Aldi Australia's Strategic Supply Chain Management Strategies Analysis

This report provides an executive summary and detailed analysis of Aldi's strategic supply chain management in the Australian market. It explores the evolution from single to multiple market-driven supply chain strategies, examining the application of lean supply chain management and its effectiveness in the context of Aldi's expansion. The report also investigates the shift from firm-based competition to network competition, highlighting the importance of timely product delivery and the integration of pricing and networking strategies. It draws on various academic sources to evaluate Aldi's approach, concluding that the company has successfully transitioned to a network-based supply chain strategy and can further enhance its competitiveness by integrating firm-based and network strategies. The research emphasizes the significance of supply chain management in delivering products to the target market and discusses the benefits of adopting a lean SCM strategy while expanding into multiple markets.

MBA strategic supply chain
management

EXECUTIVE SUMMARY
Supply chain management in a growing concern for all the companies where focus is on
making the products available to the consumers in a timely manner without compromising on
quality. This report will analyse what are various supply chan modification strategies that are
available to Aldi in Australia.

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
From single to multiple market- driven supply chain strategy...................................................4
From Firm based competition to network competition...............................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic supply chain management is considered to be one of the most iterative process
which in turn helps in evaluating the cost benefit trade off associated with the various operational
activities. This study will critically evaluate supply chain transformational strategy to achieve
competitive performance. ALDI is one of the leading supermarket which was founded in the year
1946 by Karl and Theo Albrecht. It mainly deals in various household essentials and groceries.
MAIN BODY
Supply chain management is useful in integrating preparation, manufacturing, purchasing,
marketing and distribution of the various products offered by the company (Copacino, (2019)). It
is further classified into three levels which includes strategical, operational and tactical approach
in order to attain higher operational goals and objectives.
From single to multiple market- driven supply chain strategy
Lean supply chain management strategy
Adebanjo, Laosirihongthong & Samaranayake, (2016) examined the fact that, Lean
supply chain management strategy is considered to be very useful because it tends to focus on
cutting cost of the business. This supply chain management strategy is very useful in removing
components from the process. The organization is directly linked with the downstream and
upstream flows of the funds, information, products and services. They in turn work
collaboratively to effectively reduce the cost and waste which in turn is considered to be
necessary for meeting the requirements of the ALDI Australia customers. It also helps in high
volume of the products with little variability. This in turn is considered to be one of the useful,
predictable and cost effective approach which in turn helps in achieving competitive position and
in turn also leads to higher performance of the business. Lean supply chain management strategy
is considered to be one of the key elements of the study which is very useful in developing long
term goals and objectives of the company. It also helps in improving the quality of the business
which in turn increases the productivity by the extraction of the waste. Nimeh, Abdallah &
Sweis, (2018) established the fact that, Lean supply chain management strategy helps ALDI
company to deliver the products to the customers as quickly as possible. It is considered to be an
effective process to streamline the process by effectively eliminating non- value operations of the
business. Lean supply chain management strategy is useful in identifying the cost, inventory and
time associated with various areas of the supply chain. Implementation of lean supply chain

strategy is considered to be very useful in boosting up the profits by effectively reducing
unnecessary activities within the business organization. It also helps in improving efficiency
which in turn helps in freeing up resources and employees for the quality control and innovation
within ALDI Australia. It is considered to be very useful in eliminating mistakes within the
manufacturing process. It also helps in standardizing the procedure for attaining the best quality
products and output (Advantages of Lean Supply Chain and Logistics Management. 2016). Lean
supply chain management strategy also helps in eliminating wastage by keeping track of the
optimum level of stock required to carry out certain business operations.
However, it can be argued that Aldi has already transferred from a single market chain to
the multiple market chain where it no longer caters to the requirement of a one single market but
it adequately addresses the needs of customers from different market segments. The Ayers &
Odegaard (2017). have argued that the lean supply chain management model helps in reducing
the number of elements in a supply chain by weeding out the unnecessary delay causing stages or
steps but this is not an adequate way of addressing the requirements of multiple markets. When
the company diversifies to serve into different markets, it automatically requires an additional
number of elements or players in the supply chain so that the products can be made available
timely to the consumers. Therefore, exercising lean management strategy for the supply chain of
the company is not an adequate strategy because the company might not be able to diversify
quickly.
Overall, it can be concluded that the company might not be able to achieve the actual
purpose of entering into multiple markets with the adoption of the lean strategy but it is an
effective tool in addressing the problem of unnecessary long supply chain that might exist in the
market and therefore it can be adequately concluded that Aldi can use this technique effectively
along with ensuring that it caters to the requirement of multiple markets (Ivanov, Tsipoulanidis
& Schönberger, 2017).
From Firm based competition to network competition.
Supply chain is not just limited to the delivery of product and services but it further
extends to the timely delivery of the products and services (Segetlija, Mesarić & Dujak, 2016).
For instance, if a company intends to deliver Christmas tree then it should be delivered to the
clients or to the retailers before the time to put up a Christmas tree passes on. Therefore, when
the companies shift from competition at a firm level to the competition on network basis i.e. the

competition is not just for delivering quality products but it further extends to making the
product available in the market as quickly as possible. Aldi, in the Australian Retail, has brought
a revolution with the cost-cutting strategy that they adopted for their supply chain management
where they made their product available to the local suppliers and vendors at a cheaper rate than
their competitors and the marketing strategies of Aldi and good brand name helped them in
exercising cost strategies and increasing their sales by the means of firm based competition in
Supply chain management (Mohmoud, Khair & Othman, 2019). Despite having a lower market
share in the market of Australia, the company was able to develop a significant position and this
was possible only because of the firm based competition strategies that they adopted through the
management of a well defined and segregated supply chain in the retail market.
However, the firm based strategy is no longer sufficient and effective i.e. price is no
longer the only factor on which competitiveness can exist between the different retail companies
and therefore the use of time as a competing factor is an essential element. Herczeg, Akkerman
& Hauschild (2018), have stated that today timely delivery is a much more important factor of
consideration for the retailers i.e. Aldi has reduced the amount of discounts that it earlier gave
and today, it is competing on how quickly it is able to make the product accessible to the targeted
consumer segment. The supply chain of Aldi has been restructured where the number of
suppliers that the company engages has increased and the retailers have also increased thus
making the company's products easily available at a wider scale. After the global recession hit
the economy, it was no longer possible to exercise the heavy discount strategies that the retail
stores are generally in the habit of giving and therefore the companies had to devise new
strategies for competing in the market. Therefore, when the products were made quickly
available to the consumers, then they would automatically shift from other brands to the ones
that were more readily available.
But Singh Sethuraman & Lam (2017), have contradicted the above point stating that
sometimes the companies exercising only time based i.e. network based competition strategies is
not an adequate action . There should be integration of pricing strategy and networking strategy
that can be used for the supply chain management thus effectively addressing the competition in
the market because the consumers have a perception that the products of the retail industry are
comparatively cheaper and therefore market can be targeted. This will help in conquering the
consumers associated with the retail segment in a more effective manner.

Therefore, it can be concluded that the Aldi has already shifted form using only firm
based supply chain strategy to the use of network strategy of supply chain management and the
number of steps involved in the supply chain have already been minimized so that the chain can
row shorter and the delivery can become quicker (Govindan, Seuring, Zhu, & Azevedo, 2016).
This has assisted the company in increasing the competitiveness and it can also be further
recommended that the company can effectively integrate the firm based strategy with the
network strategy under supply chain management thus making the chain more efficient.
CONCLUSION
The research above helps in concluding that the supply chain management is an integral
part in the delivery of the products manufactured in the targeted market segment. The report
helped in concluding that the Aldi Australia already has a diversified network, and if it integrates
into multiple markets instead of a single market, adopting the lead SCM strategy is a good option
when it ensures that all the factors associated with different markets are covered adequately. This
report also helped in concluding that moving from the firm based strategy to the network based
strategy was the most effective strategy because it will help in addressing the requirement of the
company by increasing its competitiveness in the market.

REFERENCES
Books and Journals
Adebanjo, D., Laosirihongthong, T., & Samaranayake, P. (2016). Prioritizing lean supply chain
management initiatives in healthcare service operations: a fuzzy AHP approach. Production
Planning & Control, 27(12), 953-966.
Ayers, J.B. & Odegaard, M.A., (2017). Retail supply chain management. CRC Press.
Copacino, W. C. (2019). Supply chain management: The basics and beyond. Routledge.
Govindan, K., Seuring, S., Zhu, Q., & Azevedo, S. G. (2016). Accelerating the transition
towards sustainability dynamics into supply chain relationship management and
governance structures. Journal of cleaner production. 112. 1813-1823.
Herczeg, G., Akkerman, R., & Hauschild, M. Z. (2018). Supply chain collaboration in industrial
symbiosis networks. Journal of cleaner production. 171. 1058-1067.
Ivanov, D., Tsipoulanidis, A., & Schönberger, J. (2017). Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Mohmoud, T.M., Khair, Z. & Othman, M.F.B., (2019). Enhancing Learning Process using
Double-Loop Theory in Purchasing Process of Healthcare Organization Toward Cutting
Unnecessary Costs. Journal of Research in Psychology. 1(3). pp.1-7.
Nimeh, H. A., Abdallah, A. B., & Sweis, R. (2018). Lean supply chain management practices
and performance: empirical evidence from manufacturing companies. Int. J Sup. Chain.
Mgt Vol, 7(1), 1.
Segetlija, Z., Mesarić, J. & Dujak, D., (2016), January. E-logistics as prerequisite of e-retailing.
In ICIL 2016-13th International Conference on Industrial Logistics.
Singh, P.J., Sethuraman, K. & Lam, J.Y., (2017). Impact of corporate social responsibility
dimensions on firm value: Some evidence from Hong Kong and China. Sustainability. 9(9).
p.1532.
Online

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