ALDI Express Store Expansion Project In Victoria

Business Overview

About The Organization

Aldi is a chain of discount grocery store, which operates in 17 countries. Aldi mainly handles its businesses under 2 main divisions which are Aldi Sud and Aldi Nord and Sud’s main operations are in Western and Southern Germany with international operations in Ireland, Austria, Hungary, the US, Switzerland, the UK, Australia, and Slovenia. Nord’s main operations are based in Northern and Eastern Germany with international operations in Denmark, France, Spain, the Netherlands, Belgium, Luxembourg, Portugal and Poland Within Australia Aldi operates 360 stores which are all located in the following states WA, NSW, ACT, VIC, QLD and SA. Aldi’ revenue was $5.8 billion dollars in December 2014 and has increased by $1 billion since then each year (Chung, 2017). There has been a spurting rise in the Australian food industry and according to its revenue; it was $113 billion in 2014 with an average growth rate of 4.5%, which contributed $79.9 billion to supermarket industry (Marketline, 2016). According to Market Line’s food retail industry report, the leading companies in the supermarket segment other than ALDI have started lessening the price of their products if they are placed near ALDI store, which includes two grocery giants Coles and Woolworths.

 Project Introduction & Justification 

This project aims at opening new 50 Aldi Express convenient stores in Victoria. These convenient stores will sell basic pharmaceutical items considering the pharmacies are usually closed during the night in Victoria. Based on the information accessed, we believe that Aldi has a huge scope of expansion in the Victoria market considering there is lack of convenient stores (no competition to 7eleven, is also expensive) and the supermarkets present have higher prices than Aldi. The main elements that we will work upon Aldi in this project will be expansion of brand by opening new express 24*7 stores keeping in mind it will be more reachable and convenient to customers than it presently is. Second, the project will focus on increasing the product range keeping in mind the quality perspective of the brand. Third, increase the market share of the company by almost   30% than its present market share.

The demand for Aldi products in Victoria will be relatively high due to the presence of value focused and quality focused customers, specially after new express stores open which will make the customers easily accessible to basic items as well as basic medicines that could be needed by a customer at any time. The Facebook page of Aldi clearly shows how awaited are customers to have new stores of Aldi due to lack of Aldi stores at present.

Demand for ALDI in Victoria

The demand for more stores of Aldi in Victoria is clearly due to high customer demand. Comparing Aldi with Coles and Woolworths, Aldi is just 16 year old to Australia whereas Coles and Woolworths are around 100 years old to this market.  The following table outlines the share of supermarkets in Australian market, which clearly shows the overtaken share of Aldi in such a short span of 16 years (compared to Coles & Woolworths): 

Supermarket	Share
Coles	33.2%
Woolworths	35.7%
Aldi	13.2%
IGA	9.3%
Other Supermarkets	8.6%

The customers’ demand for Aldi is high because of its relative low prices as compared to the supermarkets and convenient stores (7eleven).

For example, a 850 g loaf of Bakers Life Bakehouse Mixed Grain Bread in Aldi is $2.29 compared to a similar loaf of Helga’s 850g Mixed Grain Bread at 3.50 in both Coles and Woolworths. A customer saves $1.21 in Aldi only by purchasing a load of bread. Hence in a period of 52 weeks, by buying a loaf of bread from Coles and Woolworths will cost you $182 while it would cost only 119.08 if you buy it from Aldi. This would save you $62.92 per year only from a loaf of bread. 

Aldi express stores would also provide numerous products at any time of the day or night.  Statements in favor of the idea although were few, but strong:

• Lack of Convenient Stores in Victoria (only 7 eleven – but very high prices)
• Pharmacies are usually closed at the nighttime.
• The products delivered will be of high quality
• The products delivered will be of relatively low price. 

Opening 50 stores we considered will be a huge initial investment for the company and hence it will be given out to private owners for Franchisee. 

1Scope

The scope of the project consists of establishing ‘Aldi Express’ stores across Melbourne, Canberra and Sydney, initially, and later-on expanding across the country. This is primarily being done to compete with 711 stores which are open round-the-clock. An additional pharmacy section is also being added to cater to the needs of those requiring medicines during the night. To hasten the roll-out, a franchising model has been adopted which will help implement the format rapidly.

The scope does not include

• going into the supermarket sector
• opening stores on our own
• targeting non-urban areas of Victoria, NSW and ACT, as of now at least 

Deliverables 

S.NO.	MAJOR DELIVERABLE	DESCRIPTION
01.	Schedule management plan	It provides everyone involved in the project with a list of tasks to be completed and a specific timeline to be followed
02.	Resource management plan	It provides information as to what assets are present and at what stage are they required during the course of completing the project
03.	Cost management plan and estimate	It provides details of the cost estimates required for the completion of the project, and, also gives a plan to manage the expenses
04.	HR plan	It provides details of the personnel hired by the company to roll-out the project
05.	Communication plan	It provides details as to how to go about communicating information about the project to the various stakeholders
06.	Risk management plan	It provides details of the various risks that might impact the outcome of the project. It also gives a plan to mitigate the risks
07.	Quality management plan	It provides a standard of the quality to be expected from the final outcome of the project
08.	Project implementation plan	It provides details of the steps that need to be taken to implement the project from start to finish

Constraints

S.NO.	DIMENSION	CONSTRAINT (Limits)	DRIVER (State Objective)
01.	Operating Cost	100,000 aud
02.	Time to become operational	65 days
03.	Personnel	No constraints.
04.	Locations	Residential areas Commercial areas

S.NO.	ASSUMPTION
01.	All laws complied with
02.	Balance sheet of Aldi not available hence all data has been assumed
03.	Customers would want convenience store items at a cheaper price
04.	Customers want medicines in the middle of the night but all stores which sell medicines are closed

 Schedule 

The activities carried out throughout the project are as follows: 

WBS	Task Name
0	Development of 50 Aldi Express convenient stores in Victoria
1	Project Initialization
1.1	Project Requirement Analysis
1.2	Tender Document Submission
1.3	Tender Approval
1.4	Communication plan
2	Resource Accumulation and Risk Management
2.1	Development of HR Plan
2.2	Project Team Build up
2.3	Material Resources are Accumulated
2.4	Resource management plan
2.5	Analysis of project requirements
2.6	Quality estimation is developed
2.7	Quality management plan
2.8	Analysis of risk factors
2.9	Risk management plan
3	Project Planning
3.1	Selection of Plan methodology
3.2	Schedule management plan
3.3	Cost estimation and resource allocation
3.4	Cost management plan and estimate
3.5	Approval of Project Plan
3.6	Project implementation plan
4	Aldi Stores Development
4.1	Selection of the locations in Victoria
4.2	Employing Contractor for stores
4.3	Site Leveling
4.4	Furniture and fixtures
4.5	Transportation of raw materials
4.6	Wall development
4.7	Cementing and Laying bricks
4.8	Painting of the interior walls
4.9	Final Interior works
4.10	External Cementing and painting
4.11	Boards and Holdings are put
4.12	Health and safety methods are implied
4.13	Government Approval
5	Project is closed

Milestone Report

WBS	Task Name	Duration	Start	Finish
0	Development of 50 Aldi Express convenient stores in Victoria	96 days	Fri 4/28/17	Fri 9/8/17
1	Project Initialization	10 days	Fri 4/28/17	Thu 5/11/17
2	Resource Accumulation and Risk Management	25 days	Fri 5/12/17	Thu 6/15/17
3	Project Planning	13 days	Fri 6/16/17	Tue 7/4/17
4	Aldi Stores Development	48 days	Wed 7/5/17	Fri 9/8/17
5	Project is closed	0 days	Fri 9/8/17	Fri 9/8/17

Cost Estimate 

The costs projected in this report has been presented taking into consideration the costs estimate of a single ALDI Express store. The estimated costs may be subject to a 25% increase or decrease. All the costs estimated in this report are in terms of Australian Dollar (AUD).

The total initial setup cost estimate for the ALDI Express project (single store) is projected to be AUD 100,000. Taking into consideration the total cost of the project, the budget allocated by Aldi for each store is a mere $40,000. However, Aldi aims at covering the remaining costs through the investments that are received through the franchisee’s in the form of franchisee investment. Franchisee investment involves components such as Franchisee fee, Goodwill Fee, Application fee and Initial stock fees and Training Fees.

The total cost for a Aldi Store consists of two main components which are – Human Resource costs and the Equipment and Miscellaneous costs.

Human Resource costs refer to the entire workforce that is involved in contributing towards the successful initiation of the store. The equipment costs include the cost for purchasing all the equipment that would be needed in the store such as air conditioners, computers, microwave, billing machine, refrigerator, and other furniture.

Miscellaneous costs consist of aspects such as transportation costs, taxes and other utility costs.

Resource Cost Overview 

Admin Staff	$10,500.00
Analyst	$8,250.00
Management	$1,500.00
Project Manager	$5,500.00
Quality Analyst	$675.00
Store set team	$12,000.00
Supply chain	$8,000.00
Trainers	$7,000.00
Total	$53,425.00
Equipments	$27,575.00
Transportation	$8,000.00
Utilities	$10,000.00
Total	$45,575.00
Complete Total	$99,000.00

 Budget Summary 

Initial Set Up	100000
Budget for each store is	40000
number of stores are	50
Total budget	2000000
Estimated cost for Human Resources for each store	53425
Total	2671250

Resource Management Plan

The resource management plan includes the distributed use of the resources over the project life timeline as shown in the diagram below, 

Quality Management Plan 

The process of satisfying the needs of the project or the undertaken endeavor is termed as ‘Quality Management’. It includes the management functions that decide quality policies, measures, tasks and responsibilities that lead to control, assurance and improvement. 

When we talk about Quality Control it simply refers to the project results and whether they comply with equivalent project’s quality standards by removing demerits or unwanted policies. Whereas, Quality Planning focuses on identifying the essential quality standards and finding ways to find to implement them. Quality Assurance will be an important process of the Aldi Express project which will take control of the overall project’s performance on a regular basis and will provide feedback whether the standards are met or not. 

All the products and services offered by the company will be of higher quality and lower price. The Aldi express products will be priced at lower rates but the company will make sure it doesn’t hamper the quality of the products. This will eventually increase the customer base for Aldi specially when there are more stores in the city and are easily accessible to customers at any time of the day. Company can benefit from economies of scale when it manufactures more since it will increase its stock-keeping units. Aldi has always believed in simplicity, consistency and responsibility as a part of which it only gives paper bags to its customers and only serves high quality products (Aldi, 2017). The Aldi express will still continue to follow these core values and make sure all its franchisee stores follow the same core values to make an international influence along the supply chain as well in different markets. 

Scope and Objectives of the Project

The company will consider lean manufacturing viewpoint and will concentrate on eliminating inefficiencies in the process such as removing unnecessary work, unevenness in ordering quantities etc. Aldi express will follow the system of depositing money system for the trolleys so that the customers who use the trolley will also make sure they return it back to the store and that Aldi express minimizes the wastes. 

	Quality Planning (Plan)	Quality Control (Do)	Quality Assurance (Check)	Quality Improvement (Act)
What is to be done: –	Task: – Keeping the product consistency plan in place. Quality Metrics: Having the same contracted suppliers for the products.  Making sure that the quality of the product is not hampered even if the costs stay the same in comparison to other supermarkets.	Having a detailed contract with the suppliers to intake the same quality products at the same cost, by moving in a centralized buying model. But in a better quantity since the number of stores are going to increase at a good rate.	Evaluating the product’s quality and performance of the sales while the stores are expanding slowly and steadily. Running regular checks on the quality parameters of the products and reporting the issues regularly.	As and when some changes are identified working on applying the improvements, making the model robust for further market fluctuations.
When is it done: –	Planning Phase.	Execution and implementation phase.	Execution and control phase.	Execution, planning and control phase.

Risk Management Plan

The risk assessment has been done using the Identification-Analysis based on the severity- mitigation. Here, the risk categories have been provided and the specific risks associated with this project have been mentioned. 

Further, the risks have been mapped onto a risk matrix where the severity and the likelihood of that risk occurring has been analyzed. 

S.NO.	RISK CATEGORY	RISK
A.	Schedule risk	Inaccurate schedule estimation
B.	Budget risk	Cost overruns
C.	Operational risk	Vague project responsibilities
D.	Technical risk	–
E.	External risk	Entry of competitors
F.	Change in technology by the time the project gets completed	–
G.	Incorrect data analysis	–
H.	Technical resources being insufficient	–
I.	Change in management	–
J.	Human resource risk	Properly trained staff not available
K.	Project scope expansion	Stores go beyond the given scope

 Risk Probability & Impact / Risk Analysis:  

Likelihood	Near Certainty
Highly Likely				B
Likely				A
Low Likelihood	K		C	E	J
Not Likely
		5	4	3	2	1
		Minimal	Minor	Moderate	Significant	Severe
		Consequences

Risk Mitigation: 

1. Most projects usually overshoot the deadline. When this happens, reasons for the delay should be given and the project extended for an appropriate amount of time.
2. Most projects also deal with the problem of cost over-run. When this happens, a detailed and accurate list of expenses should be provided explaining where the costs were overrun. Future expenses should be appropriately calculated so that the same problem is not repeated.
3. Usually the responsibilities of all the people working on the project are well-defined. But, sometimes, due to human error, the same parts are allocated to different people or some parts are overlooked or the responsibilities are not well-defined. As soon as the discrepancy is found out, it should be rectified. This might require changes to the earlier responsibilities allocation.
4. –
5. The entry of more competitors into the Australian market or this particular sector (small stores) might affect the profit margins. The best thing to do would be to plan beforehand whether the stores would be making profit in the event that there are more competitors.
6. –
7. –
8. –
9. –
10. Employees that are hired for the project should be skilled in their particular areas. In the likelihood that that is not the case, then appropriate employees should be hired to replace the current ones.
11. Scope should be well-defined. Usually, midway during the project, the stakeholders or the management alters the scope. When this happens, the business analyst should explain to them why this should not be done mid-way during the project. 

Hr Plan

The HR Plan consists of employing the human resources for the project. The recruitment of the project team is done by following,

Step One: Posting ads for a specific designation/human resource for the project

Step two: Collecting CVs from the candidates

Step three: Sorting the candidates in terms of skills, knowledge, experience, and education

Step four: Interviewing the sorted candidates

Step five: Selecting the candidate for the role in project

The HR plan also ensures effective communication in teams members.

Stakeholder	Role
Analyst	Analysis of the project requirements
Documenter	Making project documents
Project Manager	Managing all the operations of the project
HR manager	Managing human management related activities
Budgeter	Making budget and managing resources
Quality Head	In charge of the quality of the project outcomes
Risk Analyst	Analysis of the risk factors
Planner	Making project plan
Client	End User of the project product
Worker	Performing all the activities of construction
Transporter	Transporting the materials to the site location
Contractor	External support to the activities of the project
Government	Approval of the project

Roles And Responsibilities: 

Resource Name	Roles and Responsibilities
Analyst	Project Requirement Analysis
Analysis of project requirements
Documenter	Tender Document Submission
Project Manager	Tender Approval
Communication plan
Approval of Project Plan
Project is closed
HR manager	Development of HR Plan
Project Team Build up
Employing Contractor for stores
Budgeter	Material Resources are Accumulated
Resource management plan
Cost estimation and resource allocation
Cost management plan and estimate
Quality Head	Quality estimation is developed
Quality management plan
Risk Analyst	Analysis of risk factors
Risk management plan
Planner	Selection of Plan methodology
Schedule management plan
Project implementation plan
Client	Selection of the locations in Victoria
Worker	Furniture and fixtures
Wall development
Cementing and Laying bricks
External Cementing and painting
Transporter	Transportation of raw materials
Contractor	Site Leveling
Painting of the interior walls
Final Interior works
Boards and Holdings are put
Health and safety methods are implied
Government	Government Approval

Communication Plan

Communication Strategy	Purpose	Involved Stakeholder(s)	Frequency
Meetings	Project Progress and Resource Utilization	Client, Project manager	Quarterly
Emails	Any issues in the operations of the project	Project Manager	Weekly
Reports	Project Operations and Testing results	Team Leads	Monthly
Verbal Communication	Requirements of next activity of the project	Planner, Budgeter, Technician,	Daily

 Communication Matrix:

Information	Receiver	Sender	Method of Communication	Frequency
Progress of Project	Client	Project manager	Meetings	Quarterly
Requirements of the client	Team Leads	Project Manager	Emails	Weekly
Project Progress	Project Manager	Team Leads	Reports	Monthly
Issues or Requirements of the project operations	Quality Head	Worker	Verbal Communication	Daily

Monitoring & Control

Based on the project’s defined Proposal, the Monitor and Control phase initiates. During this phase the managers follow the ‘Plan-Do-Check-Act’ cycle. This is an essential part of the process since its main goal is to ensure that the final generated product is not different from the desired product and the required constraints are well maintained and taken care off.  

The constraints are essential for the project since they work towards setting the boundaries for the project. If in a project the team misses out on focusing on any one of the constraint – the product would face impact of the same severely. In the case of Aldi Express, if the time constraint is not focused upon, the project will go over time and would lead to affecting the cost and additional resources required to function the project. Most of the projects tend to go above duration as planned because of failure in observing control of these constraints.   

Monitor and Control – Cost and Schedule/Time:

Project Activities and Timeline

‘Aldi Express’ is termed to be business expansion project where a lot of variables come in to the play, which might affect the project’s overall functioning and duration. Thus, to ensure that the project does not go over budget – Earned Value Management will be performed which will enable us in assessing the actual performance of the project with the estimated performance. It shall also assist in forecasting the actual cost the project at a specific point of time during the project is in function.

Monitor and Control – Scope:

While the project is in process, the management will focus on observing the final requirements with those, which were listed in the charter. If in any case, they do not match – the manager shall take back the project to development stage where the requirements would be remodeled and necessary changes be made to make sure the project does not breach the defined scope.

Monitor and Control – Quality:

Quality would be essential variable to be considered for the project, to make sure that the quality of the product is maintained and controlled efficiently a number of tools would be used:

• Pareto Charts
• Root Cause Analysis
• Histograms

Aldi Express will make a strategy that will help them to review their budget so that they can understand the extra costs that needs to be curtailed to increase the profits. The managers and employees will be given lucrative incentives so that they remain motivated and serve the place efficiently. The control and monitoring team will also ensure that the employees are well aware of the vision and the mission of Aldi Express.

Aldi Express will organize a feedback process for employees and customers to get a feedback on both. Eventually, the team will be able to look after the overall quality of the systems and problems raised. 

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Chung, F., 2017. Aldi launches biggest brand overhaul in 16 years, vows to maintain price leadership or ‘we’re dead’. news.com.au, 15 May.

Marketline, 2016. Aldi Einkauf GmbH & Co. oHG – Company Profile & SWOT Analysis. [Online] Available at: https://store.marketline.com/report/1124876–aldi-einkauf-gmbh-co-ohg-company-profile-swot-analysis/ [Accessed 4 October 2017].

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