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

Brandes and Brandes, (2012) 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. 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 Chuang et al., 2012, 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. 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. Chuang et al., 2012 clarified that at one time, the company

attracted the talent through giving the staff some percent of revenues made by the enterprise .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 Pioch, et al (2009), efficiency is links build between the inputs and the

subsequent outputs. He asserted 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 has 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 in 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. Brandes, 2005 pointed out that Aldi 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. For

example, its stores exhibit the commodities in pallets instead of shelves in order to cut the
 Innovations through the lens of operations management 6

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 Ghemawat and Hout, 2014 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. 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

Appendices
This was interview with Marc Heuinger CEO of Aldi retail

1. Interviewer: how have you dealt with open innovation in your organization?

Interviewee: I have partnered with different firms in food industry so that we can join hands

and also combine our knowledge to venture into expensive production of goods such as
 Innovations through the lens of operations management 10

3D printed food and probiotics such as algae. We knew that we could not survive by our

own and that is why we did this to meet the needs of clients in the market.
2. Interviewer: There are 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,

have you adopt any strategy?

Interviewee: Yes I have applied 3AAAs strategies in my organization. I believe that

adaptation, aggregation, and arbitrage will change my firm to cope up with challenges of

the globe. As the management, we found that these strategies will change the way our

good will be perceived outside there for instance, the adaptation strategies target at

increasing the market share and the returns of the company

3. Interviewer: What have you done to improve the efficiency in your firm in terms of

cost and time?

Interviewee: The management has 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

the needs of customer have never delayed. This strategy centers on the philosophy of the

thought of lean. It minimizes the cost of constructing another store. We have developed

outlets in the streets specifically in a suburb and town-down regions where the cost of

real estate cheap.

4. Interviewer: Human resource is crucial steering of the company who are responsible

for daily undertakings, what have you realize to improve them and if so which are

these ways have you taken?

Interviewee: Yes I have realized to make them better. I have changed the way of recruiting

staff. The company has attracted the talent through giving the staff some percent of

revenues made by the enterprise .It might not look a technology, but the idea will
 Innovations through the lens of operations management 11

encourage staff to work hard so that if the company gets lots of profits, then they will get

a significant percentage. Talent acquisition and talent sustainability comprise the best

operational management innovations that have driven the firm to the highest level it is at

now.
Interviewer: Have your company tested the use of uniform product code and what any

other technology have you brought to your company?

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

The idea has helped us 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 within its inventories, stores, and vendors and also communication within

its headquarters. However, 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. Moreover, 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 spending