Operations Management Report: Aldi's Strategies and Quality

This report provides a comprehensive analysis of Aldi's operations management, focusing on the strategies that contribute to its competitive advantage. It examines Aldi's approach to low-cost operations, emphasizing the importance of quality regardless of its pricing strategy. The report delves into Aldi's implementation of quality control measures, including Six Sigma and Total Quality Management, to enhance performance and customer satisfaction. It explores specific strategies such as private labels, efficient store designs, and customer involvement. The report highlights how Aldi maintains high-quality products while keeping costs low, ultimately building a loyal customer base. The report also discusses the importance of meeting customer expectations and how Aldi's strategies align with this goal. The conclusion summarizes the key findings and reinforces the importance of quality in Aldi's business model.

Operations Management Aldi

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTIONS...................................................................................................................................1
1.Aldi's strategy which leads to competitive advantage..............................................................1
2.Company's strategies................................................................................................................2
3.Aldi's low cost strategy............................................................................................................6
4.Importance of quality regardless of competitive strategy........................................................7
Conclusion.......................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operation management is the process which is created by administration to develop the
highest level of efficiency in an organisation. In this report a case study of Aldi is going to be
discussed. In this report it will discuss about Aldi's strategy which leads to competitive
advantage. Factors by which company achieve its strategies and about company's low cost
strategies is going to be analysed in this report. Further, in this report importance of quality rather
than competitive advantage is to be explained.
QUESTIONS
1.Aldi's strategy which leads to competitive advantage
It is impressive that Aldi have achieved a huge success in their business of supermarkets.
They are now proving a tough competition to leaders of this business markets.(Muzaimi, Hamid
and Chew,2018.) Their business has risen from low budget to a firm which is now most
competitive in business market. Their main motive is to provide products which is of low budgets
and are of the best quality. But it does not mean that they are not providing true and fair
information or providing a low quality products. They have maintained the best quality
development in their products and not only lower budget peoples preferring their brands but also
it is preferred by higher budget peoples.
Their way to develop continuous improvements in organisation proves beneficial for
them to rise in market. Strategy which they develop to lead in competitive market is to provide
production which is in time and where they have reduced cost of large stocks and has also saved
unnecessary cost of the business operations. They developed total quality management process
under which workers have responsibility to make products which is right in first time only. By
developing this type of strategy Aldi will able to stand in front their competitors and will also
able to provide effective products in retail food industry of business market,
Another strategy which they develop is to invest in their staff by which effective
operations of doing work came out from them and company will able to stand in front of their
market competitors. They developed different training programmes for the development of their
staffs by which they will able to become multi-tasking in their performance.(Van Dooren,
Bouckaert and Halligan, 2015.) They appoint less and effective staff and works only to train
them by which company's operations will run successfully and everyone will work under team
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spirit which unable company to develop effective products in market. Their policy is to provide
high wages to employee as well as to provide diverse job role in which they will able to improve
their efficiency of doing work in team spirit in proper time and with proper coordination. This
strategy helps company to attract knowledgeable employee in their firm by which production of
goods become right in first time of production.
Aldi's main aim is not to diversify their business, their main aim is to develop effective
product which attract customer and which is also in the best quality. Generally competitors of
Aldi's has diversified products which almost has 90000 varieties and Aldi is providing varieties
in a region of 15000. Therefore, they have achieved their sell of goods through economies of
scales. They only chooses inexpensive location in which they store only 700 products and their
competitors of supermarkets store product which is more than 25000. They also trained employee
in such a way that they able operate check out as well as able to restock items when they are
finished in their store. (Hübner and et.al., 2018.)
They generally operate with business of 13% margin for overheads and labour and other
market competitors will do business with 30% margin of overheads and labour which makes
them different from competitors and this also helps them to develop more cash registers. These
strategies made them to get their shop engaged which is full of customers and to develop strong
customer base in their organisation.
2.Company's strategies
Company achieving its competitive strategies by applying operation management theories
in which they will able to produce products at low range with the best quality. Theories which
they apply for company's strategy is Quality control, six sigmas.
 Six sigma theory
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It is a type of practise which designed by company to improve its overall performance.
Aldi also applied this theory to manage their product quality, to enhance business growth, to
increase efficiency, and to reduce any defeats in the company.
According to the first step of this theory defines means that company will define its goal
which they want to achieve from business market. Under this step company identify factors by
which they will able to minimize their defects, improve their production process and the factors
by which they will able to satisfy customer needs in business market.
According to second step that is measurement company will measure the performance
matrix by which they will able to identify and will collect data's of the company. Under this step
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Illustration 1: six sigma
(source:what is six sigma methodology,2018)

Aldi has identified the steps by which they will able to improve their performance which helps
them to improve their production quality.(Swain and et.al., 2018.)
Under the third step company will analyse data's which helps them to identify solutions
by which company's performance will get improved and they will able to identify factors which
helps them to produce products which is in fair range by which customer get attracted in
company.
According to fourth step of this theory company will now execute their process by which
they will to improve company's overall performance. It helps in running business operation
smoothly which also helps in improving overall productivity of the organisation. Improvement is
the process by which company will execute their planning which helps them to get desired
results.
Final step of this theory is the control under which company will control their
unnecessary cost of operation and will also check their result of developing improvements in the
company which ensure them whether they are in line with the needs of company's goal.
This theory applied by Aldi to develop initiatives by which helps company from going bankrupt
in their difficult times. This also helps them to develop products which is of low range and
providing better quality. Total Quality control
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It is a process by which company will develop long term success by satisfying customer
needs. Under this approach of management all the members of organisation provide their
participation in improving company's overall performance. Elements to develop this model are as
follows-
Customer- focused- under this process company will identify customer expectation of quality of
product. Elements which satisfy customer needs is to be developed by organisation. Such
elements may be employee training, to upgrade customer or software, to buy new measuring
tools etc.
Total employee involvement- under this process all employee of the organisation will work to
achieve future needs of business market. This process only develop when employee needs are
satisfied and they work fear free in organisation.(Laureani and Antony, 2018. )
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Illustration 2: total quality management
(source: what is total quality management,2018)

Process- centred- under this process company will think to develop process. Under this step
company will take input from suppliers and deliver output to customers of the organisation.
Integrated system- to develop and to implement strategies, this step is applied by organisation.
Under this step company will continuously communicate their policies to employees so that they
will achieve their vision, mission and objectives.
Strategic and systematic approach- this process includes to develop strategic planning and
process by which company will able to achieve their mission, vision and objectives by
formulating strategic plan that improve overall performance.
Continual improvement- this is most important factor to develop continuous improvement in
organisation which result in meeting stakeholder expectation.(Wheaton and Schrott, 2018.)
Fact- based decision making- to measure company's performance, data base performance is
analysed by company which helps to find accurate performance of the company.
Communication- this is the major factor which improves quality management. Under this to
develop organisation change and day to day operation managers will develop effective
communication to motivate employees by which future needs accomplish in organisation.
3.Aldi's low cost strategy
Aldi has developed low cost strategies but it doesn't mean that they are providing low
quality of products. Infect, they have developed few smart strategies which helps them to sell
groceries for so cheap. Company's strategies are so effective that attracting customers in
organisation which helps them to increase overall profitability of the organisation. Strategies are
as follows-
Private labels- Aldi has developed strategy where they have eliminated middle man cost and
they do not mention any brand name in their products by which consumers also will able to save
their cost. They sell only few items in comparison to others by which their sales volume in
company increases and they will able to provide discounts of customers of the organisation.
(Goetsch and Davis, 2014.) Aldi only stick to private labels and their 90% of products have
private labels.
No frills design- another strategy develop by Aldi is to use of boxes at their shelves. This saves a
lot time of workers in which when products runs out workers simply change that with box which
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helps them to fill shelves with stocks regularly. Another strategy which they have developed is to
utilize natural, efficient lightning which helps them to cut down cost of utility which generally
have high charges.
Insane efficiency- Aldi's stores design is so efficient that they need only few workers to handle
their stores. They have arranges shelves in such a way that product can be restocked in few
seconds. They also have developed effective packaging of items by which customer only have to
pick that item and it will check out easily. They also have developed easy scanning in their
designing of products by which check out procedure becomes faster and customer will not have
to stand in queue.
Puts customers to work- they developed strategies in which customer have to bring bag from
their home or if they want bag from shop then they have to pay small amount to fee in charge
which makes them to put customers at work. They also charge price for shopping cart which
helps them to keep low prices of products. These strategies also attract customer more in their
supermarkets which increases their overall profitability of the business.
These are some strategies which develop by Aldi to provide products at fair price to
customers and these strategies also helps them to maintain their quality of products in
organisation. Customers are attracting with their effective strategies which improving their
overall performance and profitability in organisation. Hence, it is not correct to say that company
providing low cost strategies which means to offer low quality of products.(Oakland, 2014.)
4.Importance of quality regardless of competitive strategy
To provide effective competition in market mostly business operate in competitive
markets. Aldi is company whose main motive is to provide products which is of the best quality
and providing products in low prices. To develop loyal customer base in organisation company
have to provide products which is of the best quality and with fair price of range. Customers are
only attracted to the products which are developing their needs and meeting their expectation.
Therefore, Aldi have that smart strategies which helps them to develop loyal customer base and
also to provide products which is of the best quality and meeting customers expectations. Certain
points which shows importance of quality in business are as follows-
 meeting customer expectations
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First and foremost part of every business is to develop strong customer vase by which they will
able to maintain their profitability of the business. Quality development is the most important
process by which company will able to retain customer in the organisation. It is also important to
satisfy customer needs and expectations from business markets.(Berman, 2015. ) Quality
development helps organisation to achieve long term success and profitability of the business. If
company has strong quality of products than they may charge high price of that product.
 Managing a reputation
By developing quality it means to increase company's reputation in business market. This is the
world of social media where peoples are connected with company's policy therefore, they may
provide their views which either may be positive or negative. Negative views will influence
overall performance of organisation which also damage company's reputation and will also create
negative publicly of the organisation. To develop effective reputation in business market
company have to maintain their quality of products, which must be accordance with the
customers' expectation by which only they will able to create a strong reputation in front of their
competitors and customers.
 Meeting industry standards
Another to this point company have to meet standards which every company have to develop in
product making. These standards are given by government so company must have to maintain
legal standards in doing production of the company.(Sethuraman, 2018.) It also helps company to
develop new customers in their organisation and to enter into new business market which helps
them to enhance business growth and profitability in business market.
 Managing cost
Poor quality of production increases overall cost in the company. If products are maintained at
poor quality then company have to replace them which results in developing extra cost. Poor
quality of products does not able to satisfy customers needs and expectations by which company
have faced lose in their production of goods and services. Managing cost is the major important
part for industry to develop strong customer base in the organisation. If company provides
defective products then they have pay return and sometimes replacement of products develop
extra cost which is unnecessary and company have to bear that. Sometimes customer may sue
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company for providing defective products which result is that company have to pay fines to
maintain industry standards in business market.
These are some importance of quality management for an organisation which helps them
to improve overall performance and profitability of organisation. Quality development also helps
company to create loyalty from customer which helps them to improve their overall production
of the company. Developing good quality means to stand competitive in front of competitors in
business market.
Conclusion
From the above study it can be concluded that operation management in organisation
plays an important role to develop effective customer base in organisation. In this report it is
discussed about the case study of Aldi's performance in business market. In this report it is
discussed about Aldi's strategies which leads to competitive advantage in business market. After
that in this report factors by which company achieved its strategies are discussed. Further, in this
report an explanation is given about Aldi's low-cost strategy which does not mean that company
is offering low cost quality. At last in this report an explanation is given on importance of quality
for an organisation.
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REFERENCES
Books and Journals
Berman, B., 2015. How to compete effectively against low-cost competitors. Business
Horizons. 58(1). pp.87-97.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Hübner and et.al., 2018. Retail operations.
Laureani, A. and Antony, J., 2018. Leadership–a critical success factor for the effective
implementation of Lean Six Sigma. Total Quality Management & Business
Excellence. 29(5-6). pp.502-523.
Muzaimi, H., Hamid, S.R. and Chew, B.C., 2018. Integrated Management System for Quality
Management System Accreditation. Journal of Advanced Manufacturing Technology
(JAMT). 12(1 (1)). pp.87-100.
Oakland, J.S., 2014. Total quality management and operational excellence: text with cases.
Routledge.
Sethuraman, R., 2018. Consumer preference distributions and corresponding storebrand
strategies: a compilation. Handbook of Research on Retailing. p.173.
Swain and et.al., 2018. Six Sigma success: Looking through authentic leadership and behavioral
integrity theoretical lenses. Operations Research Perspectives. 5. pp.120-132.
Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the public
sector. Routledge.
Wheaton, B. and Schrott, B., 2018. Total Quality Management. Theory and Practice:
Englischsprachiger Text Mit Zweisprachigem Index. Walter de Gruyter GmbH & Co KG.
Online
What is six sigma methodology.2018. [ONLINE]. Available through
<https://www.wisegeek.com/what-is-the-six-sigma-methodology.htm>
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