The new era of information technology, we have seen the large of migration of interrelated software and from the 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 choose ALDI is because it is near to the place where I am living and also help me to find and gathered more information to work on in the thesis. Aside on that, I do have curiosity the reason they selling cheaper products with good quality than other super market and also the reason behind their successful? I did research on it and please see detail below for more instructive information. Besides that, 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 citied by as Europe 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 privately 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 500 items. C:UserskbalaDesktopEShead_logo_blue.gif
A 1993 examination of the limited-assortment niche noted that successful discounters (like Aldi) work closely with manufacturers to design products that are cheaper to transport, stock, and sell than name-brand goods. National brands are sometimes offered, but many industry observers speculate that Aldi only stocks them to highlight its own discounts.
While Aldi has experienced huge success in its “will do” attitude to expand its influence around the world, its activities have had a pronounced effect. Nevertheless, from the research I found Aldi’s pioneering in “Internationalisation” and spurred to the changed of the global retail food industry. 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
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Former ALDI manager Dieter Brandes reveals the objectives that underpin ALDI does, starting with simplicity. The system is not only a retail discount system but the management and organisation can be applied any business. From the research, I found companies such 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 it is means?
Around the world, organizations are expanding and becoming connected – one business function with another business to another business unit (integrated business).
ESThe diagram below a summarise and fundamentals of an ES, as we can see the benefits of implementation ES in ALDI
SOME OF The Components of Enterprise Systems
Enterprise Resource Planning (ERP)
ERP is an integrated computer-based system is to handle 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 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 computes and tracks effect 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 underlying rationale for DRP is to more accurately fore-cast demand and then use that information to develop delivery schedules. This way, distribution in ALDI can minimize inbound inventory by using MRP in conjunction with other 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. Beside that in CRM, the Customer Experience Management (CEM) playing significant role to collect information automated.
ERP systems also integrated CRM systems that deal straightforwardly with the customers, or the eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems
Control and Enhance Business activity with SCM and EDI
SCM (Supply Chain Management) is to control and process of the series of activities that moved products from suppliers. It is ideal for operations for ALDI that need quick order entry procedures, visibility of operation from the order entry screen, and extensive lot and serial tracking capabilities. In addition, the software provides extensive shipping and multi-warehousing management capabilities. There are essentially three goals of SCM: to reduce inventory, to increase the speed of transactions with real-time data exchange, and to increase revenue by satisfying customer demands more efficiently. EDI (Electronic Data Interchange) we can set goals; and predict, optimize, and schedule time, materials, and other resources with EDI activities:
Demand planning and forecasting
Safety stock planning
Supply network planning
Strategic supply chain design
In addition, inventory tracking is greatly facilitated through Web-based ordering (Web 2.0 or e-Mobile) and the software’s ability to accommodate bar code readers. The system is seamlessly integrated with our retail Point of Sales (POS) system.
E – Commerce
Internet, the most powerful tool of 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 intruding of Ecommerce in ALDI and customers such as:
Faster buying/selling process
More reach to customers, there is no geographic limitations.
Low operational costs and better quality of services.
Customers can easily select products from different providers without moving around physically.
This transformation is particularly common in business-to-business (B2B) commerce and trade. Many of the Fortune 500 companies have adopted e-commerce systems such as Amazon, Tesco, IBM’s etc. E-commerce can be develop 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 (OCI; for a process similar to punch-out) between buyer and seller systems
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 of benefits of ES approaches is 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 of 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 downloading 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”
Development 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 information technology. Please see below the sample of SSM process though CATWOE analysis:
The ‘customers, who receive the benefits of the implementing new systems.
The ‘actors’, meaning those who perform activities within the system.
The ‘transformation processes. The changes of migration of the systems.
Weltanschauung, the impact of the migrations to the world view
Owner(s)’ – i.e. those who have sufficient formal power over the system to stop it existing if they so wished
E. The ‘environmental constraints’. These include things such as ethical limits, regulations, financial constraints, resource limitations and so on.
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 the ALDI. Please see below the subsequent phases:
System realization and implementation
Initial feasibility of project
Various testing phases – integration system, testing and debugging
Project planning and designing
Actual programming and coding phases
The phases-analyst, structured and documentation
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 not cared about. In eye of people, although back office systems not offer reimbursement but 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.
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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 compressive 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 succeeded 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.
In fact, the implementation of the ERP depends on management concepts and operational practices, business-and low-level personnel in the hardest hit. Internal processes optimization and fairness in the ERP implementation process is the biggest problem encountered. In addition, this does not signify that the implementation of ERP will be able to develop the management level. If management has problem, then, ERP can only fuse the “real medicine” is a business management strategy and internal management staff to boost the administration level. Moreover, many small and average enterprises, the one person to do a few jobs, the implementation of ERP are bound to influence the regular work.
The Database Management Systems (DBMS) and Strategy
The database for Aldi, why we need and the used for? Why is it important for an organisation or business? The above question radical and confusing for most people. 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.
Data Modelling is to control and manage large volumes of data. Database is a kind of program that user enable to store information. The ES enhance via avoiding traditional method of storing information in physical file folder and cabinets. A database system provides electronic and easy to inserting, update, retrieving and storing information. In order to avoid of duplication and reduce data redundancy, in DBMS the feature embedded and called Normalisation.
Multiple Users Access
The super power in database technology allows multiple access and update information and be to 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)
DATABASE SERVER http://www.petervaldivia.com/technology/networks/image/client-server.gif
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 gathering and dissemination ensuring consistency 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.
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 effectively will minimize the need for extra staff to maintain information. Although databases can account for a sizable 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 and administer it
The tremendous of DBMS is Queries, tool embedded in system enable the database administrator to retrieve information and presented 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 standard computer language for accessing 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.
GRANT SELECT, UPDATE
TO some_user, another_user;
REVOKE SELECT, UPDATE
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.
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 often simply used the DBMS system to pull data from the data 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 (COBOL, C language) 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 scare. Management must choose that person carefully in order to complete tasks according to the senior management planned and applicable to the organisations.
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 – As mention above, system must be maintained and monitor from time to time and the people who will handle this transaction must be well trained and have an expertise on maintaining the system. Not having this kind of people inside the organization will add up to the barriers to the success of the system.
IT Infrastructure – Lacking of a shared, dependable computing and network infrastructure to address the needed collaboration for the implementation. When an organisation lacks an IT infrastructure there will be a complexity in operating technology supported programs with reliability 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. Time delays pilot to serious complications in planning for and adjusting to changes in operations.
Difficulty of data collection and management – Data collection is measured to be the most critical and difficult part of implementing an Information System (IS) for it is the foundation of the entire system process. Thus, this convey what the system is all about, its scope and limitations.
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 was attempted to tackle the pro-innovation bias present in many of the reasons reported for the adoption of ES packages.
Certainly the function of organisations such as ALDI and industry has been described as significant in the dispersion of IT. In my analysis does not recommend that all decisions for ES packages adoption are unreasonable but we do suggest that organisations should not blindly conform to ‘the common sense’ when it comes to the adoption of ES. Nevertheless, for that reason, the analysis with SSM and SLDC playing significant role to the Enterprise System development.
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