Competitive advantage through efficiency
An Aldi case study

Page 1: Introduction

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The food retail industry is a highly competitive market. More so than ever, organisations need to offer customers value for money. Customers want the best quality products at the lowest possible prices. With such tough competition it is vital for organisations to understand what their customers want. Aldi understands that its customers want value for money but do not want to compromise on quality...
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Page 2: Lean production

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Lean production is quite simply about getting more from less. The aim of lean production is to reduce the quantity of resources used in providing goods and services for consumers. At the same time, it is about making the organisation more efficient. Lean production involves eliminating waste and therefore using less labour, materials, space and time. This in turn reduces costs. However, for...
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Page 3: Reducing costs and eliminating waste

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Lean principles involve minimising waste. Aldi have adopted a number of different time-based management approaches to ensure that waste is kept to a minimum. Minimising waste can help reduce costs. For example: Aldi’s shopping trolleys have a £1 deposit system. This ensures that customers return them after use. This results in fewer trolleys being lost and needing replacing. It also...
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Page 4: Just in time

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Aldi uses a just-in-time (JIT) approach to store management by only holding the stock that it needs. Stock is expensive. The company therefore only buys the stock required at any given time. When stock levels are reduced an organisations working capital is improved.  In other words, Aldi is not tying up too much investment in stock that is then going to be held for a long period of time...
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Page 5: Benefits of lean production

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Aldi’s ‘no-nonsense’ approach to retailing therefore leads to cost saving in numerous areas. These cost savings are passed on to customers in the form of lower prices, allowing the business to differentiate itself from its competitors in terms of price, as well as the quality of the products it has on offer. Corporate social responsibility Also, as money is not wasted on...
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Page 6: Conclusion

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Aldi has a distinctive approach to retailing. Its operations focus on providing its customers with quality products that are value for money. Aldi achieves this by ensuring that its operations are as efficient as possible whilst also adhering to its core values of simplicity, consistency and responsibility. Through adopting a variety of lean approaches Aldi is able to offer its customers the...
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Teaching resources for this case study

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    These are the teaching resources associated with the case study: Competitive advantage through efficiency

    This case study will demonstrate how Aldi uses a lean approach to its business operations to offer its customers quality products at competitive prices.

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