Aldi’s Quality management

In the first half of August of this year, people in United Kingdom woke-up with a news
that Glenlivet whisky became the runner-up against Aldi’s private brand Glen Marnoch
Speyside Single Malt Scotch Whisky compared by a blind taste. Whoever knows the taste and is
a fun of Glenlivet whisky will definitely ask, how did Aldi, a grocery store, manage to beat a
whisky manufactures? The answer is easy- quality management. According to Aldi’s official
website states, “our fundamental principle is to offer high-quality products at the best price.
When buying, the companies of the ALDI SOUTH Group do not look for the lowest price but
rather for the best value for money.” One of the proof is Aldi’s award winning whisky which
only costs £17.49 for a bottle compare to Glenlivet £37.45 in United Kingdom-“high-quality
products at the best price.” Aldi deployed Total Quality Management method to became award
winning products provider from cheap knockoff product retailor.
Aldi’s quality management begins with its unique business model which states “great
quality at the best price.” In addition to the core business model, the three timeless core
values- consistency, simplicity, and responsibility are the driving force for Aldi’s quality
management. The supply chain starting from strategical planner to the store executioners, each
operative follows the business model and the core values to the fullest. One of the core value
which gave Aldi the edge in their quality management is the short list of 1500-2000 SKU
compared to Walmart’s minimum 25000 SKU’s product line in any given day. The company’s
short shopping list and long-term partnership with suppliers helps Aldi to engage in continuous
improvement in almost all their products. Kirsten Geß, director of communications for Aldi
South, while interviewed for the Private Label International magazine said, “together with our
suppliers, we develop new products and set our own high standards that often exceed legally
required standards.” The company proactive way exceeding legal required standard, for
instance, led Aldi UK to sign a deal with UK’s Department of Health’s Responsibility deal to
significantly reduce the levels of salt and sugar in their food-related product.
Moreover, the company’s strategy of decentralized approach aided each stakeholder
to play as a quality ‘watchdog’ for the company. This strategy “enables Aldi to serve the highly
varied expectations and needs of their customers in the different national markets.” For
example, the growing need and access to the delivery system, Aldi-US managed to partner with
Instacart to give access to Aldi’s product to their customer homes. In addition, the
decentralization approach helped the company to get fresher quality products by promoting
home-grown products to reach their customer. A case study done on Aldi UK and Ireland found
that, in the United Kingdom, the ratio of the products sourced from UK-based suppliers are two
out of three. This strategy helped the company to hold the core values but manage to be more
flexible towards the custom and the need of their consumers in the countries they operate.
“Aldi expand its global empire and IBDs (Independent bike dealers) are on its hit list” or
“Aldi fires $3.4 billion shot in U.S supermarket wars” have been some of the news coverage
since its nine countries expansion using competitive benchmarking. Competitive benchmarking
is one of total quality management element which help a company to improve the process or
the operation by studying other companies processes or operations. As we have seen in the last
term paper, Aldi has been a beneficiary of German ‘Mittelstand’- small-and-medium sized
businesses protection regulation and also student of most of big business short-comings. For
instance, when Aldi start expanding to the East and South of the United States, 42% of times its
likely to be opened near Walmart store to target price-conscious customers. Furthermore, Aldi
carriage of 90% of private labels make the company by default a competitive benchmarking
company.
Aldi also uses different elements of Total Quality Management when it comes to food-
related products. The elements starts with supplier quality where quality assurance and quality
improvement are the bases for their relationship. Aldi uses independent third parities to review
suppliers production facilities to make sure they are aligned with food safety standards.
Further, all food-related supplier should have certification with the Global Food Safety Initiative
(GFSI). If both is not possible, Aldi specifically send their audits to the production line to check
whether they are aligned with the national standards. Finally, as Aldi official website states,
“when products are delivered to our stores, they are subjected to incoming goods controls
carried out according to stringent standards fresh fruits and vegetables or the delivery
temperature and shelf life of fresh refrigerated products.” Moreover, products are go through
random tasting by staff, external institutes, or consumer panels. ALDI-US goes through 2500
internal random sampling which covers approximately 30000 product each year.
For non-food products Aldi uses multi-tier quality assurance process. This process is
oversighted by the head-quarter, Aldi South Group, who established a comprehensive quality
assurance process. The quality procedure starts with the supplier and continues before and
during delivery. “Quality parameters are defined and communicated to potential suppliers as
early as the tendering phase.” This parameters incorporates regulatory and contractual quality
requirements guaranteed by an accredited testing institutes approved by Aldi head quarter.
Then, the second round inspection is done by the internal quality assurance departments. The
department collaborates with Aldi’s national and international purchasing department to
assure the standard of quality is intact. Thirdly, experts from Aldi’s quality assurance team
performs “in-house fit-for-use tests” by taking samples. “These samples are then examined by
independent testing labs according to certain technical and chemical parameters.” Finally,
when products reached distribution centers and stores, products will be checked for transport
damages, product specification, and quantity. After all these multi-tier quality assurance
process later, if only products passed then products will be available for consumption.
Another element of Total Quality Management(TQM) utilized by Aldi is quality at the
source which refers “do it right the first time.” Due to the company lean management
approach, Aldi trained employees to be quality inspector for their work. Aldi invests on in its
employees in two ways- on-the-job and off-the-job training. On-the-job training consists of
coaching, mentoring, job rotation and sitting next to Nellie. Coaching and mentoring used
interchangeably in the company when mentor offer more personal support than coach but give
training and knowledge transfer happens in both cases. In job rotation, employees “rotate roles
or tasks so that they gain experience of a full range of jobs.” Likewise, ‘sitting next to Nellie’ is
one of Aldi’s preferred on-the-job training method, where one employee learn the process
working alongside their counterpart. On the contrary, off-the-job training might be given at
specialist training centers, at a college, or at a company’s own premises. Training includes
“recruitment, interviewing and selection employment law, influencing skills, performance
reviews (appraisals), Aldi Management System (how to develop and performance manage
people).”
In the same manner with the trainings, Aldi engages close dialogue with employees to
further the quality of their service and product. For more than a decades, Aldi has been using
Management system which outlays the framework of employee interaction within the
company. The company uses regular survey and suggestions to “determine fields of action and
introduce initiatives that take into account the needs of (their) employees.” The quality at the
source, training and the management system helps empowering employees which gave
employees to be responsible and authoritative figure to make changes in their responsible area.
The mentoring, coaching, sitting next to Nellie, and off-the-job training will accomplish the TQM
team approach element. The team approach will help the company to tackle its problem with a
team effort.
Finally, in 2013, Aldi was caught in between with the scandal where two of its meat
providers caught selling horse meat in a beef packages. As end-use consumption retailer, there
will be these kind of allegation and quality problem arises from their suppliers or the company
process. In order to fight back these type of quality issues, Aldi follows rapid and prudent
recalls. The quality page in Aldi’s official website states, “should, despite our control measures,
shortcomings in quality come to light after sale of a product has the product from sale and,
where needed, initiate a recall, for example if health concerns arise.” The company even have a
link for all its recall products from different government bodies in its official website taking
proactive approach towards quality.
In a nutshell, Aldi by following Total Quality management elements effectively, like
continuous improvement, competitive benchmarking, employee empowerment and quality at
the source, became one the top award winning retailer in that specific industry.
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