BUS20003: Operations Management Report - Fonterra Analysis

This report provides an in-depth analysis of Fonterra Limited's operations management, focusing on the company's dairy product line. The report begins with an executive summary and an introduction to Fonterra, a major player in the Australian dairy industry. A literature review explores the importance of quality management, examining concepts such as quality planning, quality assurance, and continual improvement. The report then details Fonterra's quality management strategies, including the application of the House of Quality (HoQ) to analyze customer requirements and product capabilities. The report further investigates process and layout strategies, emphasizing their impact on product quality and customer satisfaction. The report also includes suggestions for improvements in product strategies and concludes with a discussion of key findings and recommendations for Fonterra's operational excellence.

Operations 1
Operations Management

Operations 2
Executive Summary
This report is related to the operations management of the Fonterra Limited Company, which
based on dairy products. Fonterra Limited is a company that makes dairy products in the
Australian environment. The company exports process is more than 30 % of the overall area of
dairy products. The report includes the proper description of the company and its products. The
literature review of quality management is discussed in this report. The process of quality
management is included in this report, which relates to organizational products. The several
strategies of quality management include in the report. House of quality is a formula to manage
the quality of the products in the organization, which describes in this report. The several layout
strategies include in this report, which relates to the process of the company.

Operations 3
Contents
Introduction......................................................................................................................................4
Part A...............................................................................................................................................5
Literature Review........................................................................................................................5
QM Strategies of company..........................................................................................................7
House of Quality..........................................................................................................................9
Part B.............................................................................................................................................10
Literature Review......................................................................................................................10
Process and layout strategies of the company...........................................................................12
Theoretical Layout.....................................................................................................................13
Suggested Improvements...............................................................................................................14
Suggestions for the improvement of product.............................................................................14
Discussion and Conclusions..........................................................................................................15
References......................................................................................................................................16

Operations 4
Introduction
This report includes several quality management strategies need to adopt by a particular
company. The company selected for this process is Fonterra Limited working in dairy products.
This company is a multi-national co-operative company owned by 10,500 farmers. The company
itself makes the overall 30% of the world dairy products. The revenue of the company is
increasing continuously and reached $17.2 billion. This company is the largest in New Zealand.
This company is established in the year 2001 by the mergers of the two dairy companies that are
New Zealand Dairy Group and Kiwi Cooperate Diaries. The company is increased its profit day
by day by maintaining the product quality at a particular level. The quality management of the
company increases its revenue and maintains its position in the country. This report includes
several strategies related to quality management. The product selected for discussion is butter
that is largely manufactured by the Fonterra Limited. This product is selected due to the
discussion of quality management, as the quality is mainly matters in the butter made by the
company. The report discusses the various strategies related to quality management in the
organization. The house of quality is one of the processes that manage the overall quality process
of the company (Gerasimiv and Gerasimov, 2015). The QM strategies maintain the overall
process of the organization that is briefly described in this report. The several processes and
layout strategies related to the product and company discussed in this report. The strategies
consider the several designs of the products. These layout strategies help to understand the
proper layout of the products. The various suggestions for improvement in the strategies
discussed in the report. The several discussion related to the particular topic includes in this
report. The product strategy improvement is also described in the report, which helps to
determine several processes of the company. The quality matters a lot in any product or company
that is all responsible for the better profitability in the market.

Operations 5
Part A
Literature Review
According to the Fonseca, (2015), quality management is one of the main perspectives that is
used by the company to maintain the quality in the products. The process of quality management
decides that the product and service are consistent. The quality management has many
components that include quality planning, quality assurance and quality improvement. The
product quality matters a lot in the overall process of the organization and used to attract the
customers in the specific company. The achieving of quality perspectives is also important in the
process of product quality. The quality is much more related to the customers as this overall
effect on the customers. The quality management is very important for the overall organization
and it increases the better productivity and profitability of the business.
As per the Itegi, (2015), the quality of the products can be managed by the use of a quality
management system. This system uses several processes like document process, procedures and
proper responsibility to achieve the quality policies and objectives. This system improves
effectiveness and efficiency as per the particular product. The process of the quality management
defines several purposes which are it improves the overall process, decreasing waste, recognize
the several opportunities related to the training, lower the costs, properly set the organization and
engaging the staff.
According to the Rigby and Bilodeau, (2011), the quality management process is very essential
for every organization as it related with the proper quality of the products and it also includes the
innovation in the company process. This system gives various benefits to the organization like it
satisfy the requirements of the customers, maintain the profitability of the organization, maintain
the reputation in the business market and increase the customers of the organizational products.
The quality matters a lot in the products related to eating as if it matters in the dairy products.
Customer satisfaction matters a lot in the process of quality management. There are various
principles related to the quality management, which includes relationship management, the focus
of the customers, engagement of people, process approach, improvement and the process of
decision-making.

Operations 6
As per the views of Hoyle, (2017), quality management includes several activities and tasks in
the organization to maintain the products and services which offered and able to achieve the
quality of the products. The desired level of quality is achieved with the help of quality
management. The main key components of the quality management are quality planning that
includes the proper planning of quality management, improvement of quality to get a better
outcome and many more.
According to the Stark, (2015), the innovation is implemented in the quality management and it
increases the quality process in a proper way. The quality is used to manage innovation in the
organization. The innovative products attract more customer towards the organization and it
increases more profitability. The quality assurance includes the planned activities that can
achieve the quality in the organization.

Operations 7
QM Strategies of company
The Fonterra limited need to maintain the quality in their dairy products especially in the butter
as it is the highest-selling product of the company. The company uses the strategies used in
quality management to maintain the better quality of the products. Quality management gives
several benefits to the process and maintains the stakeholder requirements in the organization
(Rosemann and Vom Brocke, 2015). The Quality management strategies used by the company
are:
 Quality planning
This strategy is very important for the organization as this include the preparation of the
quality management plan the defines the several processes used in the business process.
This planning can make a better quality of the products as the stakeholder interests are
already determined (Fening, 2012). This makes the company famous among the customer
as they satisfied all the requirements of the customer. The Fonterra limited manages the
quality plan and determine the needs of the business.
 Quality assurance
This is the second most important strategy used by the company to manage the quality of
the products (Alic, 2014).This strategy used to maintain confidence in the managers to
host the organizations and maintain the projects.
 Quality control
In the strategy of quality control, the various inspections are included related to the
quality measures and make the proper specification regarding quality.
 Continual Improvement
This strategy is very important as in this process, Fonterra Limited, to provide
information regarding quality assurance and quality control. This improves the overall
efficiency of the organization relates to quality. This increases the continuous
improvement in product quality.

Operations 8
House of Quality
This technique used by the Fonterra organization to manage the quality of the product like butter
and increases the sales of the specific product. House of Quality is a diagram that includes the
house that is required for understanding the relationship between customer desires and product
capabilities. This process included in the process of Quality function deployment and helps in
achieving all the requirements (Simcoe and Waguespack, 2011). There are several steps included
in the house of quality which is described below-

Operations 9
Step 1: Requirements of Customer
This step includes the voice of the customers. This step is of two types one is primary customer
requirements and secondary customer requirements (Zaim, et al., 2014). The primary includes
aesthetics and performance. The secondary requirements include low cost, safe and corrosion
Resistance.
Step 2: Technical Descriptors
This step includes the voice of the engineers. The way of design a product, that satisfies the
needs of the customer (Zaim, et al., 2014). The technical requirements are weight, power, cost of
production and life expectancy.
Step 3: Relationship Matrix
This shows the proper relationship between the technical descriptors and the requirements of the
customer. This makes the proper relations among the matrix attributes.
Step 4: Correlation Matrix
Relation with the technical descriptors with each other. The correlation matrix described as the
last room used by the House of Quality (Latham, 2014.) This room provides proper help t with
the engineers.
Step 5: Competitive Assessment
This step is used to analyze the competition regarding the house of quality and it also manages
the competition strategies.

Operations 10

Operations 11
Part B
Literature Review
Process and Layout Strategies
As per the views of the Gharkhani and Islami, (2012), process strategies and layout strategies are
included as an important factor in the process of quality management. These strategies maintain
the design of the product and the process of maintaining product quality. The Process strategy is
the process of the decisions used in the management process of the organization. This helps in
attaining the competitive aspects. The process that helps the company to achieve the proper value
regarding the products. The process strategies need to maintain the quality of the products.
Layout strategies are related to the design of the products so that they satisfy the customer
requirements properly.
According to the Dai and Balckhurst, (2012), the layout strategy also matters in the process of
the quality management as the layout also affects the quality of the product as it largely attracts
the customers. It is important to maintain a cost-effective layout that fulfils the needs of the
customers and manage the competition in the market. This strategy is used to improve the
employee morale and satisfaction of customers. The layout includes the design of the product
like proper space, size, arrangement and privacy. In quality perspectives, the layout of the
product is also matters.
As per the views of the Agus and Shukri Hajjnoor, (2012), the process and layout strategies play
a significant role in the quality management as these strategies maintain the process and design
of the product that is used to attract the customers of the organization. The organization need to
maintain the quality of the products which is achieved by managing the process and layout
strategies.
According to the Rubmann, et al., (2015), the layout and process, the strategy includes in the
operations management. All the operations need to be managed in the organization and it is
achieved by using the process and layout strategies in the proper manner. These two strategies

Operations 12
are also included in the operations strategy as it includes in the management of operations. The
layout strategy is included in the manufacturing process that helps to manage the design of the
product that is used to attract a large number of customers. The process strategy is also included
in the management of operations and helps the organization to manage all the operations of the
organization and increasing the sales of the organization.
As per the views of the (Reid and Sanders, 2015), the process and layout strategy management
gives several advantages to the organizations and increasing the sales of the organization. The
use of these strategies provides flexibility to the products and management of the business. The
other main advantages of these strategies make the lower investment and no stop of the
production. This also increases the scope of expanding the business. These advantages help the
business in managing the layout and process of the product. This process helps in the proper
management of quality-related with the products. This maintains the proper attraction of the
customers and increasing the sales of the organization.