PLEASE GIVE ALL CASE STUDY ANSWER CASE STUDY 01: Aldi Aldi do two sets of comple

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PLEASE GIVE ALL CASE STUDY ANSWER

CASE STUDY 01: Aldi

Aldi do two sets of complementary things to keep their costs down; they minimize input costs and they reduce process complexity. Minimizing input costs includes specializing in ‘private label’, that is Aldi branded products. This means that they can specify the composition (for example, recipe) of products to keep costs under control. Nor do they have to support the brand marketing that is necessary with branded products. They are also a large organization who can order products in very large quantities thereby keeping prices down. Nor do they use complex and costly fittings in their stores.

Using ‘open carton’ displays and deliberately not supplying grocery bags both eliminate costs that their supermarkets incur. The system is also simple. An ordering and stock management system that only has to cope with 700 items is much easier to design and operate than one which has to cope with 30,000 items. Supply chain, stock movement, quality management and other systems are therefore simpler and cheaper. By using simple customer management devices such as the returnable deposit only when a cart is brought back to the store, the job of collecting and returning trolleys is eliminated.

Questions

1. What are the main ways in which Aldi operations try to minimize their costs?

CASE STUDY 02: Lower Hurst Farm

It is first important to understand what is meant by ‘quality’ in this case. Of course, it means the same as for any other product, namely that it consistently meets its specification. But also there are other issues with this organization. First, there is a matter of trust. The people who buy this meat are doing so, at least partly, because it is organic. Therefore, they must trust the operation to maintain everything that is associated with organic farming. This includes both the way the animals are reared and cared for and the stewardship of the countryside. The operation, therefore, must do everything it can to demonstrate that it is doing this and build the trust of its customers. Second, there is a significant ‘quality of service’ issue.

Catherine points out that customers like to have personal communication with her when they are ordering their meat. Quality of service therefore means not only the courtesy and responsiveness that we would expect from any service, but also the feeling that the customers are ‘part of the system’.

Achieving these different aspects of quality means devoting considerable attention to how the farm manages its processes. In effect, there are three processes here, rearing the cattle, butchering the cattle and packing the meat and order taking and dispatch to customers.

Rearing the cattle under organic conditions is clearly a rigorous and demand process. The inputs to the process (the land, cattle, feed, absence of artificial fertilizers and drugs, etc.) must all be checked for quality and the day-to-day care of the cattle must conform to organic farming rules. The butchering must be done so as not to cause too much distress to the animals and the freezing process is designed (with specialist help) to maintain the quality of the meat.

Finally, the ordering process must be conducted, not just with courtesy, but with a level of friendliness appropriate to customers’ expectations. Similarly, transportation of the products must be fast and dependable (Catherine always calls customers to make sure that they have received their order and that it is in good condition).

Questions

1. What does Lower Hurst Farm have to get right to keep the quality of its products and services so high?

Explanation / Answer

1. What are the main ways in which Aldi operations try to minimize their costs?

Aldi reduces the cost by two ways - a) Input cost reduction, and b) Reducing process complexity. For input cost reduction, it focuses on its private label brand which needs specific recipe and control over ingredient cost. As a result, it doesn't need minimal focus in brand marketing. It also focuses on bulk order and quantity discounts. It invests very less on store fitments with expensive or complicated fittings. It also reduces consumables' consumption such as by deliberately not providing plastic bags.

Under reducing process complexity, it manages only a handful items for which the management of inventory system and storage is simpler. Its supply chain, stock management, and quality management are much simpler compared to the competitors.

2. What does Lower Hurst Farm have to get right to keep the quality of its products and services so high?

When it comes to quality, the offering is not confined to the product but also the service or the responsiveness. Therefore, the company needs to focus both on product quality and service quality. When it comes to product quality, the ideal quality of meat is difficult to define. However, relevant attributes are freshness, processibility, and taste. As people know that the product is organic, they are getting attracted towards the product. Therefore, for the company, it is very crucial to keep the trust of the customers intact and to have integrity in operations. In order to build trust, transparency, and traceability of all the food products are very crucial aspects and should be leveraged by the company. The process quality should be focused at every level and the outputs from every single process such as rearing, butchering, and packing must be dealt with specific process control mechanism. Adequate levels of product and process appraisal should also be included in the process layout.

When we consider the quality of service, it is about the responsiveness and service level that counts for quality. The inventory levels, ordering process, and production planning must be done in order for achieving the target service level. The customers should be treated with care, relationships should be built with them for gaining loyalty for long-term. it must be noted here that the customer service, service level, and customer experience are the things which will differentiate the firm with its competitors. Otherwise, producing fresh meat and delivering it to the customers are not such processes which by themselves can create a high barrier of entry.

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