Competitive Advantage through Efficiency: AldiCompetitive Advantage through Efficiency: Aldi Harvard Case Solution & Analysis

Competitive Advantage through Efficiency: Aldi Case Solution

Qno:1) Explain how principles of lean production enable an organization to compete within a marketplace on the basis of value.

Lean production is a manufacturing strategy that companies implement in order to reduce costs, increase productivity and to achieve a competitive advantage. Lean organizations are able to maintain their stocks to complete orders in addition, they usually use pull method to move products and materials during the production process which helps to reduce time to improve customer service. Furthermore, it also helps to improve the quality of the product.(Brian Heymans)

 The improvement in the quality of product and the process consequently improves the customers’ satisfaction. Thus, the aim of Lean production is to get more output from by utilizing less input. It’s all about making an organization more efficient. Lean production is based on several efficiency concepts such as Continuous improvement, Just-in-time production, Time management, Total quality management.

Lean Production
Continuous improvementAldi intended to build a culture in which all employees would be involved in making improvements to its process and to enhance quality.
Just-in-time productionThis approach has enabled Aldi to maintain its inventory and reduce the cost of maintaining additional stock
Time managementBy providing training to employees and making them to perform multitasking had enabled Aldi to reduce time consumingprocess.
Total quality managementBuilding a culture to ensure quality and making its employees responsible for getting right first time

Time based-approach

The Lean production in Aldi starts with its supply chain, for instance; 60% of the Aldi’s food and vegetables are acquired and sourced locally which reduced the time and costs for long delivery. Further, the Aldi has been successful in maintaining its employees by enhancing their skills and knowledge in order to make them efficient and familiar with the market needs. Aldi provides adequate training to its employees, which enables the employees to work in a manner which could eliminate the time, waste and cut costs. The training also enables the employees to learn and adapt multi-tasking which in turn reduces the staff costs as fewer staff required to perform a variety of tasks. Therefore, its employees become efficient in handling several tasks at a time Moreover, training and development helps the company to provide high customer service. Aldi operates its business around the philosophy to provide value due to which its customers have a greater degree of trust.Aldi applies time management approach by selling fewer varieties of products as compared to its competitors which enable it to enjoy economies of scale and which also helps it maintain small stores and to display its products.(JENNIFER CREEVY, 2010 )

Furthermore, Aldi had adopted several other different time based management approaches to make sure that waste is set aside minimum which in turn helps the company to reduce the cost by minimizing the waste. Another time based approach it has used to reduce waste by opening hours. Aldi has set timings for its store opening and closing which reduce the staff costing and the employees become more productive during the trading hours.

Continuous improvement:

Its Lean management approach is closely held with the three core values such as simplicity, consistency and responsibility.Through which it has been successful in maintaining its competitive advantage. Aldi’s stores are designed in simple manner which creates consistency.In addition, responsibility is also an important aspect which helps its employees to drive the business forward in consistent with the continuous improvements.

Moreover, Aldi offers same products but in the higher quality than the other leading brands in any market it is operating. Aldi had also been able to focus on corporate social responsibility through its lean thinking, which increased its focus on society’s need and responsibility(JENNIFER CREEVY, 2010 )....................

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