Case Analysis : Fonterra Co Agent Group Essay

The Ontario Dairy Herd Improvement Corporation, run by general manager John Meek, aims to improve the efficiency and profitability of dairy farming through an accurate, rapid, and cost effective milk testing service. Milk testing is an essential herd management component for all dairy processors as it measures the amount, quality and contents of the dairy products. Supply management agencies limit milk production; thus, profit is maximized through acquiring premiums from quality dairy with high levels of protein and butter fat as opposed to mass production and distribution. The dairy herd is the largest source of revenue for farmers, data from milk testing helps maximize milk production as farmers

The Ontario Dairy Herd Improvement Corporation is a non- profit organization, which provides milk-testing services for Ontario dairy producers. Physical facilities include a head office and computer system located in Guelph, as well as milk testing labs in Kemptville and Woodstock. Ontario DHI’s mission is to maintain an organization that will deliver an accurate, timely and cost-effective milk testing service and promote improvements in the efficiency and profitability of dairy production in the province of Ontario.

1. (TCO 7) Some of the characteristics of lean systems include which of the following?

Dairy farmers should make sure their businesses are in the right shape to seize the opportunities

Waste is a non-value adding activity. 7 types of wastes: Transportation, Inventory, (Excess) Motion, Waiting, Overproduction, Over-Processing, and Defects (TIMWOOD). 8th category: Unused creativity.

The advantages of lean operations are that they cut costs, save time, and are easy to monitor. The disadvantages are difficult implementation.

Dairy Farmers was established in 1900 (Dairy Farmers, 2006a). It is one of Australia’s oldest food and beverage companies. It is presently headquartered in New South Wales (NSW), Australia. It is also the owner of the popular and award winning OAK brand name. According to company reports, it was originally assigned the responsibility of ensuring the freshness and quality of farmers’ produce when they reached city markets and consumers (Dairy Farmers, 2006a). However, it has grown over the years to become a major and dominant player in Australia, with a turnover of over 1.3 Australian dollars. The company obtains its milk from its own cooperative, made up of thousands of dairy farmers. These farmers are shareholders of the company. Dairy farmers also supplies both fresh and processed products the local as well as export markets. The company is reputed for its product excellence, having won a tall list of awards during its existence. In the words of the company it is “committed to using only the best and freshest ingredients, and to providing our customers with

Canada 's dairy sector operates under a supply management system based on planned domestic production, supervised pricing and strict controls on dairy product imports. The system was adopted for industrial milk in the early 1970s to address the unstable prices, uncertain supplies and fluctuating producers and processor revenues which were common in the 1950s and 1960s. By enforcing this system, farmers attempt to strike the most accurate balance between supply and demand of dairy products (Canadian Dairy Commission, 2010).

The dairy business is a major industry in Canada which operates under the supply management system. Whether supply management should be eliminated or not has become a long-term debate in recent years. The system is necessary in making Canada's dairy industry become stronger and more reliable. As supply management is discussed as a whole, identifying the main reasons and effects of keeping supply management will be focused on. Specifically, how supply management effects Canadian dairy farmers, the economy, and consumers .

The company aims at ensuring that they are recognized as a leading company in its industry and rise above the noise in the market that is caused by competition.

Lean accountings primary use is in the manufacturing industry. A lean manufacturing company in which lean accounting is used looks to attack wastes in all forms. This in turn reduces the cost of goods sold. Lean accounting instead uses value stream costing. “Lean accounting experts believe that accounting itself can be lean, which can contribute to profit rather than just calculating it. Cost do not exist to be calculated. Costs exist to be reduced” (Taiichi Ohno).

Lean is defines the manufacturing philosophy that reduces the time between the shipping and customer demand, which based on the systematic method by eliminating waste, that means giving the customer what they want when they want it, and don 't waste whatever. Rahmana, Sharif and Esa (2013) suggested lean production is mentioned to improve the company 's performance from the philosophy in reducing waste in order. That means, lean system destination is the decrease cost by removing the non-value activities, which they are applying a category of tools and techniques for checking and eliminating defective in the production process. In the Evenort Company should emulate the five overriding principles of lean thinking in terms of implementing lean that there is guarantee the company has been driving correctly in the lean manufacturing (Cardiff 2015) as can show in table 1.

Lean principles can help organizations improve profitability through improved cycle times, productivity and quality, by removing waste from work processes and systems. The resulting reduction in waste also leads to reductions in operating costs. But Lean was born in the manufacturing world. So some of the core concepts pertain to assembly-line set-ups and still use that language (work-in-process inventory, flow cells, kanban-based pull systems, etc.).

Fonterra was formed in the October 2001 merger of the New Zealand Dairy Group (NZDG), Kiwi Cooperative Dairies, and the New Zealand Dairy Board (NZDB). It has become the world’s leading exporter of dairy products, responsible for over a third of international dairy trade. The Group is co-operatively owned by over 10,500 dairy farmers whose products make their way to customers in approximately 140 countries. Fonterra aims for global dairy leadership and its purpose is to sell their farmer shareholders’ milk (Fonterra Co-operative Group, 2011).

Disposing of waste cost company a lot of money. The bigger company the bigger bill. Also wasted electricity cost a lot of money. We produce too much waste and we need to reduce this and recycle whatever we can. And let's not forget about environment. Much of our waste ends up in landfill sites. As the waste breaks down, it gives off carbon emissions, which is bad for the environment. By reducing waste, a business can reduce its carbon footprint, which will help to decrease the negative impact that the business has on the environment.