FONTERRA

1.KEY CHARACTERISTICS

Fonterra co-operative Group limited is a leading global nutrient company which deals with all kind of dairy products saturated in
New Zealand . (Fonterra, 2019)Fonterra is been considered as the sixth biggest dairy producers in the world. Fonterra also is one
of the largest fast moving consumer goods companies in Srilanka having a trusted wide range of brand portfolio moreover with
a 20 year history in the local dairy industry.

Brand portfolio of Fonterra

ANCHOR MILK
POWDER
ANCHOR
ACHOR LIQUID
FLAVORED
MILK
MILK

ANCHOR
RATHI
SHAPE UP

FONTERRA
ANCHOR
ANCHOR
DRINKING
PEDIA PRO
YOGURD

ANCHOR
NEWDALE PEDIA PRO
(YOGURT\ (MAMA)
CURD)

FOOD
ANLENE PROFFESINOAL
S

Achievement of organization’s performance objectives through operation management processes

Operation management is the process of managing resources used in production of goods and services, this process involves in
adding value which is the (cost of purchasing raw material - price of finished good). The ultimate motive of this process is to
create costumer value. An organization basic performance objective would be quality, speed, dependability, flexibility and cost.
Further more there are 10 main components the operation management (OM) process goes through which is as follows;

Both the performance objectives and the main components of OM together can have a significant impact on the success of the
business. Fonterra being one of the best company in selling quality milk products having an experience in operating in Srilanka
for more than 40 years, they were able to be successful till date due to their prioritization in the 3 main core functions .

1. Product development- This refers to creation , design and marketing of new goods or modifying the existing
goods. “Fonterra in recent times launched its latest dairy innovation a new “low fat drinking yoghurt” made from
locally-sourced fresh milk which involved an investment of Rs.309 million in a fully- Automated bottle filling
machine.” (mirror, 2018)

2. MARKETING- marketing is the process of identifying , anticipating and satisfying consumer requirements
profitably. In simple terms it is the process of getting the right product at the right place at the right time.
 Fonterra has never failed to attract the market through their promotional offers for their fast-moving product
such as yoghurt and flavored milk which has captured most of the younger generation. Their promotional offers
such as if the story in the anchor newdale multi pack is perfectly matched the consumers stands a chance of
winning a drone. This kind of marketing attracts the children age group ending up in purchasing the product.

3. OPERATION- This involves the overall process from creation of the product to the delivery of the final product to
the market. Fonterra has its operations in more than 130 countries and they export 95% of their local production
to more than 130 countries. “In srilanka alone they collect 40000 liters of milk each day from a network of 4000
local farmers”. (development, 2019)they have 6 milk chilling centers around srilanka moreover they have a
workforce of 500-1000 employees.

ACHIVMENTS OF ORGANISATIONS PERFORMANCE OBJECTIVES

Fonterra, srilanka in the past years has looked up on enhancing its quality of its dairy products thus “focusing in enriching
livelihoods in dairy communities through sustainable long-term initiatives” (development, 2019)to create a healthier and a
happier nation. Their priority is to provide good quality dairy with good performance at the same time intensify the corporate
social responsibility(CSR).

 QUALITY

Fonterra brands Srilanka at the national convocation of quality and productivity 2019 were awarded 3 gold and 1 silver awards
for their consistent delivery of high quality dairy products while maintaining high level of productivity and food and quality
standards . They were recognized under quality circle and continuous improvement and the other winning project focused on
enhancing processes to double productivity and reduce wastage. (Fonterra, 2019)

These achievements have been carried out perfectly because , Fonterra is practicing one of the lean production method named
“kaizen”, continuous improvement, this approach assumes that employees are the best people to identify room for
improvement, since they see the processes in action all the time . Fonterra is practicing a policy of constantly introducing small
incremental changes in the business in order to improve quality of milk and milk based products.

 SPEED

This is the time taken by the business to cater the products to the market from the request time from the consumers, Fonterra
guarantee’s that all its product ranges are there in all distribution outlets so that consumers will reluctant to switch to
competitors products. Making the production and availability of the products faster will give the consumers a speed advantage
especially in super market, as per porters value chain model “ outbound logistics” this defines more about reaching the
consumers together with speed it makes it a more effiecnt manner of reaching the final destination. Having the speed capability
would reduce the risk of new new entrants taking over the market power as per porters 5 force tool.

 DEPENDABILITY

Dependability is when the organization consistently meets its promised delivery time for a product or service , even though
Fonterra concentrates on quality if the products do not get to the final destination in the promised time then consumers
who are the supermarkets and other outlets, they will not gain dependability advantage.

 FLEXIBILITY
 At Fonterra due to a significant increase in demand they invested 450 million in form fill seal machine where now they are
able to meet an extra 10 million serving of locally sourced anchor newdale yoghurt each month, this machine enables the
company to produce 125% more yoghurt than previous capacity. (Fonterra, 2017) This gives the Fonterra consumers a
flexibility advantage.

 COST

Cost is considered to be the finance required to obtain the inputs (i.e. transforming and transformed resources) and manage the
transformation process which produces finished goods and services (kaluarachchi,2021). Basic cost elements of any business
would be on employee’s, technology and facilities and raw material costs. These has to be kept in line with competitors to
ensure the business survives in the market.

Measures taken and its’ effectiveness in responding to the market

Fonterra co-operative in attempts of responding to the market, as per their research it was found that the number of tea
consumers were high in srilanka therefore as per local demand they launched a new milk powder product named “rathi” to cope
up with the local tea consumers demand

Moreover after the global pandemic of covid-19 fonterra has taken cautious approach by maintaining temperature testing at
the manufacturing sites and has a good supply of personal protective equipment on hand to ensure 100% quality products.
(fonterra, 2020) Due to the rapid increase in the industry by brands such as ambewala, highland, and kothmale for Fonterra to
stand different from their competitors they invested in enhancing their quality of local milk supply by equipping milk chilling
center’s around the county. (development, 2019)

References
anis, s., 2019. marketing. s.l.:s.n.

development, D., 2019. Dairy development. [Online]

Available at: https://www.fonterra.com/lk/en/about-fonterra-srilanka/dairy-development.html
[Accessed 2021].

essays, u., 2017. The History And Background Of Fonterra. [Online]

Available at: https://www.ukessays.com/essays/marketing/the-history-and-background-of-fonterra-
marketing-essay.php
[Accessed 2021].

Fonterra, 2017. fonterra doubles its manufacturing capacity. [Online]

Available at: https://www.fonterra.com/lk/en/news-and-media/articles/fonterra-doubles-its-
manufacturing-capacity.html
[Accessed 2021].

Fonterra, 2019. Fonterra. [Online]

Available at: https://www.fonterra.com/lk/en.html
[Accessed may 2021].
fonterra, 2019. Fonterra Brands Sri Lanka shines with four awards at the National Convention on Quality
& Productivity 2019. [Online]
Available at: https://www.fonterra.com/lk/en/news-and-media/articles/fonterra-brands-sri-lanka-
shines-with-four-awards.html#:~:text=Fonterra%20Brands%20Sri%20Lanka%2C%20the,three%20Golds
%20and%20one%20Silver
[Accessed 2021].

fonterra, 2020. covid-19. [Online]

Available at: https://www.fonterra.com/nz/en/covid-19.html
[Accessed 2021].

newdale, A., 2021. s.l.:s.n.

THE EFFECTIVNESS OF UP-STREAM AND DOWN-STREAM SUPPLY CHAIN MECHANISM (SCM)

SCM is the active management of supply chain activities to maximize customer value and achieve sustainable competitive
advantage (Robert Handfield, 2020). “Fonterra was established through a merger of 2 largest Newzeand dairy board and
newzeland dairy cooperative , the purpose of the merger was to create a single company that manages the over all supply
chain.” (simchi-levi, 2009).Fonterra has a 9 step supply chain as illustrated below,

1.GRASS

9.HOME 2.FARM

8..SALES 3.COLLECTION
UPSTREAM SUPPLY CHAIN
Fonterra has

7.SHIPPING 4.PROCESSING

6.STORAGE 5.PACKING
EFFECTIVE USE OF TECHNOLOGY & CHALANGES FACED

As technology keeps taking over, it has a vital part to play in every organizations performance, following
that Fonterra brands srilanka has introduced “Fonterra’s worlds leading traceability system for the first
time in srilanka . Fonterra through this traceability system is trying to provide customer’s a greater
transparency of their production, assisting them to build trust in the safety and quality of their products.

“ Fonterra is leading the way as the first dairy company globally to implement a system that can
electronically trace its products anywhere in the world within minutes.” (Fonterra, 2019) In attempts of
evaluating how the traceability system works, “the product journey of a packet of Anchor Newdale
flavored milk or yoghurt can be tracked using its batch number from the Fonterra local milk collection
centre in Sri Lanka to the point it arrives at the factory in Biyagama, through production, packing and
processing and onwards to distribution.” (Fonterra, 2019)