Sample Business Report: Fonterra
Fonterra is a co-operative company which was formed in 2001 with the help of various farmers(10,000) The company is a multinational diary which is famous for its dairy products worldwide. The company was formed with the merger of the two largest co-operatives known as New Zealand dairy group and kiwi co-operative. In 1871 at Otago the first dairy co-operative was established.
Fonterra obtained $19,232 million and has a diminution of $196 million in 2017. Whereas, in 2018 after the study Fonterra earned $20,438 and loss remains the same as it was in 2017. Increasing income of the company every year leads to the upgradation of equipment and provide best tools as well as best facilities to our employers. Operational expenses in 2017 is 1376 million. Whereas, in 2018 it was increased by 172million i.e.1548 million (Annual report, 2018)
- VISION AND CORE VALUE
Fonterra’s main ambition is to bring the best quality of diary among their customers with the help of their knowledge, products and staff members. Moreover, diaries want to increase the best returns to their business with the increasing number of consumers in the world.
The core values of Fonterra increase the strength of the company which are given below:
- Challenge boundaries: the diary continuously focuses on to lift the quality of products so it can match to the consumers need with this they keep themselves one step ahead.
- Co-operative spirit: diary also thinks about the safety of their workers as well as safety of the company. Fonterra also allows the person to work as volunteer so that they can gather more knowledge, capability and networks
- Do what’s right: Fonterra has the courage to do the things that are right for their organisation as well as for the customers. In addition, Fonterra does things which are environmentally friendly. (FONTERRA, 2018)
- PROMINENT BRANDS:
There are many other brands which they’re in Fonterra like Anchor are, De Winkel, Fresh n’ Fruity, Mainland, Mammoth, Primo and many more which help the organisation to earn more profits and to be stable in the market. This adds more variety in Fonterra and helps the customers to choose the best. (Our brands)
- Anchor: this company was established more than 130 years ago. It is known for its different types of products which are yoghurt and dairy food, cream and custard, cheese and culinary, powders and main one is milk. (Anchor, 2019)
- De Winkel: this company thinks food we get from nature is the best in tastes and they need little involvement to make it. Different types of food and drinks which they made are berry blast sunrise smoothie, avocado salad with smoked salmon, spiced apple, oat and honey smoothie and many more.
- Primo: this is known as for flavoured milk which contains less than 2% and also known as delicious company.
- Mainland: this company produces different recipes made from cheese for example southland cheese rolls, steaked and smoked cheese pie and many more. Additionally, they also put more attention to improving the quality of the product.
- KEY MARKETS
Fonterra is one of the biggest exporters of the daily products all over the world as it exports to 138 markets and more than 1 million people every day. Moreover, Fonterra operates over 30 manufacturing sites across the country. It is well known for the high quality of milk, kiwi ingenuity, dairy nutrition innovation and great team. Furthermore, it also takes care of the shareholders as also they focus on the interest of stakeholders (shareholders, employees, customers, farmers, governments and communities) and works with transparency.
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2(a) Sustainability challenge:
- Feeding a growing population: In 2050 according to the demography change has been seen in the world population which will increase to 9.7 billion by which Fonterra has predicted there will be 50% rise in the demand for nourishment and due to that they must increase their production by adding more raw material.
- Limiting and adapting to climate change: In future, the dairy industry must tackle a lot of problems related to production of dairy products due to changes in climate, so Fonterra must enhance or improve their processes to adapt to the changes in the environment or find any substitute so that the production doesn’t get affected.
- A public health crisis: there is an ongoing trend nowadays where there a lot of people who are suffering and dying because of obesity due to an unhealthy lifestyle. Whereas, New Zealand stands on the third highest frequency rate of obesity and to tackle this situation Fonterra must launch various new products with low fat and high nutrition values. Fonterra can face this sustainability challenge due to the high rate of fat in their milk.
- Water quality and scarcity: water used by farmers in agriculture has caused a decrease in the quality of water owing to which nutrients in water have been reduced. According to a survey , water demand will decrease by 40% in 2030 so they must use it wisely and can set water treatment plants so that they can reuse it as the resources we have are limited and demand for that resources is unlimited, so it is very important to use it in a sustainable manner.
- Improvements in global productivity have slowed down: productivity of crops is decreasing 1% year by year. Moreover, productivity per hectare of land has increased significantly with the help of innovations over the last 10 decades and to improve this it is very important to find the solution for production for each hectare. (sustainability report , 2018)
b) QUALITY MANAGEMENT:
- Increase employee participation(iso26000): it is an international standard which helps the organisations to survive smoothly with the completion of tasks on time with minimum wastage of resources and address social responsibilities with mission and vision. All big organisations use this standard to increase participation of employees and to understand social responsibilities. Fonterra uses this standard by giving bonus, promotion, awards according to the performance of employees and it will help to motivate the employees in a positive way. And Fonterra also faces the challenge to keep a check on all the employees because of their area of production. And to solve this issue Fonterra must take many initiatives.
- Environment, community, nutrition(iso14001): ISO14001 is basically related to environmental management which helps all companies to understand their environmental responsibilities. Because we all know about the growing compaction in between the businesses and they just keep on producing the product, but they do not care about the environment and just harm the environment by releasing the greenhouse gasses and chemical and waste materials. Because of this they face transformational change due to the growing population. Fonterra provides the milk to the rural area to develop the community and they also provide the meat and manure which is very useful as the fertilizer. So, Fonterra is investing in the future to develop the community. And because of the increase in population, Fonterra faced the challenge to give proper nutrition with proper production to fulfil the demand of the increasing population.
c) Sustainability initiatives taken by Fonterra
- Increase in employee participation (ISO26000): Fonterra can overcome through this issue by ample of methods first Fonterra have to make a site on which workers can upload their work so that company can come to know working status of employees through which workers can get feedback on their regular basis so that they can do changes if required. Moreover, the company can also determine that employees are working properly or not. And can set up proper targets so that it can be easy for workers to achieve goals effectively and efficiently.
- Environmental safety: Fonterra decided to keep going with partnership farming and manufacturing so that less impact will be there on the environment. Even they decided to give all the proper nutrients and fertilizers to the crop so that the environment can be safe. Furthermore, Fonterra decided to reduce the use of carbon by investing in its infrastructure. Even they go with proper packaging to ensure the quality of the food and safety of customers as well as of the environment.
- Waste management: waste management is one of the major issues and to tackle the same Fonterra had announced the 2 statements first one is that Fonterra will send the zero-solid waste to landfills by the year 2025 and secondly will use 100%reusable packing by the year 2025. Moreover, the products which are already sold by Fonterra are 90% recyclable.
- Loss of Biodiversity: the day New Zealand joined the United Nation Sustainable Developments Goals, Fonterra opted for all the 17 goals which are there in the agreement. Furthermore, Fonterra is also working on climate changes so that the environment cannot be affected by the process. (Sustainbility report, 2017)
- Sustainable operations: sustainable operations mean ensuring that natural products of milk we collect are secured. This means running effectively, increasing our power of manufacturing plants and investing in facilities to achieve our long-term goals for climate change. Most of our production is in New Zealand and Australia, which account for over 95% of our raw milk supply and processing.
- International Certifications: To demonstrate our performance to our clients, our website performance is regularly independently audited against the SEDEX member ethical commerce audit standard for work practices and safety and business practices. Other third-party audits are part of independent site certification of site EMS to international standards. We work towards certification across the international manufacturing footprint and most of our sites achieved such certification.
- Energy and emission: our current efficiency-based objectives have led us to reduce emissions of greenhouse gages for each production unit. Our goal is 30% percent reduction in emission by 2030 in our global manufacturing and milk collection operations compared with the FY baseline and net zero by 2050 in terms of cleaner energy resources.
- Waste management: our main product is raw milk from our supplying producers. We focus on reducing food losses across our supplying chain to maximize the nutritional performance we deliver to our customers and users. It allows us also to provide our supply farmers the maximum return and to reduce our environmental impacts. Our food safety and quality standards in our manufacturing activities are aimed at producing goods right from the start and our processing measures are aimed at identifying the new products which have previously been considered waste such as food wastage.
- Sustainable dairy farming: In agriculture, we start by taking care of the environment and taking care of the health and well being of milky cows. The natural food quality of the milk and the possibility to manufacture high-high-quiet, safe products. We have a sustainable program which in 2004 took a global lead when independent evacuations were introduced every year for each farm. We started the Tiaki Sustainable diary program in 2017. Tiaki is about loving, protecting, Feeding, holding and nourishing.
B) TOOLS FOR IMPROVEMENT
- Kaizen: this method is basically used for the improvement of small deviations in a positive manner so that major problems can be solved, and Fonterra is using this method to improve their quality standards and production standards so that they can meet the demand of the customers as well as the market. This can be treated in a long-term scope as it helps the company to be effective and efficient. (Hargrave, Investopedia, 2018)
- Just in Time: In this process the company manufactures the product according to the demand in the market so that there will be no wastage of the product as well as this process will be cost productive. Even in Fonterra the production process is according to the demand of the customers. (Banton, 2019)
- PDCA Cycle: PDCA basically stands for Plan-Do-Check-Act and is a four stage model for continuous improvement. This process is basically used for quality control. For example, Fonterra has to train the employee by just giving them instructions that first they have to find the problem and then make the plan to solve that problem. After the plan then Fonterra has implemented that plan whether that plan is working or not. Moreover, after the implementation then they must check the result. If the result is positive then Fonterra must implement this plan for the rest of the problems. (Hargrave, 2019)
- Value stream mapping: this is the way in which the organisation analyses the current situation of the organisation and according to the current situation they analyse the future terms of the business this helps the organisation to actually produce the products which are required by the customers and even that they can estimate the quantity of the product needed.
- 5 whys: this is the process in which the root or the main cause of the problem has to be identified so that the same problem will not be repeated. Fonterra has applied this process to check the quality standards of the products so that customers will not face any problem.
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From this case study, it has been observed that firstly Fonterra is one of the sustainable co-operatives and secondly Fonterra has a good production and quality standards of the product Even the Fonterra has undergone various agreements which are related to the environment so that it cannot get affected. Furthermore, Fonterra has used many tools to increase the efficiency and effectiveness of the organisation. Their main purpose is to be one of the best dairy selling products with good quality standards. Fonterra has used various tools like 5 why, kaizen, just in time and many more to increase the productivity of the organisation.
3 most important points are :
1)Fonterra has managed to reduce the wastage of the resources and is already going with 90% of reusable packaging all over New Zealand.
2) The organisation is also focusing on sustainable development and taking the necessary action according to the situation of the workplace.
3) they are taking up both ISO 26000 and 14001 to improve the productivity of the organisation.
Anchor. (n.d.). Retrieved from www.anchordairy.com: https://www.anchordairy.com/nz/en.html
Anchor. (2019). Retrieved from www.anchordairy.com: https://www.anchordairy.com/nz/en.html
Annual report. (2018). Retrieved from www.fonterra.com: https://www.fonterra.com/content/dam/fonterra-public-website/phase-2/new-zealand/pdfs-docs-infographics/pdfs-and-documents/financial-results/fy19/Fonterra-Annual-Report-2018.pdf
Banton, C. (2019, august). Investopedia. Retrieved from www.investopedia.com: https://www.investopedia.com/terms/j/jit.asp
FONTERRA. (2018). Retrieved from https://www.fonterra.com: https://www.fonterra.com/nz/en/careers/life-at-fonterra/our-ambition-and-values.html
Hargrave, M. (2018, july). Investopedia. Retrieved from www.investopedia.com: https://www.investopedia.com/terms/k/kaizen.asp
Hargrave, M. (2019, July). PDCA Cycle. Retrieved from www.investopedia.com: https://www.investopedia.com/terms/p/pdca-cycle.asp
Our brands. (n.d.). Retrieved from www.fonterra.com: https://www.fonterra.com/nz/en/about/our-brands.html
sustainability report . (2018, november). Retrieved from www.fonterra.com: https://www.fonterra.com/nz/en/our-stories/media/fonterra-releases-its-sustainability-report-2018.html (2017). Sustainbility report.
This is a Sample Business Report of Fonterra from Topicwize, Get your now
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