The success of ALDI

ABSTRACT

In the new era of information technology, we have seen the large migration of interrelated software and from research; I found that the grouping of software called the “Enterprise systems”. On this hypothesis, I worked on ALDI one of the biggest super market in Europe and profitable as well compared with other giant super market. The reason, why I am choosing ALDI is because it is near to where I am living and also this will help me to find and gather more information to work on in the thesis. I am also curious “why” they are selling cheaper products with good quality than other super market and also the reason behind their success? I did research on it and please see detail below for more instructive information. This case study introduces what Enterprise System and the important role in ALDI or other organizations. Therefore, I would like to introduce how this structure is intended to be legalizes with experiential substantiation and the expected contributions of the research to academia and business.

What is ALDI…?

ALDI is an excellent in global retailing industry and it is citied by Europe as largest retailer, the network proved of success by going against virtually every standard of super marketing. Mr. Brandes said: “The Aldi system is not exclusively a retail discount system, but the management and organisation system that can be applied in any business.”

ALDI is secretly held by brothers Theo and Karl Albrecht established in 1993, Aldi Group is Germany’s leading grocery store network. Early of 1990s the company established and operated 3,000 stores under the Aldi, Hofer, and Combi names in Germany, the Netherlands, Belgium, Denmark, Austria, the United States, France, and the United Kingdom. Unlike the vast majority of supermarket chains, which are continuously increasing their product offerings and selling space, Aldi holds selection at its stores to about 700 items. (Dieter Brandes 2000)C:UserskbalaDesktopEShead_logo_blue.gif

In 1993 examination of the “limited-assortment function” noted that flourishing discounters (like Aldi) work strongly with manufacturers to design products that are cheaper to convey, stock, and sell than branded goods. National brands are occasionally offered, but many business observers hypothesize that Aldi only stocks them to emphasize its own discounts.

While Aldi has experienced huge success in its “will do” attitude to develop its “power” globally, its performances have had a prominent effect. Nevertheless, from the research I found Aldi’s pioneering in “Internationalisation” and spurred to the changed of the global retail food organisation. “In 1993 the Economist confirmed that cross-border mergers, acquisitions and alliances in European Community food-retailing, almost unknown a few years ago, are already growing.” (Economist 1998)

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Former ALDI manager Dieter Brandes reveals the objectives that strengthen ALDI do, starting with simplicity. The system is not only a retail discount system but the management and organisation can be applied any to business. From the research, I found companies such as Wal-Mart and General Motor getting more complex in management but ALDI empowered of simplicity, so I identified the “simplicity” of the system and management, the retailer can offer discount rate of goods.

An Enterprise System (ES), what does it mean?

Around the world, organizations are expanding and are connecting – one business function with another business to another business unit (integrated business).

ESThe diagram below is summarise of the fundamentals of an ES, as from here we can see the benefits of implementing an ES in ALDI

The Components of Enterprise System

Enterprise Resource Planning (ERP)

ERP is an integrated computer-based system that handles internal and external resources, including financial resources, materials, stocks and human resources in ALDI. Activities undertaken internally – from system development to implementation and maintenance, and the management of all these processes – cover a greater number of staff. ERP systems also merge all business operations into a uniform and enterprise-wide system environment.

Material Requirements Planning (MRP)

MRP which is phase’s orders for dependent-demand items over a period to coordinate flow of materials and in in-process inventories for an example (BOM software-Bill of Materials) with manufacture schedules. It also calculate and tracks consequence of hundreds of variables such as new orders, changes in various capacities, clogged production centers, shortages, and delays by suppliers for an example (Inventory Status File software – ISF), and feeds financial data into the accounting system.

Distribution Requirements Planning (DRP)

DRP is generally used with an MRP system, even though most DRP models are more inclusive than stand-alone MRP models. The fundamental basis for DRP is to more precisely predict demand and then use that information to increase delivery schedules. This way, distribution in ALDI can reduce inbound supply by using MRP in combination with additional schedules.

Customer Relationship Management (CRM)

One important role in Enterprise System – is an integrated information system that is used to plan, schedule and control the presales and post sales actions in a business. The primary goal of CRM is to improve long-term growth and profitability through a better understanding of customer behavior. In the compartment interconnecting CRM, Customer Experience Management (CEM) playing significant role to collect automated information.

ERP systems also integrated CRM systems that deal directly with the customers, or the eBusiness such as e-Commerce, e-Government, e-Telecom or supplier relationship management (SRM) systems.

Control and Enhance Business activity with SCM and EDI

SCM (Supply Chain Management) is to control the process of the series of activities that move products from suppliers. It is ideal for operations for ALDI that require rapid order entry procedures, visibility of process from the order entry screen, and extensive serial tracking capabilities. In addition, the software provides extensive shipping and multi-warehousing management capabilities in ALDI. There are fundamentally 3 goals of SCM: to decrease inventory, to boost the pace of transactions with real-time or online data exchange, and to amplify returns by fulfilling customer demands more resourcefully. EDI (Electronic Data Interchange) and e-Procurement we can set goals; and predict, optimize, and schedule time, materials, and other resources with EDI activities:

The inventory tracking is significantly facilitated throughout Web-based ordering (Web 2.0 or e-Mobile) and the software’s ability to integrate with bar-code-readers with the retail Point of Sales (POS) system.

E – Commerce

Internet, the most powerful tool of the new era of ES technology, it has transformed the business methodologies and dramatically impacted the communication with customers. The formation of faster internet connectivity and influential online tools has resulted in a new commerce arena – “Ecommerce”. The advantage of introducing Ecommerce in ALDI and its customers are as follows:

This revolution is particularly common in business-to-business (B2B) commercial. Many of the Fortune 500 companies have adopted e-commerce systems such as Amazon, Tesco, IBM’s etc. E-commerce can be developing XML (cXML, or Commerce Extensible Markup Language) specification for the messages. The XML Common Business Library (xCBL) as the format of messages, and mySAP uses the Open Catalog Interface between buyer and seller systems

Cast study

“According to Glen Petersen, author of ROI: Building the CRM Business Case,” the most successful CRM systems are found in organizations that realign their business model for effectiveness, not just redesign their information systems”.

The other benefit of the ES approach is to have the same version and method information systems for the whole branches whether in ALDI in Ireland or ALDI in Denmark. The information stored in systems stored once and at the same time it will avoid any duplication and save money as well. As a result, there is no wasted “effort” and no variation of data. This can be done via Database Management Systems Server (DBMS), so the new opening branches need to network to DBMS server to download programs, product details, etc.

The integrated systems will flow seamlessly across diverse business strategy, business units, and geographic boundaries. Eventually, most of transactions currently are use integrated system to running business operation such as purchasing, invoicing, cashiering, (inserting, updating, manipulating and reporting data) etc. The integrated system that sound general but number of companies implemented, implementing such systems called an “Enterprise Systems”

Developments of Enterprise Systems

From my research and the inspiration by Peter Checkland the best method before designing, the phases should analyze with Soft System Methodology (SSM) before Systems Development Life Cycle (SLDC) taking process. SSM was developed during the 1970’s, the methodology surfaced from systems engineering. The system engineering unable to scope with complex system, so the SSM grew stronger till up to date. The SSM, to handle the complexity where the ALDI could recognize and understand the global needs. A complexity where SSM is appropriate is in deciding how ALDI should make use of the information technology. Please see below the sample of SSM process though CATWOE analysis:

The next stage of SSM is SLDC. SLDC is life cycle for the project management technique that alienated complex phases into smaller part. Segmentation of phases easier to manage and substantiate the successful completion for ALDI. Please see below the subsequent phases:

System realization and implementation

Initial feasibility of project

C:UserskbalaDesktopEShead_logo_blue.gif

Various testing phases – integration system, testing and debugging

Project planning and designing

The phases-analyst, structured and documentation

Actual programming and coding phases

Implementation an Enterprise System in ALDI

Enterprise systems have enabled cost-effective business processes and contributed to the improvement in process efficiencies. The Enterprise systems start from “back-office” an automating the business transactions that customer do not care about. In eye of people, although back office systems not offer reimbursement they do important role for an organizations. Poorly, operating of back office can lead to unsatisfied customers, suppliers or tax officer and also can’t generate accurate accounting final reports. So, in my observations, moved or transforms into ES it will supporting supply chains of optimization, sales force automation and improve customer service.

When implementing ES, most organisations are required to do significant changes and to (re)design processes according to the ‘best practices’ embedded in ES. This is considered the most challenging issue in ES projects (Davenport 2000, Shanks et al. 2003). Robey et al. (2002) suggest that ES implementation can be understood as dialectic of learning. ES create new opportunities but also new challenges and difficulties for both users and implementers and influence ES development.

The implementations of system in ALDI, can be done in either by installing more comprehensive software or by installing complementary software applications-it called Bolt – on systems (from 3rd party software company). In addition to the issues that relate to change management, the legacy systems still maintained by many large organizations such as ALDI for some specific applications, along with the ERP system, are posing further challenges for the business processes. ALDI have been successful in capitalizing on enterprise systems are striving to continuously improve their business processes and the fit between processes and information systems, and how they support their business needs and models.

The Database Management Systems (DBMS) and Strategy

The database for Aldi, why we need it and it’s used for? Why is it important for an organisation or to ALDI? From the research that I have been through and found the most common uses for databases and the deep impact for the Aldi or any organisations.

Storing Information

Data Modelling is to control and manage large volumes of data. Database is a kind of program that enables the user to store information. A database system provides electronic and easy to insert, update, retrieve and store information. In order to avoid of duplication and reduce data redundancy, in DBMS the feature embedded and is called Normalisation.

Multiple Users Access

The super power in database technology allows multiple access and update information and to be instantly viewable by all users. It is improve communication internally and externally but also ensures the server distribute equally with “load balancer” via (file, print, database and application server)

Application Server

DATABASE SERVER http://www.petervaldivia.com/technology/networks/image/client-server.gif

Data dictionary

Organisational Structure

Log Files

Master Data

Programs

Transaction Data

Please see above the Tiered of Configurations and the Layer of Database

Security and Protection

Database security indicates the system, processes, and procedures that defend a database from illegal activity. DBMSs frequently impose security through access control (manages who can connect to the database via authentication and what they can do via authorization), auditing (records information about database activity. Encryption (protects data at the lowest possible level by storing and possibly transmitting data in an unreadable form. The DBMS encrypts data when it is added to the database and decrypts it when returning query results).

Centralization of Database

Centralised database, information congregation and distribution ensuring reliability of data across the region and producing economies of scale. The centralisation of database is to ease maintaining accurately updated of data that easily accessed to DBMS via File Sharing and Networking tools.

Maintenance

Relational Database Management System (RDBMS) feature maintenance tools to easily maintain, test, repair and back up the databases housed in the system.

Enable to access to Web

The new technology of data storage and retrieval via XML with connected with DBMS, where the ability to access information any part of world.

Cut Down On Staff

A database that is used efficiently will lessen the need for extra man power to maintain the system. Although, the DBMS can account for an initial investment, it will more than pay for itself after long-term active use.

Reduces Data Duplications

Object Linking and Embedding, Database (OLE DB) uses the Component Object Model (COM) which reduces unnecessary duplication of data at high level degree, not only among diverse information sources but also among existing database.

Money, Money, Money: “When choosing a database, one of your first decisions is going to be about money. How much are you willing to spend for your database? Free databases exist, but remember the maxim: software isn’t free, you are. In this context, if you get a free database package, it will be up to you to install, configure and administer it.”

Tech target.com

Queries

The tremendous of DBMS is Queries, tool embedded in system enable the database administrator to retrieve information and present in a predefined format. There are number of database management system available in today informative world, such as SQL – Structured Query Language (SQL). SQL is computer language for designing and manipulating database systems. The SQL work database programs like MS Acesss, Oracle, Sybase, etc

Example of SQL to control user with DCL: The Data Control Language (DCL) authorizes users and groups of users to access and manipulate data.

Example:

GRANT SELECT, UPDATE

ON My_table

TO some_user, another_user;

REVOKE SELECT, UPDATE

ON My_table

FROM some_user, another_user;

Barriers of Implementation of Enterprise System in ALDI

Cost and Financial barriers – Financial barriers should in fact be the biggest barrier. The implementation of ES to millions, tens of millions, for small and medium enterprises, and ultimately to create value or by products, ES, at best, is an information platform. ES in the short term, apart from helping to cultivate and to help staff the concept, the negative returns. As for the long-term interests, for the efficiency gains and cost reduction, but also fundamentally corporate will produce fundamental changes in the structure of the self-optimization path.

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Another significant of implementing is the initial setup and preliminary expenses time and the cost through with adaptation, adjustments and training. For a business that only receives one P.O. per year from a client, fully integrated CRM, MPR and EDI may not make economic scale. In this case, businesses may implement inexpensive solutions. For other businesses, the implementation of an integrated ES solution may be necessary as increases in trading volumes brought on by EDI force them to re-implement their order processing business processes.

Tools – Many ES initiatives have failed because the tools weren’t available enough to end users so the ES (e-commerce, DW and a complex of business intelligence system), capabilities were never really applied. Users regularly used the DBMS system to pull data from the warehouse and import it into Excel, bypassing the system’s analytic capabilities that, to them, seemed overly complex or not very useful. Despite this fact, we can see the complexity of systems and all about the related to financial matter to buy hardware and developing a complex programming (Java, Delphi, Pearl and C ++) and end with re-engineering of ES if the current system not useful for management and users.

People – People who have the information, industry skill, and objective to succeed are sometimes unenthusiastic to embrace new technologies. This can be internal or external of people, when implementing advance ES, an organisation should value and estimate the level of education and culture with the current location. There are several factors:

Employee are comfy and secure with the expertise of current factors

The leadership issue, the senior management will have to look hard to find a business minded leader (project manager) – wise and technology savvy leader. Such people are scarce. Management must choose that person carefully in order to complete tasks according to get the most productive and efficient leader for the organisation to maximise the use of the system.

Inadequately information is communicated about the technology that is being adopted and deployed;

Lack of training and empowerment between management and staffs

Without proper hiring of staff or human resources it is consider as one of the Information System (IS) barriers with the implementation for they are the one who gives the specifications, requirements and standard that help to develop and improve the functionalities of any business organization. Communication also adds up to impediments of technology, every staff member and manager must work together as a team to be able to be successful in achieving one goal.

Unskilled staff – The system must be prolong and supervise from time to time and the staff who will handle the operation must be well trained and have a capability on maintaining the system. By unskilled staff inside the organization will add up to the barriers to the realization of the system.

Technical Problems:

IT Infrastructure – Deficient of a sharing, reliable computing and network infrastructure to address the needed teamwork for the implementation. When an organisation deficient an IT infrastructure there will be a complexity in operating technology supported programs with consistency from one office to the other or building to building. It also slows and complicates communication among the organization or others.

Unworkable time frames – Most information systems take considerably longer than initially planned. The timing issue delay and attempt to serious technical hitches in planning for and regulating to changes in operations.

Difficulty of data collection and management – Data collection is measured to be the most crucial and tricky part of implementing an Information System (IS) for it is the establishment of the entire system process. Thus, these convey what the system is all about, its capacity and limitations.

Conclusion

Enterprise systems affect nearly all aspects of organizational life, not only at the point of start-up but also throughout their operational lives. Indeed, an organization’s enterprise system affects its need and ability to upgrade or convert to more modern technologies. . In this paper, I have attempted to tackle the pro-innovation bias present in many of the reasons reported for the adoption of ES packages.

I have gone through the benefits and barriers that are relating the Enterprise System. The Enterprise System can be a company’s best asset when it is used correctly, however if not it will not yield much saving for a company. It is best suitable for the large organisation such as ALDI.

My overall research does not recommend that a company “blindly” put in place Enterprise System without proper knowledge, research, technique, methodologies and analysis for a term of “modernisation”. Nevertheless, for that reason, the analysis with SSM and Enterprise System life cycle playing significant roles of the developing integrated business intelligence system. Overall, new organisational structure need challenge to new Globalisation Information Systems (GIS) to centralised on establishing data communication, IT infrastructure, e-business and DBMS to positing of the global organisation in the international economy.