The Times 100 Business Case Studies Edition 16 Competitive advantage through efficiency Aldi

Introduction to Aldi Retailer in international markets since 1913 Over 7,000 stores worldwide Takes a distinctive approach to retailing Business focuses on principles of ‘lean production’ Savings passed on to customers Reinvestment of profits enables business growth Core purpose = to provide value and quality to customers

Aldi core values Simplicity Consistency Responsibility Fewer varieties of brands/products offered at value prices Consistency All stores have same simple design Responsibility Active role in the supply chain ensures improvement Training and developing employees drives quality customer service

Lean production ‘Lean’ avoids waste or duplicated effort Techniques most often used in manufacturing industries Principles equally apply to service industries ‘Lean’ avoids waste or duplicated effort Focuses on using resources efficiently Minimise cost Save time Reduce waste

Reducing costs and eliminating waste Continuous improvement All employees focus on quality Staff trained to become multi-skilled Allows flexibility across tasks and roles Time-based management 60% of Aldi’s fruit & veg sourced locally, reduces fuel miles Efficient till operations increase speed of checkout Store opening hours shorter Sales contained in less time, so staff costs less Reduced use of power/heating etc

Reducing costs and eliminating waste (cont) Just-in-time production Stock only bought when needed Releases working capital Eliminates storage costs Ready-to-display cases reduce handling in stores Total quality management - ‘Right first time’ Empowering staff improves motivation Strong relationship with suppliers Improves product offerings Helps suppliers meet international standards

Benefits of lean production Aldi differentiates itself from competitors Achieves cost savings across the organisation Customers benefit from keen prices Savings put back into business and CSR activities