BUSINESS PROCESS AND SYSTEMS
Part One
LIDL’s Operating Model within the UK
LIDL’s Business systems and operation within the United Kingdom seem to improve due to conducive and enabling business environment. The operating profits of LIDL business have increased over the past years. As shown by Ackley and Steeneken’s business model for supermarket LIDL’s Business is a retail supermarket. Just as B&M, Aldi and Wilko, LIDL Provides services to clients but does not produce its products. Their business model is designed by a functional system which focuses on bringing the product closer to local customers from the suppliers. Supermarket companies define themselves as discount retailers who are close to customers and lie between general merchandise discounters and specialist retailers. The primary operating strategy for LIDL Company is too fast-moving stock products where 30% of the products are purchased directly from Far East suppliers. In contrast, the rest product is bought from the manufacturers as stock clearance sales when their clients had over-ordered. The main focus of this business is a wide variety and volume and also offering excellent value to clients. LIDL secret is to work with manufacturers to keep operating cost low and be able to plan for products delivery, control of purchases, controlling value for the customer while keeping prices low (Chang 2016).
The LIDL annual report of 2015 specifies a model to allow the organization to follow Slack et al.’s. Operation performance objectives. Slack’s model has seven spokes, and each part supports the next section to create a distinguished business model. The LIDL business philosophy takes into consideration of the seven parts, thus making it able to work with other business partners effectively. The use of seven business elements enables LIDL to reduce cost, increase the quality of goods and be flexible in their operations (Chang 2016). Don't use plagiarised sources.Get your custom essay just from $11/page
LIDL philosophy is to ensure all things operate in a simple process while offering a quick and precise discussion making process. LIDL focus on big brands at low prices and emphasize the high quality of the products they purchase. LIDL concentrates on leading brands for fast-moving consumer products rather than fast goods from unbranded products.
According to Slack 2010, retail companies become successful if they systematically use their resources and competence. Utilizing third part of Slack’s seven spokes, ‘disruptive sourcing processing’, LIDL was able to outsource partnership with manufacturers and therefore control cost and quality of the products. This made the company gain the power to control their purchases and sales by deciding on the best method to deliver products.
The Efficient Consumer Response (ECR) accentuates that supply management is a significant aspect of controlling customer modes of consumption through the supply chain and demand management, building consumer value and enhancing promotions. LIDL distinguishes different customer behaviours and market trends to make sure all retail shops are topped-up. This information is vital as it will not allow the creation of shortages of the product (Havur, Cabanillas, Mendling and Polleres 2016).
Facilities Location
LIDL retail supermarket is viable because of its strategic position of their stores. Location contributes mainly to the viability of any business. LIDL locates itself in an area surrounded by private’s homes and retail parks. Each LIDL store identifies itself as a top-up store for its customers and does not deal with fresh foods. They have excellent customer relation online services where clients are prompt to enter their mail before any purchase. This online helps the company do follow-ups and updates weekly about new products. The latest promotional offers and encourages customers to shop at LIDL for lower prices. LIDL also, reassures customer to post theirs till of postcode which helps the company to know the social class they can categories clients and give an insight of how far the customer has travelled to research and analysis. LIDL saves on advertising because they mostly rely on word of mouth instead of advertising. LIDL have high visibility since the sales are increasing every year even without advertising (Havur, Cabanillas, Mendling and Polleres 2016).
Soft Systems Methodology
According to if the problem is messy and complicated, it is advisable to use the Soft Systems Methodology (SSM) approach to evaluate and analyses different sensitivities that might be involved in a business situation. Soft Systems Methodology will be used to reviews essential challenges LIDL is facing due to the introduction of an online platform that will allow customers to order products online and have they delivered at their doorstep. This method has seven parts; some addresses conceptual world while others address real-world situations. According to the first step is “Problem Solution” definition to be able to acknowledge and explore the case in some way.
The solution to the problem.
LIDL UK main competitors are WILKO and ALDI. However, its main competitors going online are TESCO, ASDA, SAINSBURY and WAITROSE. Following the British Retail Consortium (BRC) research 20% increase in online purchases in 2016, this analysis is considered the highest in previous years. Contrary to this, the BBC article stated that “ BRC’s survey found there had been approximately 0.8% decrease in online sales in the past years as sales had experienced an increase in the competition”. Online marketers’ failure to put proper strategy has led to a decrease in sales and also suffered stiff competition from competing companies. LIDL UK company argues to be late in introducing online goods delivery services and website. They launch their website in early 2015, on the contrary, despite the entrance of the online site, sales had dropped by a significant margin in the two consecutive years,2016 and 2017 (Zur Muehlen and Shapiro 2015).
“The consumer research and training charity IGD” stated that “online trade is likely to doubles in value and improve by a greater percentage compared to present situation”. It furthermore predicted that the consequent fastest growth would be felt in the food sector as they are fixed to double by 90%, compared to the current rating of 45%. Chief executive of IGD said that close to 30% of the buyers’ responsibility to their survey and revealed that they would majorly use food discounted in the coming year compared to the current year where only 20% used food discounters.
Buyers shopping behavior has heavily impacted on the growth of online food shopping with appropriate and time factor being a considered factor. Online customers want stress free shopping without spending much of their time visiting shops, especially in an era where home delivery is familiar and convenient compared to past years. Some LIDI UK main competitors are yet to launch the online website while others have recently launched their online sites in 2019. However, they don’t sell all the products but only individual items like wine cases and kitchenware. Some competitors responded to customers’ wants as well. This strategy was, however, to the disadvantage to LIDL UK as some competitors like Wilko have taken the early lead and familiarized itself with shoppers (Hammer 2015).
This paper has outlined the importance of LIDL UK, giving an online shopping option to its customers. LIDL UK needs competitors as they are already familiar with shoppers’ needs. However, it was considered late for an online move. Besides, this paper clearly explains the information that is customer-base accepted to shop at a relatively low price. Therefore LIDL UK needs to use this to their advantage, not only to grow its retail capability but also online sales are predicted to doubles (Zur Muehlen and Shapiro 2015).
LIDL UK supermarkets experienced several challenges when they were adopting online operations. Therefore, they require proper system management and components that facilitate online services to run smoothly and effectively.
Online Sector Models
LIDL UK should either consider adopting a “decentralized or centralized approaches “when entering online operations as this will helps in managing inventory, considering the online delivery process, customer value process and all the cost incurred in the whole operation remains competitive. Explanation of the problem reviews varied models that need to be considered and evaluated (Akella 2015).
A method where employees simply pick orders online form the existing stores for home delivery. Many companies have adopted this method and utilizing a decentralized approach has been proven reliable, convenient, and customer satisfying. On the contrary, to maintain the demand for online orders, some companies using this approach has opted to double the online website space to accommodate the demand and supply to different centres (Akella 2015). This approach utilizes dark stores, and this is where customer’s orders are taken from the warehouse and supplied directly to customers. Decentralize approach facilitates easy availability of goods and make online shopping more convenient method for a lot of shoppers compared to when products are taken from stores.
All this supermarket respectively makes home delivery with a varied range from as low as 1 Euro, where a representative offers free home delivery. Nonetheless, they also provide corporate services; most of LIDL UK competitors provided this service with the minimum spend possible. However, some have a minimum of 40 Euros for this service to provided freely. In 201, WILKO major LIDL UK competitor realized that more than 50% of its customers use click and collect services. Therefore LIDL UK should adopt collect services as one of the methods facilitating online sales (Akella 2015).
Operation Objectives.
Retailers and customers can experience online retail operations very involved in several factors. This factor can be considered as setbacks for major online operations for LIDL UK, some of these are costs, quality, speed, reliability and dependability.
LIDL main objectives should, therefore be:
Costs.
To provide low-cost goods and services to its customers. Coming up with online services could cut the cost for delivery vehicles as well the cost of storing the inventory in the warehouses. LIDL UK should also maintain a partnership with the manufacturers to manage reasonable prices for their goods and services (Akella 2015).
Quality.
LIDL UK should maintain standards of high quality and the effects of gets lost that may influence the quality of goods. If control measures are compromised, quickness during delivery to the customer, LIDL UK should also consider time and cost to avoid the inconvenience which is the key (Mendling, Weber, Aalst, Brocke, Cabanillas, Daniel, Debois, Ciccio, Dumas, Dustdar and Gal 2018).
Speed.
LIDL UK is required to continue with existing online retailers and be able to give the constant lead time. LIDL UK needs to be dependent; they should ensure they can provide what they promise to their customers. There is a necessity for LIDL UK to offer their products to their customers according to their choices and not substitute and on time (Mendling, Weber, Aalst, Brocke, Cabanillas, Daniel, Debois, Ciccio, Dumas, Dustdar and Gal 2018).
Dependability.
LIDL UK should ensure flexibility and be able to change operations. They should be able to improve the value and volume in which they produce products and the time t to provide their quality products.
Reliability
LIDL UK supermarkets should provide reliable products that satisfy customers’ needs and priorities (Zur Muehlen and Shapiro 2015).
Proposed Solution
Due to the factors above, LIDL UK has to take into consideration the possible resolutions for LIDL UK services in shopping online has been o below (Zur Muehlen and Shapiro 2015).
When introducing online shopping services LIDL UK should implement a dispersed approach using the picking in-store model. In 2017, LIDL UK opened two new distribution centres within the UK, and their roles are to ensure fully stocked stores as sales rise. These centres could be used as dark rooms in the past few years if LIDL UK online sales were successful, and there is a need to integrate their approach. It is unsuitable for LIDL UK to use a unified approach because it will raise the costs and make a multifaceted structure for LIDL UK to control its suppliers. Most UK people used a decentralized approach and were successful when they introduced themselves online, and LIDL UK still finds this method successful (Zur Muehlen and Shapiro 2015).
Before shopping, online customers are encouraged to access their postcode, which will direct them to the appropriate website, which would connect to their local store. The employee will process the order and pick items from the shop as directed from the store. This method can be best to use in the existing operations of the store and resources of the staff would encourage the process to be managed effectively.
These ways allow LIDL UK to put into contemplation the movements in the market and behavior of customer when choosing their items from suppliers, LIDL UK should ensure to keep their partnership with the manufactures so that they can provide affordable products.
It is necessary for LIDL UK to give an exact time for delivering products to customers and to compete with other online shopping centres, and offering their products at a low charge, according to customers trends where accessibility is the main issues. For LIDL UK reduce the cost of this service they should assign a least- spend for customers to qualify for home delivery (Zur Muehlen and Shapiro 2015).
Parcel Challenge
LIDL UK will be required to put into consideration the chain of delivery for its online operations. The parcel challenge is a continuing problem that companies are required to overcome to ensure customers gare given excellent service, and customers are satisfied. During the fast time in the UK, 10% of deliveries fail, costing the company redeliveries of an estimated amount of £3bn. They realized that many online customers had challenges with their delivery.
LIDL UK should provide high-quality order fulfilment services to their online customers by using the external delivery company. LIDL UK should update their Customers throughout the process of their orders. By notifying them via email or text customers, to ensure an accurate way of tracking customers deliveries, this will help in removing second delivery attempt as buyers will be able to ensure that they are home for delivery. Consequently, this move will reduce poisonous release that harms the environment as reported in some other cases (Mendling, Weber, Aalst, Brocke, Cabanillas, Daniel, Debois, Ciccio, Dumas, Dustdar and Gal 2018).
Part Two
Rich Picture
Root Definition
This section explains about root definition that was developed for online sales provided by LIDL UK following the review on part on and root picture above. The new system will provide the best services to online shoppers facilitated by LIDL UK.It will ensure smooth home delivery as well as click and collect services are provided with quality and variety of services and goods at a relatively low price. To familiarize with the online market, maintaining good relations with suppliers in the aim to maximize its profits within the industry. By introducing online services, LIDL UK will allow its customers to obtain convenient services (Harmon 2019).
CATWOE Analysis
CATWOE breakdown that has been obtained to ensure that the root definition has all the requirements (Polyvyanyy 2019).
CUSTOMERS: Online shoppers will contain shoppers in-store as well as new customers that may be served at the LIDL UK as the online service is ongoing. LIDL UK will utilize customer feedback to assist them to improve on other areas as well to make decisions for their development. The new system will facilitate convenience to prospective buyers and to make sure this is made; LIDL UK, therefore, needs to provide convenient options as they maintain low prices and quality products.
ACTORS: The participants include LIDL UK employees who ensure that online operations go on well. Therefore the managers must ensure that the staff has the required skills for the role. LIDL UK website is built and managed by (Corporate LIDL UK stores). Therefore the company is the leading participant in the process as they ensure the right site is in place to accommodate online orders. Other than LIDL UK employees, other logistic companies participate in ensuring the delivery of products goes on well, LIDL UK has partnered with some logistics companies to provide excellent online delivery with appropriate customer care services (Mendling, Weber, Aalst, Brocke, Cabanillas, Daniel, Debois, Ciccio, Dumas, Dustdar and Gal 2018).
TRANSFORMATION: Transformation is the process that LIDL UK changes from the brick method to online. This process involves customers ordering goods online, the supermarket process the order and pick it followed by either delivery or pick service
(Polyvyanyy 2019).
Perception: The perception that LIDL UK provides excellent online services has boosted the company in producing varieties of products at relatively low prices, this has facilitated the expansion of the company (Mendling, Weber, Aalst, Brocke, Cabanillas, Daniel, Debois, Ciccio, Dumas, Dustdar and Gal 2018).
OWNERS: LIDL UK accomplished and owned the system facilitating online sales, they regulate the picking store and the customer delivery services (Polyvyanyy 2019).
ENVIRONMENTAL CHALLENGES: LIDL UK company should consider providing products that are safe to both the environment and human consumption. Providing products with precise consumption period and expiry dates reduce next delivery, additionally click and collect services should assist LIDL UK to contain this challenge properly. Financial problems have made people shop at retailers dealing with discounted products, therefore, boosting LIDL UK sales. LIDL UK will also have to consider protecting customers’ data like home addresses once they buy online (Polyvyanyy 2019).