Optimizing Supply Chain for Fonterra Company

Supply and Distribution system
10/30/2018
Fonterra Company

Supply and Distribution system 1
Contents
Introduction......................................................................................................................................2
About Fonterra.................................................................................................................................3
The suitable supply chain for Fonterra............................................................................................3
Aspects of the SC that could be optimised and the way it will get affected by different
environmental factors..................................................................................................................6
Proposed plan to implement the new supply chain.........................................................................8
Financial implications of this supply chain...................................................................................10
Investments in plant and equipment..........................................................................................10
Sources of finance......................................................................................................................11
Measures of financial performance...........................................................................................11
Stock Control Policies...................................................................................................................12
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

Supply and Distribution system 2
Introduction
The aim of the report is to explore the supply chain, material shipments, physical delivery,
storage of products and business systems of the selected company. The company that has been
selected for this task is Fonterra, a well-known New Zealand multinational dairy. In the current
era, the supply chain contributes ineffective management of operations related to the company.
The report will include the design of an optimal supply chain for the products that are offered by
the company in the market to meet the strategies related to the organisation. Along with this,
there is discussion related to the aspects of the chain that are essential to be optimized and the
ways through which these actions of the company get affected by the various environmental
factors. In addition, a plan that talks about the implementation of the new supply chain by the
Fonterra Company have been discussed. This has been found that the implication of the supply
chain needs the financial investment which will make the implication successful for the company
in the market. Therefore, the report includes the analyses related to the financial impact related to
the supply chain options. In the end, there is discussion related to the inventory control policies
and processes which are utilized by the company to enhance the performance.

Supply and Distribution system 3
About Fonterra
Fonterra Company is a multinational dairy co-operative that came into existence in the year
October 2001. The company is considered as the global dairy nutrition company that is owned by
more than 10,000 farmers with their families. Fonterra believes in creating the expertise on the
legacy of the thousand farmers who have contributed in making New Zealand as a world leader
in the dairy. The company is exporting their products across the world and well-known for their
innovation and quality (Fonterra, 2018). The products which are offered by the company are
good at nutrition with the farming and processing the operations in the four continents. The value
of the company works as the strength of the company which makes them stronger to take the step
towards the innovation (Fonterra Co-Operative Group, 2018).
The suitable supply chain for Fonterra
In order to find a suitable supply chain, it is essential that the company finds the best framework
that suits their business. This is because the supply chain framework justifies about the way in
which any supply chain would be implemented. It also suggests the aspects of business on which
this supply chain can be used. At the same time, it also tells about the problems that it might face
while implementing the supply chain. Since there is a lack of a universally accepted definition of
the supply chain hence different framework is used by the organisations. It depends on the
requirement of the company that which framework do they use (Chen, Zhang & Delaurentis,
2014). Fonterra is a milk product manufacturing company and requires the frameworks that are
related to the production, process and logistics. The framework that is suitable for the Fonterra is
Supply Chain Operations Reference (SCOR). It is a framework that tells about the standard set of