that there is a minimal negative impact on social and economic grounds. The application of the
practices is ensured through the supply chain process and which leads to positive reputation in
the market (Genovese and et. al., 2017). In addition to this, Aldi involves human rights in their
supply chain which simply shows their responsibility towards protecting Human Rights. As
sourcing best products at best price is heart of what company is doing as well as their passion for
quality drivers part of business. Thus, low operating cost and unique relationship Aldi have with
their suppliers that was build by providing top quality products ans price which no other
organisation can match. For Aldi relation with suppliers is everything what they well do.
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Furthermore, it is important for respective retail company to ensure safe and fair working
conditions, being committed to human rights as well as fair labour practices, they have to ensure
that suppliers will treated equally and products have to be sustainability sourced for reducing
environmental and social impact of their offerings.
Critical analysis and evaluation of supply chain complexity, risk management and sustainability
Supply chain complexity – It is caused through several factors which result in rising
expectations of customers for faster lead times, expanded products as well as services and
tailored experience (Jabbour and de Sousa, 2016). All these factors force owner of company to
provide assistance more unique orders for customers who are surrounded their supply chain,
needed great collaboration with partners, enhance inventory management with suppliers as well
as proper control and deeper visibility within every supply chain steps. In other words, Supply
chain complexity includes activities related to identifying, analysing, measuring as well as
controlling complexity. There are several factors do to which supply chain management of
company get more complex and Aldi have to take care of it. Explanation of these are as
follows :-
 Growth in supplier/ Partner relationship – For an organisation relationship with
suppliers and partners is important for expanding their footprint with present customers
and reaching new ones. Managing these relation in essential for making customers satisfy
and it is not good then result in complexity.
 More milestones to manage – When an organisation expand its product line and
customer bases it result in enhancing their supply (Kshetri, 2018). In simple term it can
be said that, more steps will required for completion of orders because demands will also
get increase. Some increased customer base may result in creating complexity within
supply chain of Aldi.
 Data availability – If availability of data is not proper for company across supply chain
to use these for more informed decisions. Such things result in making supply chain
complex and have impact on real-time decision about customers related to company
supply chain (Mangan and Lalwani, 2016). Moreover, gaps in data tends result in adding
more complexity for business and requirement for better supply chain visibility.
For Aldi complexity in their supply chain is will be continue to be important mainly in
expectations of customers and aspiration for rising growth of business. Thus, solution is not to
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make supply chain less complex but they have to figure out how to embrace complexity. For an
organisation it is important to have proper supply chain management because with this they can
serve customers in effective manner and make them satisfy.
Supply chain risk management – It is related to implementation of strategy for
managing both everyday as well as exceptional risks including supply chain which is based on
continuous risk assessment. Objectives of this is to reducing vulnerability and ensuring
continuity (Meixell and Luoma, 2015). In simple term, SCRM is risk management process tool
which help in dealing with risks and uncertainties which cause within supply chain. There are
both internal and external risks which can interrupt supply chain of Aldi explanation of these are
as follows :-
External supply chain risks – These factors also have negative impact on supply chain
of Aldi and external factors are not easy to predict as well as need several resources to overcome
with it. Some largest external supply chain risk from which respective retail company have to
aware as mention below :-
 Demand Risk – When Aldi have demand of miscalculate product it generally result in
lack of insight within year over year buying trends or unpredictable demand.
 Supply risk – when raw material on which company rely will not deliver on time result in
causing disruption to the flow of material, products or any other parts.
 Environmental risk – It include several factors such as socio-economic, political,
environmental disasters which have impact on supply chain related aspects of company
(Meredith and Shafer, 2019).
 Business risk – When in activities of business anything get change it is important for
them to keep their supply chain running smoothly such as buying and selling.
Internal supply chain risk – There are several internal supply chain risk which occur in
the operations and control of company. Internal risk are control and can tracked as well as
identified by using robust data analytical programs. There are several internal supply chain risks
explanation of these are as follows :-
 Manufacturing risk – when any type of components within work of Aldi is disrupted or
result in causing fall off schedule.
 Business risk – It occurs after changes in standard personnel, management and reporting
business procedures.
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 Planning and control risk – This type of supply chain risk caused due to several reasons
such as inappropriate assessment, forecasting as well as planning of product and
management.
 Mitigation and contingency risk – This type of risk occurs when an organisation don't
have contingency plan in relation of their supply chain disruption (Monczka and et. al.,
2015). Thus, it is important for Aldi to prepare backup plans
Apart from these type of risk, there is approaches also which Aldi can implement in their
working for supply chain risk management. Explanation are as follows :-
PPRR management Model – It stands for prevention, preparedness, response and
recovery (Wang and et. al., 2015). PPRR is most common risk management strategy which
organisations are implementing now a days.
 Prevention – Implementation of safeguard in working for preventing any supply chain
disruption.
 Preparedness – Prepare contingency plan which can be implement in case of emergency.
 Response – Execution of contingency plan as well as total efforts for minimising effects
of disruption.
 Recovery – For recovery purpose company will go back on track and running at normal
as quickly possible.
Supply chain sustainability – SCS is holistic view of supply chain procedure, logistic
and technologies which will address social. Environment, legal as well as economic aspects
related to supply chain components. Factors which will have impact on supply chain
sustainability involves amount of wastage, air pollution, emissions and carbon footprints, labour
violations as well as health and safety of employees (Rostamzadeh and et. al., 2015). Thus, it is
important for Aldi to ensure that their supply chain will not have negative impact on
environment and the surroundings within that company is working.
Recommendation for improving supply chain performance
It is important for an organisation to manage is supply chain in proper manner because it
help them in serving their final produced goods to customers in effective manner. As Aldi is
retail store dealing in several grocery and household products (Wang and et. al., 2016). So for
them it is essential to have proper supply chain management as it will help them in approaching
customers in effective way and fulfilling their needs and wants. Supply chain management is
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referred to a process which focuses on procurement and delivery of the products to the end
consumers as per their requirement. The major activities which are included in supply chain
management are procurement, sourcing raw materials, manufacturing, shipping, managing
returns and most importantly improving the efficiently of supply chain process so as to improve
profitability (Saberi and et. al., 2019). For Aldi there is some recommendation which help them
in improving their supply chain in appropriate manner. Explanation of these are as follows :-
 Aldi can improve their supply chain management by implementing automatic purchasing
because continuous monitoring level of inventory required much time. Thus, to make
things easy ERP system with supply chain function automatically and place order with
vendor when level of inventory get drop. By implementing this, employees of company
also get free and focus on other important activities.
 Aldi have to improve their distribution network because it have wide impact on
everything from tracking delivery to sales strategy. Thus, respective company have to
enhance their distribution network which is possible with the assistance of holistic
approach as well as cluster view (Saenz and et. al., 2015). Thus, in holistic approach
manager of Aldi will review important part of entire distribution network as well as they
have to find out which part work in sync. On the other hand, in holistic approach cluster
view group graphs, charts and other details together which help in keeping eyes of supply
chain management practices.
 Cash flow is an fundamental tool which several business utilise fore improving suppliers
management. It is essential for Aldi to track payment terms as well as condition with
several groups in supply chain. Through proper cash flow payment technology also get
improve which help in managing activities related to supply chain in effective manner
such as paying vendor bills, shipment tracking software and so on. Along with this, ERP
system work in more effective manner with both just-in-time manufacturing as well as
JIT inventory management for reducing cost as well as enhancing inventory turn around
(Silvestre, 2015). By implementation of this, their will be less chances of mistakes in
order fulfilment.
With the assistance of above mention recommendation Aldi can improve their supply
chain management in effective manner. Along with this, they will be able to conduct their
operations in more appropriate manner and conduct operations.
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Supply chain of the future
Supply chain is network within organisation as well as its suppliers for producing and
distribution specific product to final buyer. There are different activities which included in this
network such as people, entities, information, resources and many more. In addition to this, it
also present steps which are taken for getting products or services by its original state to
customers (Schoenherr and Speier‐Pero, 2015). Motive of an business behind developing supply
chain is to decrease their costs as well as to remain competitive within business environment.
Supply chain have its future at wide level which will provide assistance to Aldi in conducting
their operations in effective manner. Explanation of these are as follows :-
 Supply chain digitalisation – it is the procedure of utilising latest tech solution along with
other digital as well as physical assets for redesigning logistics practices. Supply chain
digitalisation help in conducting operation more fast and it is highly competitive. In
addition to this, digitalisation enhance speed, dynamic and resiliency of supply chain
operations which help in gaining customers responsiveness and ultimately high revenue.
Through implementation of digitalisation it become easy for company to automatically
maintain their supply chain which result in making employees free so they get engaged in
other activities.
 Artificial intelligence – Advancement in artificial intelligence solution have several
applications within supply chain, especially the warehousing segment. In this gesture
recognition solution will be uses instead of keyboards as well as mice in the procurement
procedure. Apart from this, concept related to automation as well as robotics widely
applied within supply chain for conducting operations in more effective manner.
CONCLUSION
After going through above discussion it has been summarised that, Supply chain
management is important part of an organisation. Because supply chain management is the
management related to flow of goods as well as services and it involve procedure which convert
raw material within final products. In simple terms it can be said that, with the assistance of
proper supply chain management it become easy for company to serve their customers in
effective manner. Along with this, while working on SCM there are several areas which business
firm have to critically evaluate as these are supply chain complexity, risk management and
sustainability. Apart from this, for an organisation it is important to implement automatic
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inventory management practices in their working. Because employees should not have to focus
on other activities and they can put efforts on other important work.
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REFERENCES
Books and Journals
Chen, D. Q., Preston, D. S. and Swink, M., 2015. How the use of big data analytics affects value
creation in supply chain management. Journal of Management Information
Systems. 32(4). pp.4-39.
Fahimnia, B., Sarkis, J. and Davarzani, H., 2015. Green supply chain management: A review and
bibliometric analysis. International Journal of Production Economics. 162. pp.101-114.
Genovese, A. and et. al., 2017. Sustainable supply chain management and the transition towards
a circular economy: Evidence and some applications. Omega. 66. pp.344-357.
Jabbour, C. J. C. and de Sousa Jabbour, A. B. L., 2016. Green human resource management and
green supply chain management: Linking two emerging agendas. Journal of Cleaner
Production. 112. pp.1824-1833.
Kshetri, N., 2018. 1 Blockchain’s roles in meeting key supply chain management
objectives. International Journal of Information Management. 39. pp.80-89.
Mangan, J. and Lalwani, C. L., 2016. Global logistics and supply chain management. John
Wiley & Sons.
Meixell, M. J. and Luoma, P., 2015. Stakeholder pressure in sustainable supply chain
management. International Journal of Physical Distribution & Logistics
Management. 45(1/2). p.69.
Meredith, J. R. and Shafer, S. M., 2019. Operations and supply chain management for MBAs.
Wiley.
Monczka, R. M. and et. al., 2015. Purchasing and supply chain management. Cengage Learning.
Rostamzadeh, R. and et. al., 2015. Application of fuzzy VIKOR for evaluation of green supply
chain management practices. Ecological Indicators. 49. pp.188-203.
Saberi, S. and et. al., 2019. Blockchain technology and its relationships to sustainable supply
chain management. International Journal of Production Research. 57(7). pp.2117-2135.
Saenz, M. J. and et. al., 2015. Theories in sustainable supply chain management: a structured
literature review. International Journal of Physical Distribution & Logistics
Management.
Schoenherr, T. and Speier‐Pero, C., 2015. Data science, predictive analytics, and big data in
supply chain management: Current state and future potential. Journal of Business
Logistics. 36(1). pp.120-132.
Silvestre, B.S., 2015. Sustainable supply chain management in emerging economies:
Environmental turbulence, institutional voids and sustainability
trajectories. International Journal of Production Economics. 167. pp.156-169.
Wang, G. and et. al., 2016. Big data analytics in logistics and supply chain management: Certain
investigations for research and applications. International Journal of Production
Economics. 176. pp.98-110.
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Wang, Y. and et. al., 2015. Service supply chain management: A review of operational
models. European Journal of Operational Research. 247(3). pp.685-698.
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