Innovations through the lens of operations management 1

Innovations through the lens of operations management

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 Innovations through the lens of operations management 2

Introduction

The changes in the operations management refer to the attaining high performance

through coming up with new ways of handling the administration of the practices of the business

in an aim to create the highest level of the competence within that organization. It involves

developing new ways of converting labor and materials into good and services to maximize

profits in any institution. The operational management tries to balance revenue with costs in an

aim to attain the highest net of operating profit (Stevenson and Sum, 2002). Any organization

should put in place innovations in their management operations so that they can achieve better

performance. However, adopting strategic leadership, talent sustainability, talent acquisition and

coming up with new technologies which assist in the processing of goods could make an

organization to achieve its set goals.

Qualitative and quantitative research methods were used in finding the responses from

the institution. The information under the study bases on the views from the management of the

organizations. The method was appropriate for the study since all the information could only

come from the staff of the organization. The report will present a literature review that addresses

the innovation and or newness viewed through the lens of operations management in Aldi Retail

Company. It will also try to find out how such technology have impacted the organization.

Lean production in Aldi retail industry

According to the CEO of Aldi operations, the values of the lean production are very

crucial to the competitive edge of the firm. The firm has three core values which involve

consistency, accountability, and straightforwardness in lowering the costs and getting rid of the

waste, Aldi uses its philosophy superbly in that; it targeted at reducing the wastages to reduce the
 Innovations through the lens of operations management 3

spending. It also reduces the expenses via opening hours, for example, opening for 12 hours from

8 am to 8 pm in daily contrary to what many key competitors are doing. The Aldi sales enclose

within the little period, and it has assisted in lowering the energy used and the expenses on the

salary of the staff expenditures (Brandes and Brandes, 2012). The staff of this company

undergoes extensive training which targets helping them to become skilled to do different duties

in the Aldi store. Also, it provides the rotas and staff to be lithe. The operations tills are diligently

organized to make the procedure more proficient. For example, the items have the barcodes in

most places to saving time while searching them.

The JIT approach

The chief executive of Aldi said that the firm utilizes JIT approach via holding the stock

which required for a given period. Therefore, it assists in not tying up space and cash in holding

the stock. In the time of arrival of stock, the focus is only cost reduction and managing it. Some

of the goods sold in store from a platform. It is an intelligent way of getting a bigger volume

speedily into the shop. The Lean production theory used by the firm saves the expenditures

(Brandes and Brandes, 2012). These costs passed to the clients in the form of lower prices. The

business takes precautions not to waste resources and at times it spends on charities to be part of

its program of corporate social responsibility.

Uniform product code

According to the CEO of Aldi retail, the company has advocated technology in its

processes. It is the first company to install and use the uniform product code in the sale points.

The idea has helped the firm to identify the location of each item in all the times. The company,

however, set up a satellite system which promoted the company in enhancing the communication
 Innovations through the lens of operations management 4

within its inventories, stores, and vendors and also communication within its headquarters. He

further pointed out that the ideas helped in lowering the cost of inbound logistics among other

fruitful undertakings (Chuang et al., 2012). The company, on the other hand, has installed a

massively parallel processor used to track the stock movement. The innovation keeps. The firm

however adopted data mining strategy which it competitors always copy them but the company

is always ahead of them. According to the operational manager of the company, the firm has

adopted advanced systems of cross docking. It means that goods are delivered quickly without to

inventory them. The lowered prices eliminate the expenses incurred in the sale promotion, and

also the sales are predictable. The cross-docking in Aldi retail form has offered each manager

much control at store level.

Human resources

Concerning the way human resource can change the ways of goods and services

provision, many companies have put in place arrays of incentives which help to lure different

talents in different departments. The CEO of Aldi clarified that at one time, the company

attracted the talent through giving the staff some percent of revenues made by the enterprise

(Chuang et al., 2012). It might not look a technology, but the idea will encourage staff to work

hard so that if the company gets lots of profits, then they will get a significant percentage too.

The company, however, have changed the way of recruiting its staff. According to the

human resource officer of Aldi, talent acquisition and talent sustainability comprise the best

operational management innovations that have driven to the highest level it is at now. In this

particular case, the talent acquisition, the professional carry out the post-hire skills matters which

encompasses the workforce retention and career development (Foster, 2012). The addition of
 Innovations through the lens of operations management 5

more leaders into the management of the organization will shape the leadership of the company,

and by doing so, the investors from different parts of the globe will be lured to come and invest

in the enterprise. It is also seen that the talented leaders brought to the company will motivate the

existing staff to work hard to achieve the set goals of the plan. Here, many expertise employees

will get attracted to the business, and at the long run, the firm will have wealthy of knowledge

and its operations will do well. In regards to talent sustainability, the Aldi retail has retained and

developed individuals within capabilities and commitments. It uses this strategy to bring success

to the enterprise. It hires talents across the world for the reason that they bring innovative and

experienced workforce. It uses the social media sites such as the LinkedIn to make easier the

recruitment processes and come up with positive experiences.

Efficiency

According to human resource manager of Aldi retail, efficiency is links build between the

inputs and the subsequent outputs. He said that efficient operations encompass the reduction of

cost in all business sections. The areas which the Aldi retail have managed to reduce the cost are

saving of; effort, energy time and space. The management said that I have saved the cost of

recruiting the workforce for example in each shop; it has less than 6 employees working in a day.

Due the less number of workers Aldi, the needs of customer have never delayed. The strategy

which Aldi said it uses to conduct its business centers on the philosophy of the thought of lean.

Aldi minimizes the cost of constructing another store. It developed outlets in the streets

specifically in a suburb and town-down regions where the cost of real estate cheap (Pioch, et al.,

2009). It utilizes small spaces hence making the startup expenses low. It assists the business to

blanket its markets. The CEO also said that Aldi has other strategy which has assisted it to

manage its sales well (Brandes, 2005). For example, its stores exhibit the commodities in pallets
 Innovations through the lens of operations management 6

instead of shelves in order to cut the expenses of restocking and time. However, the customers

bring their own bags or are supposed to buy bags when shopping.

Adoption of AAA strategies

According to CEO of Aldi, these involve the approaches which are done within the

operations of the company so that they can bring in innovations that can transform the firm to

better positions. Ghemawatts three As involves adaptation, aggregation, and arbitrage. The

adaptation strategies target at increasing the market share and the returns of the company. If the

company plans to adopt this operational plan, the firm will make the local preferences be the

basis done in any region set to start a business. It aims at getting the product accepted in the area

through meeting the preferences of those targeted prospects (Ghemawat and Hout, 2014).

Concerning the arbitrage, the company can adopt it to get significant economies of scale via the

creation of the worldwide efficiencies.

The procurement and production approaches will reduce the cost incurred. Any firm can

centralize the purchasing of the raw materials and also the production of goods shifted to the

countries that the cost of production is low. According to Aldi retail firm, aggregation strategies

target the creation of values and exhausting the differences in the market, and it has assisted the

company to resort to buying the products from the competitive markets and selling them in

markets with higher prices. However, Aldi retail, has extensively utilized this kind of strategy

through sourcing its products from the competitive markets for instance China and selling them

in Europeans countries at higher prices.

Partnerships in Aldi retail

 Innovations through the lens of operations management 7

The open innovation forms the best operational innovativeness in the management of

Aldi Company. According to chief executive officer of Aldi retail, the firm has no ability to start

inventions on their own, but it needs to join hands so that they can venture in innovative

investments. Open innovation encompasses the chain companies, knowledge institutions and

government bodies who come together to create new products and processes. The CEO pointed

out that open innovation; the firms have a different part to play while the other businesses do

the rest. For instance, many innovations in the food sector which ninety percent involves the

small scale enterprises usually called innovative and efficient. Relating to the 3D printed food,

the technologies in this area have helped in improving the customized food and diets (Wortmann,

2004). The 3D pointed food was modified based on the ingredients and the dietary values

together with size, quality, and essence (Bigliardi nand Galati, 2013). He further pointed out that

by coming up with new types of food which meet the needs of the clients, the firm have modified

the food retailing of the in the world. The invention of algae as food has altered the way which

client purchases the goods in the shops. The attention towards sustainable diets faces on the

alternative ingredients of the meat.

Conclusion

Through the responses from primary research, the top management of Aldi pointed that

the operational management involves all the processes concerned with converting the labor and,

materials into goods in an aim to get much profit. By coming up with innovations in this sector,

Aldi made lots of profits and increased the supply of goods and services to the clients. These are

an important process which needs many individuals to get involved in making sure that all these

innovativeness come to operation.

 Innovations through the lens of operations management 8

The Aldi retail firm has three core values which involve consistency, accountability, and

straightforwardness in lowering the costs and getting rid of the waste. It has used its philosophy

superbly in that; it targeted at reducing the wastages to reduce the spending. It also reduces the

expenses via opening hours, for example, opening for 12 hours from 8 am to 8 pm in daily

contrary to what many key competitors are doing. The Aldi CEO clarified that at one time, the

company attracted the talent through giving the staff some percent of revenues made by the

corporation. It might not look a technology, but the idea will encourage staff to work hard so that

if the company gets lots of profits, then they will get a significant percentage too.

At times it was difficult to venture into the processing of certain products such as food

algae, but through partnerships with other firms, it becomes very easy for Aldi to process,

distribute and sell such products. The open innovation, therefore, made Aldis operational

management to come up with new strategies to produce and deliver goods within its operation

systems. The activities of the firm can also transform into the human resource that can come up

with new knowledge that can help the company to maximize profits while minimizing the

expenditures
 Innovations through the lens of operations management 9

Reference list

Bigliardi, B. and Galati, F., 2013. Models of adoption of open innovation within the food

industry. Trends in Food Science & Technology, 30(1), pp.16-26.

Brandes, D. (2005). Is ALDI really that special?. International Commerce Review: ECR

Journal, 5(1), 26
Brandes, D. and Brandes, N., 2012. Bare essentials: the Aldi way to retail success. BoDBooks

on Demand.
Chuang, M.L., Donegan, J.J. and Ganon, M.W., 2012. Culture Implications for the Operations

Strategy-Walmart Experience in China. In 15th Technology Integration Management

Seminar (pp. p1-17).

Ghemawat, P. and Hout, T.M., 2014. Globalization, Capabilities, and Distance: Theory and a

Case Study (of China). Globalization.

Pioch, E., Gerhard, U., Fernie, J., & Arnold, S. J. (2009). Consumer acceptance and market

success: Wal-Mart in the UK and Germany.International Journal of Retail & Distribution

Management, 37(3), 205-225.

Stevenson, W.J. and Sum, C.C., 2002. Operations management (Vol. 8). New York, NY:

McGraw-Hill/Irwin
Wortmann, M. (2004). Aldi and the German model: Structural change in German grocery

retailing and the success of grocery discounters.Competition and Change, 8(4), 425-441
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