Aldi's Success: A Case Study on Lean Production, JIT, and TQM

This case study analyzes Aldi's business approach, focusing on cost reduction through lean production principles, Just-in-Time (JIT) inventory management, and Total Quality Management (TQM). Aldi aims to maximize profit and minimize costs by providing quality products at competitive prices. The company fosters a positive environment for continuous improvement, reinvests profits to lower prices, and emphasizes quality and safety in its products. Aldi uses clear labeling to provide nutritional information and prioritizes positive nutritional benefits. The JIT approach helps manage working capital by minimizing inventory levels and reducing warehouse costs. By implementing these strategies, Aldi has achieved a distinctive and cost-effective retailing model, ensuring customer satisfaction and maintaining a competitive edge. Desklib provides access to similar case studies and solved assignments for students.

Case Study

Contents
INTRODUCTION...........................................................................................................................2
TASK...............................................................................................................................................2
Business Approach......................................................................................................................2
Role of Just in Time approach.....................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Profit maximisation along with cost reduction is the main aim for any business organisation and
for that they use various strategies to make their cost effective in order to earn profit (Ross,
2017). Business management strategies allows entrepreneur to cut down their operational cost so
that they can provide best price to their customer and can face dynamic and competitive market
in an effective and efficient way. This case study is based on Aldi, a discounting store focus on
providing better quality of products with minimum price. This project will cover how Aldi used
lean production approach in order to cut down operational cost along with use of Just in Time
and TQM.
TASK
Every business owner wants to cut down their overall cost so that they can render better quality
of products and services. There are various approaches they can use in order to reduce
unnecessary cost along with elimination of wasteful activities. In case of Aldi, it had introduced
a concept of providing quality products by lowering down overall cost. This helps in taking
competitive advantage as it can offer similar products with lower prices. This contributes in
generating more profit along with increased efficiency. Following are the ways by which Aldi
had able to apply lean production approach in order to remain competitive in dynamic market.
Business Approach
 Providing foster environment – Aldi focus on providing a foster environment so that
employees regularly try to make improved products. This shows that it has a healthy
environment in which feels valued and works as a team towards making company more
productive and efficient (Jackson, 2017).
 Retaining profits – Aldi’s aim is to provide better quality of products with minimum
prices so that it can capture a large customer base. Along with reducing cost of
company’s operations, it also reinvested its savings in order to get lower down its prices
as possible. Reducing prices of products leads customer satisfaction.
 Total Quality Management – It may be defined as a management framework based on
belief in which an organisation can build long term success by having all members which

may include low level workers to highest level associates by focusing on improving
quality of products or services in order to makes customer satisfied (Mukhopadhyay,
2020). It focuses on managing its resources in such manner that will yield higher profit
along with minimising its overall cost. All the employees in Aldi focus on bringing
innovation and improvement to its products along with lowering down its overall cost. It
is needed to formulate strategies that will lead to attainment of its objectives in a time
frame manner. Business strategies are the basis of company’s success and it must be
formulated in an effective manner or it will be useless.
Elements of Aldi’s business
 Aldi focus on making products that meets nationally recognised for quality and safety.
They are produced by taking care of ethical practices in order to smooth functioning of
business. The products must have quality assurance in order to meet nationally
recognised standards.
 The products of Aldi are having clear information and labelling that provides information
about and about ingredients used along with nutritional values. This helps customers in
getting information about products that they are using. For example-if an individual is
lactose intolerant then he can opt for other alternative by viewing its nutritional value or
facts.
 Aldi focus of providing positive nutritional benefits that keeps individual fit and healthy.
This is because of selection of right supplier who provides better quality of material at
lower cost and operational function of Aldi’s business. The ingredients are used in
formulation meets quality standards.
 They prioritize on reducing negative impact of their products by using better quality of
ingredients in their formulation.
This approach helps Aldi in establishing a strong relationship with its suppliers. It keeps
an eye on it suppliers and ensures that they are meeting with international standards or
not. It also focusses on improving its culture that helps Aldi in elevating its efficiency. To
ensure its quality, it undertakes various testing and control procedure of its suppliers.
Bonuses, appraisals, promotions and other fringe were given to employees to in order o
keep them motivated (Pinto and et.al,, 2018).

Role of Just in Time approach
This approach helps Aldi in meeting its day to day working capital requirements. It
manages its inventory level and hold only limited part that is needed. It will benefit
company in two ways, first it will help in reducing warehouse cost along with managing
cost. The other benefit is that kit will allow company to save and reinvest its savings in
business rather than investing in higher inventory. It becomes complex to manage such
large inventory and increases other operational cost too. To reduce its cost, some
products are sold from a pallet. Barcodes helps cashier in billing process as eliminates the
efforts of searching products price.
By the above approaches Aldi is able to lower down its overall cost and provide better
quality of products at a lower price. It has a distinctive approach to retailing. It is done by
bringing efficiency in their process and by optimally utilisation of resources.
CONCLUSION
From the above project essay, it was concluded that Aldi is focused on making it process
cost effective and by reinvesting its profits and savings in order to provide better quality
of products to customers. The concept of TQM helps in making the process much
effective by establishing a healthy and friendly relationship with its suppliers. It regularly
monitors its activities and ensures that all activities are done in an organised manner or
not. The concept of JIT helps Aldi in reducing its cost by lowering down its stock level
that blocks funds and thus, working capital may be affected.

REFERENCES
Books and Journals
Mukhopadhyay, M., 2020. Total quality management. SAGE Publications Pvt. Limited.
Ross, J.E., 2017. Total quality management: Text, cases, and readings. Routledge.
Jackson, T.L., 2017. Just-in-time for business. Productivity Press.
Pinto, J.L.Q., Matias, J.C.O., Pimentel, C., Azevedo, S.G. and Govindan, K., 2018. Just in Time.
In Just in Time Factory (pp. 25-38). Springer, Cham.