Competitive advantage through efficiency

1. The actual meaning for the term lean production is to use less to get more out of it. The main purpose of lean production is to make sure that resources’ quantity is reduced, which are used to provide consumers’ goods & services, and organizations should become more efficient as well. In this process, the wastes will be eliminated from the production process by using less space, labor, time as well as materials. It is important to mention here that with all these steps, lean production will result in reducing all relevant costs for any organization.

2. The “economies of scale” is a method, which allows Aldi to reduce its long term average costs; the costs, which can be raised by using increasing scale in the operations. Aldi is able to achieve economies of scale by giving more value to their customers in various ways. For instance, they use less number of varieties of products, producing products in large quantity and saving costs per unit, and then delivering the benefits of cost reduction to customers by producing discounted products. The less number of precuts also use less space in stores and smaller stores helps Aldi to reduce long term costs, and provide more value to customers.

3. Lean thinking is a great way for organizations to achieve improvements in every area of their business. Lean thinking enables organizations to come up with new ideas to improve quality and efficiency, and reduce costs related to use of different efforts, space, time etc. For instance, the business objective of companies like Aldi is to providing quality & value to customers, so when they use lean thinking, they reduce costs, and use saved resources on delivering quality & value to its customers.

4. It is important to understand that principles of lean production can be instrumental in delivering value to the customers. The organizations can do so by following those principles, and reduce its costs as well as wastes in every area of business, and then investing those savings back into the process to deliver more value. For instance, an organization can use time management approach, where they reduce costs by doing several things, like using less operating hours, which allows them to reduce their staffing costs as well as consumption of utilities.