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DBN509 Operations Management: Assessment 1 Part A Answer

NEW ZEALAND DIPLOMA IN BUSINESS (LEVEL 5)

Course Title: Operations Management

Course: DBN509

Title: Assessment 1: Part A

Level 5

Read the following case study and answer all questions. You are encouraged to do additional research on the relevant topics.

Case Study Fonterra – Rising up to the Sustainability challenge Introduction Fonterra is a $19.2 bn (Figure 1) dairy co-operative owned by 10,000 farmer shareholders in New Zealand. Pasture-fed dairying has a long history in New Zealand with our farmers closely connected to the natural environment and their rural communities. As New Zealand’s largest business, and the world’s largest processor and exporter of dairy products, our high-quality dairy ingredients and branded dairy products are consumed in over 100 countries around the globe. Fonterra’s farmers are at the forefront of sustainable farming (for example, low greenhouse gas emissions per litre of milk collected) but that is not enough for ourselves or our New Zealand stakeholders. New Zealanders value their natural environment highly and they expect Fonterra and our farmer shareholders to continue to strive towards the highest standards of sustainability. Fonterra aims to be a true global leader in sustainable dairy nutrition and this will require them to produce high-quality dairy nutrition within an environment that meets the expectations of New Zealand communities

The Sustainability Challenge Food is at the centre of many sustainability challenges facing the world. There is growing concern regarding global food security and nutrition with malnutrition impacting people in many ways. The global transformation required to meet these challenges will shape the future of food production. 

1. Feeding a growing population By 2050 the world’s population is projected to increase to 9.7 billion. This is expected to drive a 50 per cent increase in the demand for food.

2. Access to nutrition Many people don’t have access to adequate nutrition. Around 792 million people are undernourished around the world. 

3. Water quality and scarcity Intensification of agriculture has contributed to declining water quality around the world, caused by run-off of nutrients. By 2030 it is projected that 40 per cent of water demand in the world won’t be met. 

4. Limiting and adapting to climate change The world’s food production systems must address emissions from agriculture. It is also likely that agricultural production will face significant disruption from changes to climates and increased variability in weather patterns. 

5. Threatened biodiversity Even with today’s agricultural practices, there is not enough additional agricultural land to meet the growing demand for food. Around the world the variety of plants, animals and micro-organisms, and the ecosystems they form, has decreased. 

6. A public health crisis The leading cause of death in most countries today is poor diets and lifestyles. About 1.9 billion adults are overweight or obese. New Zealand has the third highest prevalence rate of obesity in the OECD countries. 

7. Improvements in global land productivity have slowed down.

Over the past century innovation has significantly increased productivity per hectare of land. However, these gains are slowing. Productivity growth per hectare is now less than one per cent each year.

Fonterra’s Sustainable Approach Like all major transformations, change cannot occur without clear objectives, pathways to achieve them and a collective intention to implement what is needed. Clear objectives have been set through the United Nations’ 17 Sustainable Development Goals (SDGs) adopted by member countries in 2015. These were strengthened last year with 169 targets set across the five P’s – People, Planet, Prosperity, Peace and Partnership. Fonterra recognising the strong need for business-led action support the SDGs and are committed to playing their part in achieving them by working collaboratively to deliver change at scale.

A sustainable future for the Co-operative is part of our Fonterra’s strategy – it’s how we create long-term value for future generations. To summarise Fonterra has organised their priorities into three main pillars: 

1. Nutrition – improving health and wellbeing through the products and services we deliver We have challenged ourselves in providing healthy and responsible products. We will: • Address public health challenges by improving the nutritional profile of our products and promoting healthy diets • Improve access to adequate nutrition by developing affordable products tailored to specific nutritional needs of communities • Improve the wellbeing of individuals by leading innovation in advanced dairy nutritional products to address specific health needs. 

2. Environment – achieving a healthy environment for farming and society Globally, food production systems are facing a transformational challenge to meet the demands of a growing population within environmental limits. Dairy is a rich source of many vital nutrients which will be relevant as the world shifts to more efficiently produced diets. However, the dairy industry also needs to find more efficiency in the way it operates and reduce its impact on the environment. New Zealand farmers lead the world in many aspects of sustainable dairying, with high productivity, year-round pasture grazing and lower use of supplementary feeds. However, the scale of the industry in New Zealand means that our environmental footprint is of national significance. For example, around a quarter of New Zealand’s greenhouse gas emissions are from dairy farming. Our challenge is on improving our productivity and protecting the environment. We will: • Improve the health and biodiversity of our land and waters by reducing the impacts of farming and manufacturing and working in partnership with others • Lead the transition to a low-carbon future by investing in innovation and infrastructure to remove greenhouse gas emissions from our supply chain • Meet the growing nutritional demand through improvements in productivity and minimising waste from farm to consumer. 

3. Community – delivering prosperity for our farmers and wider communities. The production of milk and dairy products touches the lives of up to a billion people, from family-run farms to international businesses. The dairy industry makes a significant contribution to regional New Zealand and to the national economy. In New Zealand and around the world our industry plays an important role in supporting rural livelihoods and community development.

In developing countries, dairy cows provide a daily source of food and cash, unlike other crops or meat. Cows also generate manure, which is valuable as a fertiliser, fuel and construction material, offering other sources of income. Farm animals are also a popular asset among rural women, and often provide the first stepping-stone for rural women to start creating a better place for themselves in their communities. Our challenge is to improve the long-term wellbeing of our farmers and communities. We will:

Support healthy sustainable livelihoods for our farmers by returning the most value from every drop of milk by driving volume to higher value • Provide positive livelihoods for our people by developing a diverse, skilled and agile workforce and promoting a healthy and safe working environment • Invest in the future of our communities by sharing what we do best and building farming capability in key emerging dairy markets.

Sustainable Dairy Farming 

The natural nutritional value of milk and the ability to produce high quality, safe products starts on the farm. This means caring for the environment, and caring for the health and wellbeing of dairy cows. We have a long-standing sustainable dairying programme, which took a world-leading position in 2004 when it introduced independent assessments for every farm each year. In 2017, we launched the Tiaki Sustainable Dairying Programme. Tiaki means to look after, to guard, to care for, keep and nurture. To accompany the name, we have crafted a whakataukī (proverb): ‘Tiakina te whenua i tēnei rā, kia whai oranga tangata mō ngā rā e heke mai nei’. It means ‘Caring for the land today, so that the land cares for us tomorrow.’ This gets to the heart of what we are striving to do when it comes to our land and natural resources. Global Positioning System (GPS) mapping technology is used to map the land used for dairy farming. Another example of new technology is Agrigate, an online tool jointly developed by Farm Source, Fonterra’s farmer-facing business unit, and the New Zealand Livestock Improvement Corporation. This tool aggregates data from across a farmer’s business into a single view, providing an online dashboard to enable smarter and faster decisions. The dashboard provides insights into the interactions between different aspects of the farming system, including weather conditions, animal health, milk production, pasture cover, fertiliser use and financials

Sustainable Operations 

Sustainable operations means taking care to preserve every drop of natural goodness from the milk we collect. It means operating efficiently, minimising our manufacturing sites’ energy use and emissions and investing in new technologies and equipment to meet our long-term climate change ambitions. The majority of our manufacturing activity is in New Zealand and Australia, representing more than 95 per cent of our processing by raw milk supply

International Certifications

Our manufacturing sites are subject to regular internal and third party audits. We are a member of Sedex. Regular independent audits of site performance against the Sedex Member Ethical Trade Audit (SMETA) standard for labour practices, environment, health and safety, and business practices are used to demonstrate our performance to our customers. Other third-party audits are part of independent certification of site Environmental Management Systems (EMS) to international standards, such as ISO14001. We recognise that independent environmental certification is not in place at all of our sites. This is particularly true outside New Zealand and Australia. We are working towards achieving certification to ISO14001:2015 or equivalent across our global manufacturing footprint. As of the end of FY17, more than 60 per cent of our sites had achieved such certification. 

Energy and Emissions 

Our existing efficiency-based targets committed us to reductions in Green House Gases (GHGs) emissions for each unit of production. For our global manufacturing and milk collection operations our target is an absolute emissions reduction of 30 per cent by 2030 against a FY15 baseline, and net zero by 2050 by transitioning to cleaner sources of energy. 

Waste Management 

Raw milk from our supplying farmers is our largest input material. To maximise the nutritional value we deliver to our customers and consumers, we focus on minimising food loss across our supply chain. This also helps us deliver the maximum return to our supplying farmers and minimise our impact on the environment. In our manufacturing operations our food safety and quality standards aim to deliver products right-first-time and our processing steps seek to capture by-products that were previously considered waste, such as whey, and make them into new valuable products. 

CASE STUDY Lichfield: Investing in new technologies 

The new 30 tonne-an hour dryer is fuelled by natural gas. It is Fonterra’s most efficient milk dryer to date. The dryer is capable of processing 4.4 million litres of milk each day, making it the largest milk powder dryer in the world alongside the dryer at Fonterra’s site at Darfield in Canterbury, New Zealand. The site expansion also included investment in a new biological wastewater treatment plant. This uses natural processes to reduce the nutrient levels in wastewater. This brings the site up to the leading industry standards we have committed to bringing all sites in line with by 2026. 

 Sustainable Packaging 

Packaging is a vital element of delivering safe and quality nutrition to our customers and consumers. The primary job of our packaging is to protect the nutritional value of the natural and perishable product contained within. The sustainability of our source materials is another consideration. We seek to use renewably sourced input materials such as fiber from sustainable forests. Our Fonterra Milk for Schools milk uses a 200ml Tetra Pak package, manufactured from sources certified by the Forestry Stewardship Council (FSC). As a result of food safety impacts, we have found there are limited opportunities to use recycled materials in our product packaging but it is an area we continue to consider carefully. 

Cases of Environmental non-compliance 

Over the past three years our most significant fine was in 2015 for $192,000 related to the discharge of buttermilk in a South Taranaki treatment pond. In 2015 we were also fined $174,150 for discharging wastewater from our Edgecumbe plant into Bay of Plenty waterways. The Bay of Plenty Regional Council prosecuted Fonterra over four failures of our whey irrigation system and two overflows of wastewater in September 2014 and April 2015. 

Food Safety and Quality '

Our Food Safety and Quality System ensures that, wherever we are located in the world, we have a clear, consistent framework to deliver safe, quality products and services. Our Food Safety and Quality System is subject to regular scrutiny from third-party audits by regulators, key account customers and certification bodies. We are working towards a target of having all our global manufacturing facilities independently certified to the benchmark quality standards by 2019. Through our active participation in organisations such as the International Dairy Federation (IDF) and International Organization for Standardization (ISO), we continue to contribute to the international harmonisation of standards and guidelines and help develop international test methods for milk and milk products.

Employee engagement and Human Rights

Employee engagement is a measure of Fonterra’s performance as an organisation and as an employer. An engaged workforce is central to our success and effectiveness. We measure our engagement performance through Fonterra’s employee ‘MySay’ survey. We also measure our performance using the McKinsey organisational health improvement (OHI) system. Historically, our approach to human rights has prioritised the rights and protections of our employees around the world. In 2014 we adopted ISO26000. This guidance standard for a socially responsible organisation has widened our focus, providing an emphasis on due diligence to consider our broader impacts on human rights. We are applying the United Nations Guiding Principles on Business and Human Rights. 

Health, Safety and Wellbeing 

The Fonterra Group Health and Safety Policy sets out our global requirements for responsible operation in relation to employee safety. Our Safe Home System standards are aligned as a minimum with AS/NZS 4801:2001 (Occupational Health and Safety Management Systems). Accountability for sustainability rests with the Fonterra Board, our CEO, and the Fonterra Management Team (FMT). Regular performance updates are provided at this governance level. Accountability for individual elements of sustainability performance cascades through the organisation and is integrated into individuals’ Key Performance Indicators (KPIs) where relevant. 

Conclusion 

Strong healthy local environments and communities are the foundation for sustainable, profitable dairy farming. That’s why, what we call the “Sustainable Co-operative” is one of our three strategic priorities – alongside Strong V3 (Volume, Value and Velocity) and Innovative Co-operative. Our Sustainable Co-operative commitment is to support our farmers by investing significantly in the development of new technology and solutions for water quality and on-farm emissions – without impacting production. We are also committed to reducing the environmental footprint of our processing operations and transitioning to renewable energy as options become viable. (Source: Adapted from Sustainability Report, 2017 of Fonterra Co-operative Group Limited, New Zealand)

Instructions:  This is a question/answer format assignment, you are required to read and make sure that you understand the question before you start answering.  You will need to do additional research to do justice to your assignment.  In this assignment you should use 2500 to 3000 wordsto answer all the questions(excluding preliminary pages and references).

1. Introduction

Provide a brief background of Fonterra. Include the key points or information about the organisation below:  History and Type of Ownership (2 marks)  Financials (2 marks)  Vision and Mission (2 marks)  Products/services (2 marks)  Core Values (2 marks)

2. Sustainability Challenge

a) Research and discuss at least five challenges faced by Fonterra related to quality and performance that led them to adopt sustainability in their operations.  (5 challenges x 1 marks each =5 marks) b) Briefly explain any two Quality Management Systems (such as ISO 9001) adopted by Fonterra. Identify and discuss the issues and challenges Fonterra may face during implementation of each of the Quality Management Systems. (2 marks for brief explanation and 2 systems issues and challenges x 5 marks each =12 marks total) c) Analyse and discuss at least four ways in which sustainability initiatives taken by Fonterra will help them to overcome issues and challenges discussed in Q 2 (a) and (b.

3.Continuous Improvement

a) Identify and explain at least five initiatives taken by Fonterra to continuously improve their dairy operations.  (5 initiatives x 2 mark each = 10 marks) b) Recommend the use of any five of the following tools of continuous improvement and discuss the methods and techniques used to apply these tools to Fonterra.  Kaizen  Kanban  Just In Time  PDCA Cycle  Value Stream Mapping  5S Analysis  5 Whys  Any other tools. 4. Conclusion

Summarise your essay and identify the 3 most important points or 3 key ideas.  Concise summary with at least THREE points or ideas identified

References

a) Include in-text citations of data or ideas in your paper, and at least 3 academic sources, with correct APA 6 citation format.  Complete in-text citation (2.5 marks)  Correct APA references from academic sources  (2.5 marks)

Answer

DBN509 Assessment 1 Part A – 2018

Reference Style: APA

Word Count: 2500

1. Introduction 

Fonterra is a co-operative dairy firm, involving around 10,000 farmer shareholders in New Zealand. The company was founded on 16th October 2001, following the merger of kiwi Cooperative Dairies and New Zealand Dairy Group with the New Zealand Dairy Board. It is the largest company in New Zealand that accounts for around 30% of the total dairy products export in the world. The total revenue collected by the company in 2016-17 is around NZ$19.232. The total operating income and net income of the company in FY 2016-17 was around NZ$$1.120 billion and NZ$$0.745 billion. As of 2017, Fonterra has a total asset worth NZ$17.842 billion (Fonterra.com, 2019).

The company has the vision to share its dairy products with the world. Fonterra wants its customers to use nutritious dairy products of the company. By attracting people towards their products, Fonterra can achieve its vision of being a natural source of daily nutrition for every person.  Although it is a bold objective for a business, it can be achieved with continuous product improvement. The mission statement of the company says that Fonterra is dedicated to maintaining key criteria required for being in the leading place in the global dairy industry. Fonterra’s mission also suggests effectively providing advanced client service (Fonterra.com, 2019).

Fonterra manufactures dairy products, including butter, yogurt, cheese, milk and milk powder, which are full of nutrition. The company manufactures, distributes and markets their consumer products, including branded dairy products, which are sold to customers directly.   Some of the well-known brands of the company include Anmum, NZMP, Anlene, and Farm Source, all of which are made using trusted processes and the best quality natural dairy. Three global brands of Fonterra include Anchor, Anlene and Anmum. 

Every individual associated with Fonterra is shaped by diverse professional, cultural and personal experiences. The shared values of Fonterra’s employees certainly enable them to combine their personal strengths with others to make the company successful, stronger, and better. The values are most important to the company as it operates in many countries and multicultural settings. 

2. Sustainability Challenge 

a) Five challenges faced by Fonterra

Five quality and performance related challenges encountered by Fonterra include water quality and scarcity, access to nutrition, limiting and adapting climate change, threatened biodiversity, and slowing down of improved global land productivity. It has been reported that around 792 million people around the world are undernourished. Another major concern for the company is that intensified agriculture has resulted in declining water quality around the world, contributing to reduced nutrients from the food items. The agriculture production contributes to emission of air polluting gas, causing climate change (Ross, 2017). Due to the changes to climate and increased variability in weather patterns, the food production system around the world has been largely affected, resulting in low productivity in food manufacturing companies. Growing demand for food around the world has been another significant concern for food manufacturing companies, including Fonterra, as the companies encounter difficulties to increase the production of food due to lack of access to the agricultural land. Over the decades, innovation has made significant contributions to the increasing productivity of food. However, in recent years, the production of food based on innovation has slowed down to a great extent, which has resulted in people unfulfilled demands for food around the world.  In order to overcome these challenges related to business performance and food quality, Fonterra has adopted sustainability in their various operations. 

b) Explanation of two Quality Management Systems

Fonterra has adopted different quality management system to maintain a standard quality bar in products and services. The approach of the company towards human rights has prioritized protections and rights of Fonterra’s employees around the world. In 2014, the company adopted ISO26000, which provides a standard guideline to become socially responsible (Papp, 2018). The implementation of this quality management system indeed has facilitated the company to widen its activities to protect human rights. With the application of ISO 26000 facilitates Fonterra to act transparently and ethically, making huge contributions to the health and welfare of the society. Some of the core subjects surrounding ISO 26000 include organizational governance, human rights, labor practices, the environment, fair operating practices, consumer issues, and community development and involvement. When implementing ISO 26000 in the organization, the management of Fonterra encountered a number of challenges. For example, due to the implementation of this standard, the organization has increased its budget in functions surrounding social responsibilities. The leaders and managers were given additional training to gain their understanding of the standard and its role in protecting human rights effectively. Before the implementation of ISO 26000, Fonterra used to involve them in various social activities. However, the organization has started using a process-approach post implementation of this quality standard, which demands appropriate planning and schedule. Therefore, it can be assessed that the implementation of ISO 26000 has helped Fonterra to maintain human rights and social responsibility in an effective manner.  

Another quality management standard that Fonterra has been trying to achieve is ISO 14001:2015, which specifies the requirements for an environmental management system that an organization can implement in order to bring improvement in its environmental performance (Noe et al., 2017). ISO 14001:2015 is used by organizations to successfully manage its responsibility towards protecting the environment, contributing to the environment support of sustainability. One of the main reasons why Fonterra has focused on implementing ISO 14001:2015 is that it contributes to the organizational achievement of an environmental management system, providing value for the environment. It can be assessed that the possible outcomes of this environmental management system that Fonterra could achieve post-implementation include improvement of environmental performance, attainment of environmental goals and objectives and accomplishment of compliance responsibility. One of the major challenges of implementing ISO 14001:2015 is that visible leadership, as well as support from the higher management, is critical in the revised standard (Siva et al., 2016). Representatives from the top management of Fonterra must possess adequate knowledge of modified areas in ISO 14001:2015 in order to ensure that it follows all the major obligations mentioned in the guideline of the standard. Another significant challenge that Fonterra might encounter when implementing ISO 14001:2015 is the determination of risks and opportunities surrounding this standard. Hence, it can be assessed that the implementation of ISO 14001:2015 could bring some challenges for the leaders and top management of Fonterra. 

c) Four ways in which sustainability initiatives taken by Fonterra 

In order to resolve the issues regarding lack of access to nutritious foods, the management of Fonterra has focused on developing affordable products modified according to specific nutritional needs of people in the community (Nanda, 2016). The improvement of the wellbeing of individuals is also carried out through the innovative approach in producing advanced dairy products. The management has also focused on addressing various public health-related challenges by enhancing the nutritional product profile. 

Fonterra has also taken a number of steps towards improving productivity and protecting the environment to a great extent. The company has improved the biodiversity and health of land and water through the reduction of effects of manufacturing and farming. Fonterra has also emphasized on investigating in infrastructure and innovation to eliminate greenhouse gas emission from the supply chain. 

In order to produce high quality and safe products, Fonterra has implemented a sustainable dairying programme. In 2017, Fonterra launched Tiaki sustainable dairying programme, aimed at caring for the land. With the implementation of this sustainable programme, Fonterra has been able to care for the environment, and health and wellbeing of dairy cows. 

The existing efficiency-based operation focuses on reducing the emission of Green House Gases from each unit of production. Fonterra has set a target of reducing the emission of greenhouse gases by 30% by 2030 from their milk collection and global manufacturing operations. The company has also aimed at reducing the emission rate to 0% by 2050 through the transition of cleaner sources of energy (Fonterra.com, 2019). Hence, it can be assessed that the organization has taken several sustainable initiatives to overcome diverse challenges. 

3. Continuous Improvement 

a) Five initiatives taken by Fonterra to improve dairy operations 

Initiative 1: Fonterra has taken several initiatives to bring improvement to their dairy operations. Recently, the company has started using a new technology called Aggregate, which is an online tool developed by Fonterra’s farmer-facing business unit named Farm Source, and New Zealand Livestock Improvement Corporation. The main reason to use this tool is to aggregate data from farmer’s business, which provides an online dashboard, allowing the company to take faster and smarter decisions (O’Neill, Sohal & Teng, 2016). This particular dashboard allows Fonterra to identify diverse aspects of the farming system, such as animal health, weather conditions, milk production, fertilizer, and financials. Consequently, it makes significant contributions to dairy production. 

Initiative 2: Another sustainable approach taken by the company to improve dairy production is the use of sustainable dairy farming, as mentioned earlier, Fonterra has implemented Tiaki Sustainable Dairying Programme to guard land and to care for dairy cows, which in turn has made a significant impact on the dairy production. Without caring for land and dairy cows, it is not possible for Fonterra to make continuous improvement to dairy production. 

Initiative 3: In order to maintain the natural goodness of milk, Fonterra uses sustainable operations, where the manufacturing sites’ energy usage is reduced using advanced technologies. Moreover, the use of new technologies also makes a large contribution to deal with climate change issues that affect the dairy production process to a great extent. 

Initiative 4Waste management is an integral part of the dairy production process (Aquilani et al., 2017). In order to maximize the nutritional value of the products, Fonterra has focused on reducing food loss across its supply chain. The particular process facilitates the company to ensure that farmers supplying raw materials get maximum return, which can be used further to increase dairy production to a large extent. It also plays a major role in minimizing the impact on the environment. 

Initiative 5Food safety and quality standards implemented in the organization have been playing a significant role to enhance dairy production largely. In the manufacturing operations, food safety and quality standards focus on delivering products right-first-time. The implementation of quality standards largely facilitates the company in delivering the best quality dairy products to the customers (Nilsson, Griggs & Visbeck, 2016). Therefore, it can be assessed that these five initiatives have been playing a significant role in enhancing the dairy production process at Fonterra. 

b) Five continuous improvement tools 

KaizenThis tool is very easy to implement as the key ideas are derived from workers, who are less likely to be thoroughly dissimilar (Hák, Janoušková & Moldan, 2016). It is important for the management of Fonterra to collect ideas from their existing talents in the workforce, based on which the production of dairy products can be improved. Since R&D and other managerial positions are not involved in this process, it can be accomplished without investing a huge cost. When implementing this tool, workers of Fonterra, especially farmers, must be encouraged to provide their significant feedback on the dairying process. 

Just-In-Time: Although the implementation of this tool in the manufacturing process is complex, the management of Fonterra should use it in order to maintain the high nutritional value of their wide range of dairy products. In order to establish a Just-in-time inventory, it is important for the organization to develop and maintain a strong relationship with suppliers, such as farmers (Le Blanc, 2015). There must be a strong communication channel between the suppliers and production team so that the product can be manufactured and delivered to the customers without any delay. 

PDCA cycleFour stages of this cycle include plan, do, act and check (Osborn, Cutter & Ullah, 2015). The management needs to define the problem to be identified in the first stage, which is planning. In the planning stage, relevant data need to be collected. The solution to the identified problem is developed and implemented in the next stage. In the third stage, the management of Fonterra needs to compare data before and after the implementation of strategies to confirm whether the desired results are obtained. The final stage, ‘Act,’ suggests the documentation of results and informing others regarding the changes. Through the implementation of this model, the management of Fonterra can carry out continuous improvement in business process management. 

PDCA cycle

Figure: PDCA cycle

(Source: Nilsson, Griggs & Visbeck, 2016)

Value stream mapping (VSM)It is a flowchart method to analyze, illustrate and perk up the steps required to deliver a service or product. With the implementation of VSM, Fonterra could reduce waste not only from its manufacturing system but also from all functions carried out in the business. One of the major benefits of VSM is that it enables the organization to find out the real cause of the waste (Hák, Janoušková & Moldan, 2016). It is important for the management to consider some factors when implementing the VSM tool in manufacturing or supply chain process. For example, both value-adding and non-value adding activities in the production process must be identified in a careful way while drawing the current site map. 

5 Whys: It is an interrogative technique, widely used to explore cause-and-effect relationships underlying a particular issue. One of the main reasons why Fonterra must implement this technique is to find out the root cause of an issue by repeating the question “Why.” In this process, each answer forms the ground of the next question. There are two primary techniques are available to conduct 5 Whys analysis, such as the fishbone diagram and a tabular format (O’Neill, Sohal & Teng, 2016). With the help of this technique, the management at Fonterra could identify the root cause of a problem affecting production or supply chain system. 

4. Conclusion 

Throughout this particular assessment, an in-depth analysis of different sustainable approaches implemented by Fonterra has been conducted in relation to the given case scenario. In this assessment, the researcher has identified Five quality and performance related challenges encountered by Fonterra, such as water quality and scarcity, access to nutrition, limiting and adapting climate change, threatened biodiversity, and slowing down of improved global land productivity. Fonterra has adopted different quality management systems, including ISO26000 and ISO 14001:2015, in order to maintain a standard quality bar in products and services. In 2017, Fonterra launched Tiaki sustainable dairying programme, aimed at caring for land and dairy cows. With the involvement of such sustainable programs, Fonterra has enhanced its production and supply chain method largely. Fonterra has set a target of dipping emission of greenhouse gases by 30% by 2030 from their milk collection and global manufacturing operations. Using advanced technology is one of the significant steps taken by Fonterra to enhance its dairy productions. For enhancing production process, in recent time, the company has started using a new technology called Aggregate, which is an online tool developed by Fonterra’s farmer-facing business unit named Farm Source, and New Zealand Livestock Improvement Corporation.

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