Report on Integrated Supply Chain Management: A Case Study of Aldi

This report provides an in-depth analysis of Aldi's integrated supply chain management, exploring how the company has leveraged its supply chain to achieve a significant competitive advantage in the grocery market. It examines Aldi's strategies, including the use of efficient transportation logistics, standardized warehouse designs, and optimized inventory management to reduce costs and maintain high-quality products. The report also delves into the performance of Aldi's supply chain, discussing the impact of innovations like the adoption of new generation crates, and the challenges faced in inventory turnover. Furthermore, the report highlights the importance of training and commonality within the supply chain. The analysis covers various elements, such as transport logistics, supply logistics, and the role of technology and efficient processes in maintaining low prices and high-quality products. The report concludes by emphasizing the supply chain's role as a critical determinant of business success, using Aldi as a prime example of a company that has successfully integrated its supply chain to drive growth and market dominance.

Integrated Supply Chain Management
Integrated Supply Chain Management
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Integrated Supply Chain Management
Introduction
The Supply Chain is undisputedly one of the most integral departments in a business
regardless of its size. This fact explains why most of the companies and business
organizations in the business world have integrated Information technology with Supply
Chain. Supply chain ensures quality customer service by ensuring that the commodities
required are availed at the required time and location, in the required quality. Aldi is an Essen
based supplier of Food, beverages, household essentials, and Sanitary products. It is a grocer
that has for quite some time been placed above its rivals based on its ability to cut cost by
decreasing overhead. The organization has been able to successfully turn its supply chain into
competitive advantages in the zeal to outdo its competitors. Consequently, Aldi has been able
to thrive in the competitive business world.
Performance of Aldi’s Supply Chain
Increased logistics cost has led to decreased profit margins which have consequently led to
the decrease in quality of products delivered to customers in an attempt to recover the lost
profits. Aldi suffered stacking of fresh produce in the stores which meant poor quality and
handling. It, therefore, in response to that problem, adopted CHEP's new generation crate
family. These crates were produced to be the industry standard for fresh produce and Aldi has
used them for efficient transportation of its products from the farm to the store. According to
(Lambert, 2016), these crates have helped Aldi “achieve a one-touch solution and maximize
efficiency at various levels in the supply chain.” As a result, Aldi has been able to keep the
production costs low thereby passing the savings to customers by providing them with low
price commodities at the same time maintaining quality high. The one-touch new generation
crates solution provided less handling of the highly perishable products which consequently
means that customers will enjoy high-quality products and enhanced shopping experience

Integrated Supply Chain Management
(Cooper, 2017). Statistics show that these crates adopted by Aldi perform better than all other
crates in the market by 29%.
Some strategies are often considered simple but their end result is amazing. Aldi has
embraced the use of the consistent design in its supply chain. For instance, it has made sure
that its warehouse is simply designed which has in turn allowed uniform processes and
systems which has, as a result, reducing the cost of operations. The grocer has also removed
complexities from the distribution and packaging. The grocer has made delivery vans to be of
the same size and standardized pallets. The organization has also done away with
unnecessary products store services such as unpacking and arrangement of items. It has
embraced the use of boxes and pallets as product displays which has greatly reduced the
handling costs.
For most companies, check out has been one of the most time-consuming processes that can
be dealt with better and time saved used in other income-generating activities. For Aldi, fruits
are sold in predetermined bags which therefore means that they no longer need to be
weighed. Reading of bar codes during the real selling process also takes time to search and
scan the bar code. Aldi has come up with a solution for that. Its products have multiple
barcodes reducing the time taken to search and scan them. After paying, customers return
their purchases back into their trollies to put them in their bags elsewhere in order to allow
space for the proceeding customer to check out. That has reduced throughput time, increasing
capacity and eventually reducing labor costs.
The relative performance of the supply chain
Aldi has invaded the world’s grocery market by providing high-quality products at the lowest
prices possible which has been made possible by good supply chain and inventory
management. In this way, it has been able to outcompete its rivals like Lidl, Salling group,

Integrated Supply Chain Management
Dollar Tree, among others. That is because its products are, in most of the times 20 to 45%
cheaper than those of its competitors according to (Hervani, 2017). Aldi only stocks
approximately 1,500 staple items as opposed to tens of thousands of items that are stocked by
its rivals such as Walmart. That makes its supply chain, from acquisition to distribution,
simpler thereby reducing costs. Additionally, most of the products stocked by Aldi are its
own brands as opposed to its rivals who stock products from other brands. That further
lowers prices of the products, still increasing their profit margins. The organization also
delivers products when needed to reduce the costs associated with warehousing thereby
further reducing prices.
The relative performance of individual elements of the supply chain
Aldi’s transport is one of the most efficient systems in the industry. It is divided into transport
logistics that involves distributing goods to the store and supply logistics that involves
transporting goods from the place of manufacture to its distribution center. It has about 3000
vehicles that cover more than 300 million kilometers in a year. It focuses on the reduction of
costs to save customers up to 50% on purchases. The organization uses Red Prairie
transportation services to reach its more than 18 million customers according to (Hua, 2017).
The transportation company smoothens all transport aspects and provides a conducive
environment for the client organizations to control the complexities of global distribution. For
Aldi, its delivery vans have the same size and its pallets standard.
The organization puts much emphasis on inventory management to ensure that its core
objectives of saving customers purchase are achieved. Only the required products are
delivered to the customers. The organization ensures that it purchases what it will be able to
sell within a specified period of time since if it buys more than that, the stock turnover will go
down and it will have to pay storage costs for the unsold products. However, Aldi’s inventory

Integrated Supply Chain Management
turnover has faced a number of challenges. Customers have for some time complained about
not finding some commodities in store on demand. This means that the store has only availed
what the company thinks it can sell at a particular time, not making all items ready for an
immediate customer. Moreover, the company has stocked most of its own products which
have deprived consumers the ability to have a wide choice of products (Jones, 2015). The
company has opted to use its own products to be able to effectively cut on production cost to
provide customers with huge discounts. However, this has been one of its major competitive
advantages, it has only availed a narrow line of stock leaving the customers with not a wide
range of commodities to choose from.
Training is also one of the most significant elements of logistics. It ensures that the newly
acquired personnel comfortably gets into the company’s culture and work towards achieving
its goals. Aldi conducts training for its new employees on how to handle packages, how to
relate with customers, how to meet delivery timelines, among other logistics requirements
(Cachon, 2016). New employees not only undergo one on one training but are also required
to learn from their managers in work and apply the acquired skills to propel the company
towards attaining its strategic goals. Aldi focuses on commonality. It focuses on having all
the stakeholders working with a common purpose in a common manner. It, therefore,
provides necessary training to achieve the commonality it stands for.
Conclusion
The supply chain has been the pillar of many businesses and in fact, the major determinant of
success. It is quite evident that organizations that understand and make good use of the
supply chain have had much to reap. Aldi is an example of a number of organizations
dominating their industry by surprisingly being in a position to reduce prices by up to 50%.
This definitely means an unlimited market, real growth, and global diversification.

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References
Cachon, G., 2016. Supply chain inventory management and the value of shared information.
Management Science, 8(9), pp. 54-75.
Cooper, M., 2017. Supply chain management: more than a new name for logistics. The
international journal of logistics management, 5(78), pp. 65-73.
Hervani, A., 2017. Performance measurement for the green supply chain management.
Benchmarking: An international journal, 8(9), p. 78.
Hua, G. C. T. a. W. S. 2., 2017. Managing carbon footprints in inventory management.
International Journal of Production Economics, 5(7), pp. 57-63.

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Jones, T., 2015. Using inventory for competitive advantage through supply chain
management. International Journal of Physical Distribution & Materials Management, 7(8),
pp. 68-74.
Lambert, D., 2016. Issues in supply chain management. Industrial marketing management,
7(8), pp. 45-65.