Competitive advantage through efficiency An Aldi case study
Page 3: Reducing costs and eliminating waste
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 means that Aldi do not have to employ someone to collect the trolleys as customers return their trolley to the front of the store.
Another time based management approach that Aldi has adopted to reduce waste is through its opening hours. Aldi trades from 8am until 8pm from Monday to Saturday and from 10am until 4pm on a Sunday. In contrast some of Aldi’s competitors are open for 24 hours. This means Aldi’s sales are spread over a shorter period. It also means that staffing costs are not incurred at times when there would be fewer customers. As a result Aldi is more productive during its trading hours. Consumption of utilities for power and heating can also be reduced through trading only during the busiest times of the day.
How staff support waste reduction
To underpin these principles Aldi requires competent staff. A combination of total quality management techniques and a time based management approach help to ensure employees take responsibility for their job roles whilst minimising the amount of time wasted. Employees are paid market-leading salaries within the grocery industry.
A comprehensive training programme enables them to become multi-skilled. This means that staff can undertake a number
of different roles within each Aldi store, allowing staff to be flexible with the tasks they can do. It is therefore easy to produce a staff rota as employees can fulfil a variety of tasks. Employees can carry out whatever tasks are needed throughout the day, leading to time-based savings. Training, high wages and a diverse job role all help to motivate staff. This in turn leads to lower sickness levels and a more empoweredteam.
The process of buying and selling within Aldi stores also operates on time-based management principles and means that they require fewer tills and cashiers. For example:
Products display numerous bar codes. This means that cashiers do not have to search for them and they can be scanned more quickly.
Customers place products back in the trolley after scanning. They then pack their bags away from the till after paying. This helps throughput. It is also more efficient as another customer can have their shopping scanned as the previous customer packs. Again, these cost benefits can be passed on to customers.
These processes contribute to savings which help Aldi to operate more efficiently as an organisation. The savings are then passed on to its customers. This is in the form of quality products at prices that are lower than the competitors.