Answer To: ©Aspire2 International – DBN509 Assessment 1 Part B – XXXXXXXXXXPage 1 of 6 NEW ZEALAND DIPLOMA IN...
Soumi answered on Feb 25 2021
Running Head: OPERATIONS MANAGEMENT 1
OPERATIONS MANAGEMENT 2
NEW ZEALAND DIPLOMA IN BUSINESS (LEVEL 5)
OPERTIONS MANAGEMENT
DBN509
ASSIGNMENT 1: PART A
CASE STUDY — FONTERRA – RISING UP TO THE SUSTAINABILITY CHALLENGE
Table of Contents
1. Introduction 3
History and Type of Ownership 3
Financials 3
Vision and Core Values 3
Prominent Brands 4
Key Markets 4
2. Sustainability Challenge 4
a) Five Driving Challenges faced related to Quality and Performance 4
b) Two Quality Management Systems adopted by Fonterra and Challenges during Implementation of Systems 5
c) Four Ways to Overcome Challenges 6
3. Continuous Improvement 7
a) Five Initiatives taken by Fonterra to Improve Dairy Operations 7
b) Five Tools to be used for Continuous Improvement 9
4. Conclusion 11
5. References 12
1. Introduction
History and Type of Ownership
Fonterra is a dairy co-operative in New Zealand, which is owned by 10,000 farmer shareholders. The farmers of New Zealand are closely connected to the rural communities and the natural environment. It is a multinational company, which was established in 2001 after the merger of two largest dairy companies of New Zealand — New Zealand Dairy Group and the Kiwi Cooperative Dairies. The name Fonterra actually mean spring in Latin. The merger of the two companies was initially rejected by New Zealand Commerce Commission, but was later approved by the New Zealand Government. The company has been expanding at a rapid pace since its formation. The company accounts for 30% of the world’s export approximately.
Financials
During the year ended 2018, the revenue from sales of goods of Fonterra was $20438 million, which was 6.27% higher than 2017. The gross profit for the same year was 15.45%. The company has shown a book loss of $196 million during the year ended 2018. Total non-current assets of the company is valued at $12050 million for the year ended 2018. Total non-current liabilities for the year ended 2018 was $6533 million (Fonterra, 2018).
Vision and Core Values
The vision of the company is to become the worlds most trusted source of dairy nutrition and making a difference in the lives of two billion people by the year 2025. The company aims to lead the industry in terms of both quality and quantity if production.
The core values of Fonterra include co-operative spirit, doing what is right, challenging the boundaries and making it happen. These values have enabled the company to be among the top producer of dairy products across the globe (Fonterra, 2018).
Prominent Brands
The most prominent brands of Fonterra include Anchor, Anlene, Farm Source, NZMP and Annum. These are the most prominent brand for dairy products across the globe. Customer in New Zealand as well as outside New Zealand loves the products of these brands.
Key Markets
Fonterra is the world’s largest dairy product producer across the globe. The key markets of the company are Australia, Brazil, Chile, China, Indonesia, Malaysia and Sri Lanka. The company is the market leader in New Zealand as well as in countries, in which it operates.
2. Sustainability Challenge
a) Five Driving Challenges faced related to Quality and Performance
According to the views of Malik, Knapman, Mann and Director (2018), Fonterra faced a number of challenges related to maintaining the quality of products and its operational performance. Five driving challenges related to quality and performances were:
Feeding the growing population:
As the size of the population would increase, the demand would also increase. This will require production on a large scale to meet the increasing demands. Maintaining prime quality for small quantum of production is easy but when the same is to be done on a large scale, it becomes difficult.
Access to nutrition:
Many people across the globe do not have access the proper nutrition. It may be due to locational disadvantage or low purchasing power. Maintaining the quality in such a scenario is a challenge for the organisation. As per the opinion of Stojkov, Nov and Saglam (2016), if the purchasing power is low, the individuals will not be able to procure quality products. It the price of products is decreased, quality may be an issue. Therefore, the same is a challenge for the organisation to ensure access to nutrition for all.
Water scarcity and quality:
In the modern times, the quality of water has gone down at a rapid pace. In addition to that, there is shortage of pure water. Therefore, maintaining the quality of the products with such a shortage and low quality water is a challenge for the organisation. According to the perspective of Nilsson and Rydberg (2015), if the scale of operation is increased, the requirement for such water will also increase, which may not be procured.
Limiting and adapting to climatic change:
The increasing emissions form agriculture is a major issue for the humankind. The increased variability in weather patterns affects the quality of inputs, which directly affects the quality of the product. When operating at such a large scale, frequent changes in weather condition s affect the production schedule of a production firm.
Threatened biodiversity:
There is a lack of agricultural land to meet the growing demand for food. On the other hand, expansion plan requires land for production purpose. Therefore, lack of land may have an impact on the production facility of the firm. This may have a negative impact on the quality of output of the firm.
b) Two Quality Management Systems adopted by Fonterra and Challenges during Implementation of Systems
Two quality management systems adopted by Fonterra to deal with the sustainability challenges are:
Improving the health...