Implementing TQM For Supply Chain Management At Aldi – Business Plan

Background of Aldi

Question:

Explain to a client the costs and benefits of your intended IT project?

 The Business plan helps in the creating the outlines the strategy for the business in order to sell the customized software to the client who are looking for the cost reduction in the long term.   The main purpose of the CSS software is to prepare quality and customized software as per the client requirements. One of the clients Aldi is looking to expand its business for which company is looking to install the TQM for which CSS software has asked to for 255000 of the fund required for the installations.  Apart from that, the maximum fund will be gain in the form of 60:40 ratios of debt and equity respectively. With the help of market analysis, major competitors of the company are Delta 4 and the SAP. Lastly, with the help of SWOT analysis, it has been found that there are various barriers to change management, high cost and lack of innovation due to installation of TQM within the supply chain management of Aldi.

Aldi is one of the major retail chains of the Germany who has now expanded in UK and Australia. Recently, Aldi is facing tough to manage its sales that are because of the rise in the stores wild wide.  Company supply chain is currently manual which is why Aldi is facing tough to survive in the contemporary business scenario (Afuah, 2007). Now company is looking  for the better solution of IT programme which helps to intact the their supply chain management within the existing business which will give them high ROI and low wastage which has been one of the major problem for the company in recent times (Analoui and Karami, 2009).

As the business expanding, competitor are also arising , with stiff competition in market company is looking to proper and long-term solution for its supply chain which would gain give the company high chances of profit and  product availability within their stores which is one of the major challenges (Dess and Lumpkin, 2009). TQM management will be one of the perfect solutions for the company that laid for consistency in the supply chain and low wastage control.

As an one of the major software company also known as CSS (Corporate software sales) software are  known for the unique products selling to the clients who are looking for the appropriate solution for the business process handling. The company is known for the software planning package that will already prove in the consumer market (Fifeld, 2012).  As the matter of fact, the product that the company will be selling TQM IT solution has been voted top rated best-selling package.  The products will allows the corporate sales force and franchise like Aldi to use the planning tools to achieve the incredible in their existing business process which will help to manage the sales force and quality within the supply chain system and the inventory control (Freeman, 2010). CSS consulting will be providing the high level expertise in the international high technology business development, distributing strategies and centralization to control over the existing technology via TQM.

Figure 1: Company structure of the Aldi

(Source: Budyansky, 2009, pp-922)

From the company structure Aldi seems that, company has enough scope for improvement within its company structure .as the company is using manual way of proceedings which will provide manufacturing process effective with low manufacturing cost by implementing TQM within its existing management system (Abrams, 2003). As the existing supply chain is a very much assembly line and is, lack of IT system within its which why monitoring the operations is next to impossible for the company. The current IT system of TQM management will give an opportunity for the monitoring and set benchmarking for the production which helps to gain the Aldi large part of waste control within its existing management system (Abrams and Vallone, 2005).

Benefits of TQM for Aldi

Figure 2: Implementation of TQM within the existing supply chain of the Aldi

(Source: Chang, 2009, pp-2)

From the above, diagram, it has been found that TQM will be implemented monitor from inbound logistics to the manufacturing to the outbound logistics of the products and services. Implementations of IT will enough scope to capture the large potential to manage the existing supply chain effectively will ill result in the higher productivity (Barrow et al. 2008). Apart from that, at the inbound, TQM will analyse the  inventory benchmarking,  followed by the manufacturing where the waste will be controlled, at outbound logistics , TQM will show the right products at right price at right time which will help the business to gain control over their operation systems (Blackwell, 2008). 

At each and every step, the new IT system helps the organisations set the standard for the employees and the machine to perform effectively and efficiently (Finch, 2010). With the rise in the control over the supply chain system help the company to centralize its value chain that will affected by reducing the error and fault done by the employees.

Team	Roles and responsibilities
Board of Director	The team of head of the CSS software will be forming the team for the implementation process of the TQM. The project leader will responsible for the entire project along with forecasting of cost and time of the complete the process.
Personnel management	Project Consulting
Field Supervisor	Filed supervisors will give the day to day report of the work and the problems or issues faced by the engineers during the time of implementation project. He will be directly reporting to the project head.
Survey tracking coordinator	Looking for the time and cost of the project and assigning the team works as per their expertise areas. Quality will be checked at each and every stage of the project (Luther, 2001).
Experts	Experts in  their works like hardware engineer, software engineer and the techies and their respective team leader will be appointed as per the Job requirement
Data processing coordinator and processors coordinator	Leading the team with EPI information’s and directly oversees the data entry of direct surveys to ensure everything. Apart from that coding of data participate in designing of TQM as per the Aldi existing supply chain system (McKeever, 2012).
Lawyers	These people will be responsible for the patent right, and the trademark act 1977 and 2004 respectively helps the other company to copy the CSS software of TQM.
Safety personnel	Training will be given to the employees and the team for the safety of measures taken during the time of implementing. Apart from that, SMS (Safety Management system) will be followed by CSS software  during the time of  training  (Stutely, 2002).

Figure 3: TQM as service

(Source: Young, 2007, pp-125)

Software: TQM as products from the CSS software is not just a quality checking or benchmark setting system. It is beyond the quality check, it encourages the buyer to keep neat in their habit of forecasting and maintaining the productivity within the organisations (Chang, 2009). Apart from that, it also analyses the efficiency of the machines and the employee’s productivity along with continuous improvement in the existing supply chain management   that automatically solve the problems of waste control and increase the productivity of the company for long term. Although, the product is expensive and not for the small organisation as the function of these types of IT services gives the wide range of the benefits in future.

Consulting: CSS will be providing the analysis of all potential clients planning strategies and tactic along with the degree of capacity with planning software and information technology within the business operation of the clients (Chowdhury, 2009).  The major goal of the company is to ensure that all clients will have enough solutions that will be tailored made as per the needs and requirements of clients. Whether the company is looking decide to purchase or service or looking for the experience from the company for planning the strategies, in the both of the above case scenario , company will be helping the clients (Freiesleben, 2009).

Training: Finally, CSS software will provide complete training for the use of solutions purchased from the company by the dummy experience on the works.

 As the CSS software is into the business of selling of software for which company ha ensured the patent and trademark on the innovations of the product in order to maintain the copyright act with the alone. With the rise in the competition from the SME’s and Large organisations like IBM and the RS Software are making they’re making huge number of development cater their corporate clients (Jochem, 2009). Rise in the competition also tend to copy of the software very quickly by the companies are being noticed in the market with copyright infringement will prevent the companies to do the needful for the company. While the Act 52(2) of the European patents Conventions’ saves the company to copy or claiming of the similar programme which is matches by the competitors inventions even if they do not have seen the programme of the CSS software, they cannot claim for their inventions. In UK territory, more than 25% of patents are granted to the software related programmes (Prado-Prado, 2009). Articles 52(3) are being stop the members of the company to sell the ideas of the company.

Marketing strategy: Marketing strategy of the company is being noticed as simple which is innovations, and ant to sell in the UK, US and Europe. The companies care selected here is mostly larger size and medium sizes like Aldi (Taiwo, 2001).

Market analysis

Market analysis	Growth %	1997	2000	2012
US high tech	10%	5000	7321	12,255
European market	15%	1000	1749	3250
UK	35%	250	832	1820
Others	2%	250	10824	22,014
Total	6.27%	10,000	20726	39339

 

Graph 1: Market analysis for demand of the CSS software

(Source: Lindgreen and Finn, 2010, pp-738)

Figure 4: Porters generic model on the CSS software

(Source: Lim and Lusch, 2011, pp-655)

CSS software lies in the 2nd quadrant that shows that, company innovates or designs the products as per the demand of clients. The client she is very specific about the detail and the products that are looking for (Bottomley and Doyle, 2008).  CSS software needs to develop customized the products as per the demand of the customers. With software and patent rights, shows that CSS software are known of innovations and unique products which is used as per the company existing efficiency.  However, the differentiation is costly in term of price as the benefit is for the longer period of more than 10 years and saves the manual process of managing the supply chain or accounting or other major development (Bolton and Lemon, 2009).

Structure of Aldi

9.1 Products

Time Period

Graph 2: Plc curve for Software products

(Source: Bhattacharya and Korschun, 2008, 115)

The product sold by the CS software has various stages that carry from the innovation stage to the maturity to declining. At declining company state to modify the version that will again enhance the business that will keep the company sustain in the market and good for the future of business.

9.2 Pricing strategies

Figure 5: Pricings strategies of CSS software’s

(Source: Bendapudi and Leone, 2008, pp-19)

CSS software is very many charges premium pricing in order  to cater only large number of companies. As the software business requires lots of innovations and clients demand and their existing system to replace with the new system, need to change the premium pricing because of the innovations and patents (Dr. Nigam. 2011). CSS software is known for producing new kind of software for the companies which will help the most of the Retail chain and the service giving company to roll out their function easy and very effective manner and cost effective. CSS software is known for its IT and TQM software’s which are very much customized as per detailed given by the company (Taiwo, 2001).

9.3 Place:

CSS computer is known for the B2B business in which will target the corporate offices and the several other large firms.  The software personnel manufacturer has already has been naming and information about the companies of the large firms that fits the profile. Place here depicts the meeting with the client within their company or the within CSS software building. Along with that, test and dummy service to show the various function will be present in the CSS software labs (Asq.org, 2015).

9.4 Promotion

Promotional strategies	Expenditure (%)
Websites	58.01%
Newspapers	32.02%
Magazines	28%

Graph 3: Expenditure on advertisement of software products

(Source: Prado-Prado, 2009, pp-309)

Some of the major competitors of the CSS software within the UK would be Datanomic , delta 4, Oregan networks and ANT software (Managementhelp.org, 2015). These are medium term enterprise of the software companies who are slowly capturing the large market base of the UK market CSS  software is new company which has  just has been establish for 5 years ago , in 2009.

SME software Companies	Market share %
Datanomic	14%
Delta 4	12.9%
Oregan network	11.1%
ANT software	6.3%
Amdoes	3.6%
CSS	3.1%
Business integrity	2.2%

Graph 4: Market software companies of UK

(Source: Freiesleben, 2009, pp-1263)

From the above diagram, it has been found that, CSS Software was established in 2009 which suggest that, most of the software companies already has been able to capture the market base of UK (Chowdhury, 2009). However, CSS software has been recently taking the market by storm as the company innovated the TQM ver.2 that is much more effective than earliest one, and the value of the products is higher the market. As Aldi is looking to implement the idea within its retail chain to reduce its cost and maintain the continuous improvement within its business.   With rise in the EPC and JIT innovations, most of the software companies are looking for continuous development of the products in order to sustain with large competitor like IBM, SAP and Accenture (web.mit.edu, 2015).

Team Roles and Responsibilities

One of the major customer of the products is large retail firms and services firms like Bank of England, Royal Bank of Scotland, Tesco, Sainsbury and Lafarge tarmac are some of the large companies will be customers of the CSS software’s. Some of the major customers of the company are given below:

Segmentation bases		Target customers segment of Fast food industry
Geographic	Region	North America, Europe and UK
	Density	Urban (4500 companies)
	Income	High and  middle income groups of companies
	Occupation	Employees and professionals
Demographic	Social status	Working and higher class companies
	Company size	Single or the group of companies or MNC
Psychographic	Existence	Modern , innovation and as per the customised products
	Occasions	Regular
Behavioural	Benefits	Price advantages and diversify services under one roof.
	Occasion	Expansion of business or the increasing branches  or  the creating diversified business

Customers	Customised Software’s
Glendon College , USA	University is looking to ensure students pursue certificate programme in technical communications that help the student to hands on state of art writing techniques before entering the workforce (www.rowan.edu, 2015).
BIG salad food chain	Company is known brand for burger, and fresh salad, since the company is expanding its base, company, is looking for supplies the recipes with stores chef via software called Big salad cookbook designed by CSS software.
Over drive	It is known for the delivering the books of more than 5000 publishers. This has been possible only by using MAdfalre. Now the company is selling more than 30, 00,000 books (Bottomley and Doyle, 2008).

Other potential customers are universities, car manufacturing and banking companies who are growing consistently needs to focus on their IT system to built these areas.

Agreements with Madcap software create the high branding the future. There have been numerous agreements with other media agency like OMD, and Total media are known for launching the several brands of the products from software to retail food items to electronic items (Jochem, 2009).  Total media agreement with the CSS has made the company one of the most renowned software intelligence solution companies.  Apart from that, Total media and OMD is doing international campaign for the products and services on the behalf of the companies. As the member of Einstein deigns, association CSS software is looking to creates strong brand in UK and a Global platform. With the help of social media advertising and blogs, OMD tries to generate the positive response for the products and services sold by the various companies. Agreement with madcap software will creates high brand value for the company in near future because Madcap is known for the its manufacturing and customised products in Australia and US where the company has strong foothold in these nations and are already known brand in international regions (Freiesleben, 2009).  As far as the news concern CSS software is known for the making TQM software for thy customers in UK region will have the potential edge to the company in the global platform.

There are various forms of software developed by the CSS software but since Aldi is one of the major client so TQM software implementation budget for the company will give an idea of total expenditure and the benefit from the business.

Budget	Amount  (£)
Software	150,000
Consulting fees	2400
Training fees	2550
Payroll	80,000
Utilities	480
Insurance	1440
Tax incurred	14279
Total installation fees	251149

Graph 4: Total Amount expenditure on installation of TQM within the supply chain

(Source: Freiesleben, 2009, pp-922)

Expected benefit for the Aldi will be started from the coming years from the implementation of TQM :

Particulars	2016	2017	2018
Sales	655290	714,266	778550
COGS	65529	71427	77855
Gross profit	589761	642839	700695
Expenses
Payroll	243000	250,290	273,712
Administrative expenses	14400	13000	9350
Marketing expenses	13761	15000	26523
Wastage	25000	25750	18440
Insurance cost	7500	7875	8269
Travel and vehicle cost	15000	16500	18150
Rent and utilities	17500	18375	19294
Miscellaneous expenses	4915	5357	5839
Payroll taxes	36450	37544	41057
Total operating cost	377526	389,690	378,768
EBDITA	21,2235	253149	321927
Taxes	80650	90811	100595
Depreciation expenses	5893	5893	5893
Interest expenses	13107	12197	11202
Net profit	112,586	148,165	164,129

From the above , it has, been found that Administrative expense that will be reducing every year and the wastage  will also be controlled which  shows that, profit and loss  of the company will be higher as per the standard of the Total Quality Management. With the rise in the expansion of the business, marketing expenditure and the payroll will be increasing, but the decrease in the waste; administrative expenses would create positive feedback within the company (Chang, 2009). Aldi will have enough current assets like cash and liquid asset to maintain its short term finance that will gain decrease the short-term borrowings in futures for the company. Own of the major benefit of the TQM implementation in supply chain increase the quality of production and the consistency and continuity in the supply chain of Aldi will reduce the chances of error free products and the chances of human error will be less which automatically increases the productivity of the company (Prado-Prado, 2009).

Figure 6: Source of fund for the implementation of TQM

(Source: Bhattacharya and Korschun, 2008, pp-119)

Own capital: While looking for the sources of finance , own capital would be safest t fund the fund the IT within the company. As the own capital is risk free and the client does not have to return their money to others (Bendapudi and Leone, 2008). However, if the project gets failed or rather installation of TQM get failed then the entire loses will be faced by the owners.

Retained profit: Retained profit is another major source of funding for the implementation of TQM within the company. Retained profit is the profit of the existing form which will be invested in the TQM system in order reduce the operation cost and increase the high quality of materials (Bolton and Lemon, 2009). It is risk averse, as the company does not have to pay anybody. However, if the technology will not be work as per the promised by the CSS then the loss of installation worth of 2550,00 would be borne by the existing company.

Patent Rights and Trademarks

Equity: It is one of the most prominent way to fund the any of the business plan. At this place , business would be financing the TQM via selling of the share of the company. Apart from that, it is less risky than the debt financing because here owner or the company des not have pay any kind of interest (Jochem, 2009). However, when it comes to ownership, company has to sell its ownership in order to achieve the high technology.

Debt: It is another major method of funding any business, or technology or any machinery. Debt financing riskier the equity or own capital or even the retained profit (Lindgreen and Finn, 2010). However, it is very much effective for the SME and large companies because of the easily available and company does not have shared its ownership.

Financing	Amount £
Management investment Retained profit and equity earnings	125000
Total equity financings	125000
Bank and lenders
Bank loan	126,149
Total debt	126,149

One of the major funding would be from the Equity and debt. Equity would be 40 and debt would be 60. With 60:40 combinations company will buy the TQM software to reduce its operation waste and bring continuity within its supply chain management.

Some of the major barriers would be for the Aldi while installations are given below:

 

Figure 7: SWOT analysis on TQM model installations

(Source: Lim and Lusch, 2011, pp-649)

Strengths: One of the major strengths would reduce waste that will be helpful in increase consistency within the production of the Aldi. CSS software would increase the efficiency of the machine and manpower that would increase the production and increase the productivity of the company (Managementhelp.org, 2015). Apart from that, the product that will be produced would be high quality and error free materials which would increase the company market share.

Weaknesses: On the other hand, major weaknesses of the TQM implementation would bring change management within the supply chain. This is where the major problems start most of the older employee’s fear of losing the job because of the new technology. Apart from that, company needs to hire more skilled manpower for handling the TQM software for which company will have to spend on payroll and recruitment and selection process (Bendapudi and Leone, 2008).

Opportunities: With the installation of TQM, chances of rise in the profit will be high. Again, reducing and consistency within the production from the CSS software would decrease the COGS sold and reduced in the administrative cost and waste (Jochem, 2009). Other opportunities, since the company is looking to expand its TQM software, would be given company to sustain in the Global platform to sustain for a longer period because of the continuity in the productions.

Threats: The external threat for the company would be the lack of innovations. As the TQM software only look after the consistency in the production and totally ignores the innovation or the R&D time for bring up the new products (Chowdhury, 2009). Apart from that, prototyping often creates the situation where the clients mistakenly believe that the system is finished when, in fact, its not. Prototyping model of are pre-implementation of version of systems that are more than one-dimensional structures.

Marketing Strategy

Market approach: It helps in calculating the value of the company in terms of its competitors. As the CSS software is selling its customized software solution to Aldi. In order to do so, CSS software should quote the price right and given the quality in compare to its competitors otherwise the client will move to the substitute company (Freiesleben, 2009). However, it fails to evaluate the benefit of the single industry not the whole.

Income approach: It is usually revenue based which will again give enough scope for future discounting company future income (Chang, 2009).  In this method, profit is major exit criteria. However, it is based on the opportunity cost that says next best choice.

Asset approach: The asset approach would help in offsetting the liabilities but fails in recognizing the value of underpaid labour (Chowdhury, 2009).  Apart from that, this method assumes that the entire asset can be converted into liquid cash easily, and the entire debt are easily paid off which is very much untrue in the real world.

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