Analysis of Asset Management Techniques at Fonterra Co-operative Group

This report analyzes the asset management techniques employed by Fonterra, a major player in the dairy industry. It begins with an executive summary outlining the report's objectives, which include examining the function of asset management within the business, the operational and performance requirements of its assets, and the identification of key physical assets like inventory, facilities, and equipment. The report then delves into the company's background, outlining its industry and operational structure. It discusses the function of asset management, including inventory, facilities and equipment, and how these assets contribute to overall business performance. Furthermore, the report examines operation and performance requirements for assets, including smart manufacturing techniques, and reviews ISO standards (55000, 55001, 55002) used in Fonterra's asset management system. The report also includes a gap analysis, identifies areas for improvement, and suggests an action plan for addressing these gaps, concluding with a summary of findings and recommendations for enhanced asset management practices.

Running head: ASSET MANAGEMENT TECHNIQUES
Asset Management Techniques
Name of the Student:
Name of the University:
Author’s Note:

1ASSET MANAGEMENT TECHNIQUES
Executive summary
The purpose of this paper is to discuss about asset management techniques of Fonterra. It
aims to discuss about function of asset management in overall business. The paper also aims
to discuss about operation as well as performance requirement for the assets for overall
production process. The paper aims to analyze about leadership, planning, and support as
well as performance evaluation of the company. The paper discusses about major
requirement in the business and areas where improvement is required.

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Table of Contents
Introduction................................................................................................................................3
Identification of employer and the type of industry (Fonterra ).................................................4
Function of asset management to the overall business..............................................................4
Operation and performance requirements for the assets............................................................5
Identification of key physical assets and their operation as well as performance requirement
for overall production.................................................................................................................6
Review of ISO55000, ISO55001, ISO55002.............................................................................7
Brief Comments.........................................................................................................................8
Context of the organization....................................................................................................8
Leadership..............................................................................................................................9
Planning..................................................................................................................................9
Support...................................................................................................................................9
Performance evaluation..........................................................................................................9
Improvement........................................................................................................................10
Identification of one major requirement and areas where improvement can be made............10
Development of an action plan for addressing the improvement already identified above.....11
Conclusion................................................................................................................................12

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Introduction
Asset management refers to the path of all or part of portfolio of a client by institution
giving financial services which can generally be an investment bank or it can also be an
individual(Garleanu & Pederson,2018). Financial institutions provide services related to
investment with a broad range of existing or related offerings of the product that might not be
existed for the average number of investors. The role of asset manager involves analyzing of
what is the role of investments in growth of the portfolio of clients. Specific techniques are
used for management of assets (Goodall, Rosamond & Harding, 2014). In such case mainly
research is done for effectiveness of macro as well as micro tools for analysis purpose. The
research can include statistical technique or process of existing trends of the market,
conducting interviews with officials of the company as well as other thing that would help
out in achievement of already stated goal of asset appreciation related to client.
The paper aims to conduct a gap analysis in the form of report for company named
Fonterra. The report would include the discussion about the employer and type of industry
Fonterra is. It includes the function of asset management of the business of this company.
Further it discusses about operation as well as performance requirements for the assets of this
company. The report emphasizes on physical assets of the company and its performance
requirements for the company’s overall production. The paper deals with and discusses about
leadership, planning, operations as well as performance evaluation of the business. Hence, the
paper aims to develop an action plan with respect to the improvement identified in major
areas of the business and using these gap analysis can be conducted.

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Identification of employer and the type of industry (Fonterra )
Fonterra Co-operative Group Limited is well known for making approximately30% of
dairy exports of the world and has revenue which has been exceeding NZ$17.2 billion.
Fonterra was started in the year October 2001 by merging of two largest dairy cooperatives of
the country named as New Zealand Dairy Group as well as Kiwi Cooperative Diaries with
Dairy Board of New Zealand.
Fonterra is a dairy nutrition company in a global level which is owned by
approximately 10000 farmers. Being the world’s leading exporter of dairy products the
company has been involving in the industry of quality as well as innovation (Ohlan, 2014).
Company has been involving in fairness of dairy nutrition all over the world with the brands,
farming as well as operating in the four specific continents (Popa et al., 2018). Company has
portfolio containing brands of Anchor, Anmum as well as Anlene. Starting from the South
Pacific Fonterra sells their dairy products across 138 markets all over the world. DIRA
Fonterra has certain statutory obligations with respect to be itself as an open cooperative that
consent to receive supply of milk offered by dairy farmer of New Zealand ready to held
shares in.Fonterra assures the conditions of supply that is applicable in case of new
shareholders as farmers that differ from application to existing shareholders as farmers in
order to express several situations.
Function of asset management to the overall business
One important asset of the company is inventory. Inventories with the help of supply
chain, distribution as well as production manages the margin very well (Christopher, 2016).
The second as well as third assets of the company are facilities provided as well as
equipment. Dairy product manufacturing facilities of Fonterra have very difficult operations
and make use of high quality machinery as well as technology that cost high (Curwin,

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Deddens & Mc Kernan, 2015). There might be interruptions in the processing or issues
might arise with the machinery leading to break in production process or might also impact
into products being absent for selling .In this case asset management plays a vital role in
managing the whole facility as well as elements inside them in order to protect profit margins
as well as to well maintain high quality of customer service.In case of equipment asset
management plays an important role in maintenance of machines, maintenance and proper
working of equipment such as fire extinguishers as well as supplies that would act as
preventive. The asset management system as an overall helps the mechanical as well as
physical elements related to operation for getting monitored as well as get to be managed
(Wallace, 2014). An efficient Asset Management technique is used along with well-
established system to play a major role in helping out manufacturers of dairy products of
Fonterra in managing the physical assets. An asset management process is used for involving
designs of packaging of dairy products, maintenance, operations of the machineries in
production of dairy products as well as replacement of plant can further help in making the
assets to be most effective and in reducing repair costs.
Operation and performance requirements for the assets
In order to be competitive, dairy products manufacturing systems have to be performed
at superior level. For this reason continuous improvement with respect to operations is
required. Information adopted manufacturing as well as smart manufacturing techniques can
make the operations to be more effective for the company (Wang et al, 2018). New
technologies and innovativeness are involved for helping dairy products manufacturing of
the company and is helping out for dairy product processing operations. Smart
manufacturing technique of operations is useful for the company in improvement of
utilizing its assets, increasing of yield, for driving productivity related to workforce as well
as in management of resource optimization. Smart manufacturing process can make the

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operations in creating well communication for people as well as assets. Using this operation
technique if new challenges take place dairy manufacturers can be able to make effective
use business process such that it becomes manageable (Zywicki, Zawadzki & Hamrol,
2017). Further, new developments are brought about in terms of technology for redefining
products related to dairy manufacturing. Other than this issues related to quality are reduced
using supply chain management efficiency in operations. Reduced costs technique is
another technique used as efficient operations for assets.
Through Asset Performance Management performance requirement of manufacturing
assets of Fonterra are well managed (O’Neill, Sohal & Teng, 2016). Assets of the company
involve equipment, machines for production purpose as well as infrastructure system of the
factory. Performance requirement for the assets of the company might involve reduction in
unsystematic during downs of production. It might include enhancing of available critical
assets; reduction in maintenance cost is required. Further for good performance of assets,
bringing improvements in maintenance and its efficiency as well as bringing limitations to
environmental and safety risks are required. For improving quality and for staying
competitive a strategy is used to bring about Asset Performance Management.
Identification of key physical assets and their operation as well as performance
requirement for overall production
The key physical assets of company Fonterra include- Inventory, facilities as well as
equipment. Coming to the asset’s operation inventory management for Fonterra is quite
important. Right tools related to inventory management are used in order to manage supply
chain, dairy product delivery as well as for bringing about safety of the food product for
customers (Brigham et al., 2016). In case of facilities related to production process of
Fonterra operations might include in the form of various procedures used that would bring

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about improvement for the quality of life of customers (Mitra, 2016). Several more processes
are included for product maintenance to make the dairy products while producing free from
health related risks. Facilities also operate in the form of creating specific hygienic codes for
making dairy products of the company free from health risks Facilities also operate for
protection from negative environmental impact of product manufacturing by Fonterra. Next
moving towards equipment it operates for processing into dairy products for the company and
certain operations relating to washing as well as separating get performed. Other functions
involve supporting of primary functions relating to production cycle in the form of material
handling as well as control system in operations for further dairy products processing and
standards.
Performance requirement is most important factor playing a vital role for successful
production of Fonterra. For creating good quality of dairy products company is in use for
enhancement of performance in the form of good packaging system, development of the mix
of the ingredients as well as bringing about cost-effectiveness. Further performance
requirement of the company for overall production include manufacturing of dairy products
that is good in appearance as well as taste. Manufacturing requirement in the form of safety
and cleanliness is used for avoiding illness (Ericson, 2015) Additional to this, Clean
equipment is used and working areas are kept free from infected particles.
Review of ISO55000, ISO55001, ISO55002
Fonterra in order to implement manufacturing system for dairy products uses asset
management system as per standard of ISO55000 (Hastings, 2015). As per ISO55000 certain
leadership, policies as well as strategies are used as a necessary elements for establishment of
commitment of Fonterra towards an efficient system of asset management. The mentioned

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elements govern with the principles and explain further with how asset management will
meet company’s goal of production.
Fonterra uses ISO55001 as a standardized system in the form of management of asset
(Turner, 2014). It is used by this company in helping out its business of manufacturing dairy
products in management of risks by implementation of benchmarks making it to be part of
improvement cycle. Fonterra make use of ISO55001 as a specification for further
development of its product using asset management system.
Fonterra uses ISO55002 as a best guide towards establishment of efficient asset
management system for its overall production (Trindade et al, .2019). It make use of strategic
asset management plan for its production process. The standard is used by the company for
considering seven cross cutting elements used in ISO55001 as anew guidance for asset
management system. Further it helps the company to deal with issues related to boundaries,
outsourcing as well. This standard is helpful making clarification to Fonterra for being
eligible as dairy product manufacturer.
Brief Comments
Context of the organization
Australia is known to be the source for Fonterra’s largest milk and dairy product across
New Zealand and it is also well known to be a part of several country’s choicable dairy
brands. Fonterra has been expertise in dairy products in the global and creates local
knowledge in order to support farmers as well as customers. Company has been processing
approximately 20% of Australian milk which has been pooled from dairy farmers. They
offer with good dairy brands which gives a good taste, a very good-quality of dairy nutrition
for the customers.

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Leadership
Leaders in Fonterra play a vital role in taking decisions related to dairy products
production system. They think about how to make use of source as well as production for
supply chain purpose as well as for retail sale that would impact customers. Leadership is an
important part of the company to adapt changes for processing system by implementation of
new regulations, new marketing techniques for more production (Birasnav, 2014).
Planning
Good production planning is done in order to reduce waste materials and for running an
efficient manufacturing practices (Newman et al., 2015). For planning purpose company
uses historical data for forecasting of lead times, for developing a continuous purchase as
well as for bringing improvement in maintenance and cutting of issues. Further it would
help for good operations. For better management of manufacturing process Fonterra uses
planning process to reduce costs and increase profit.
Support
Fonterra does support their local farmers that helps them in production of milk pool. By
supporting farmers company is voicing their own opinion with dollars. Farmers are getting
supported for production sustainability. Several product delivery programs are also
supported. Local farmers especially get the support to enhance the production of the
company. Depending upon the demand and on choosing the future support of farmers
becomes necessity.
Performance evaluation
Proper determination of Fonterra’s need is done through performance management
system. Proper review of job descriptions as well as drafting of the standards related to
performance for the job of manufacturing dairy products is done. Further to bring about

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more improvement in the performance evaluation of performance through performance
appraisal technique is done (Azizi, 2015). Proper training is given to supervisors as well as
mangers for good functioning of Fonterra. Appropriate planning of communication strategy
is used.
Improvement
Continuous improvement is used by Fonterra as a method in order to reduce waste. An
approach is also used for proper analysis, improvements as well as for control in order to
solve process issue or in reduction of dairy product waste or might be the cost by bringing
about efficiency in a production process. Improvement is brought about in operations, quality
as well as in production of dairy products bringing various teams together across the plant.
Identification of one major requirement and areas where improvement can be made
Major requirement of Fonterra is in the form of packaging for its dairy products
manufactured by it. Improved packaging is required by the company that would keep the
dairy products to be contained as clean and to be well displayed. Packaging of materials will
be helping out in expansion of product’s life in shelf and make an attractive package in
designed form that would increase in the sales in future. Recyclable packaging of the dairy
products would retain customers with the sense that Fonterra keeps in mind about issues
related to environment. Further, manufacturing process in the form of strategies as well as
new technologies are required for packaging the product of the company.
Development of sustainability of operation is needed for bringing about efficiency.
Improvement in quality of the dairy products and increase in output is necessary. Change in
regulatory policies of the company is required. Better transparency using supply chain is
needed (Slankovic et al., 2016). Improvement into the maintenance of machineries and
equipment can be made. r Inventory area does also needs further improvement for Fonterra.

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Further, improvement in the form of work efficiency should be made. Moreover
improvement in production process for making growth in business is required.
Development of an action plan for addressing the improvement already identified above
For bringing about improvement in the above mentioned areas for the company an
action plan needs to be developed as follows:
 Bring up with policies related to quality control: For enhancement of quality of
dairy products of this company required systems, tools as well as specific policies
should be implemented. Scanning of product should be done. Temperature as well as
climate control systems can ensure for monitoring further changes.
 Maintenance for prevention: Well maintenance of machineries as well as
equipments are required for bringing about development as well packaging of
company’s dairy products (Arsalankya & Atay, 2015). Fonterra should use this as a
strategy for protection of equipment from failure and make it to be prepared for
downs. For ensure enhanced operations this strategy is required.
 Tracking of inventory: Proper outgoing inventory should be maintained and
quantities of raw materials should be maintained for successful dairy product’s
production for Fonterra. In order to ensure this establishment of appropriate tracking
system of inventory should be used that would further help out in acquiring new
materials.
 Improvements with respect to workflow efficiency: Existing technologies,
processes should be replaced for the company using some modernized specifications.
For this proper identification of improvement areas play vital role. Deployment of
equipment should be used by Fonterra by replacement of manual process and more
efficient technologies should be used for enhanced production.