Fonterra initiates major revamp to operations

Posted by Isobel Drake on 25th June 2009

Fonterra, the world’s largest dairy exporter, has consolidated ten core operations into a single strategic business unit and reorganised its senior management team, but their Australian consumer brands business will not be impacted.

The dairy firm’s CEO, Andrew Ferrier, said the changes were designed to boost efficiency and give greater focus to the company’s global ingredients business.

The consolidated business unit, Fonterra Operations and Trade, brings together all functions from the farm gate through to Fonterra global trade customers. This includes Milk Supply, Shareholder Relations, Milk Collection, NZ Operations, Offshore Milk Sourcing and Processing (other than those activities already within existing business units), Supply Chain, Sustainability, Government Relations and Global Trade.

It will be led by Gary Romano, who was formerly Fonterra’s Director Group Manufacturing and Supply Chain. Andrei Mikhalevsky becomes Managing Director Fonterra Global Ingredients and Foodservices.

“For our strategy to be successful, Fonterra’s core must continue to get more and more efficient,” Mr Ferrier said. “That will always be fundamental. The quality of our milk right across our supply chain will also always be fundamental to our success. Gary’s appointment gives more weight to this drive.”

Mr Ferrier said Fonterra also saw significant opportunities in growing Fonterra’s partnerships with key global and large regional customers through the increased focus on value-added products and services.

“Many of our major customers around the world are forecasting big growth over the next few years,” he advised. “We have an opportunity to become much more involved with them as their preferred supplier and partner.”

“Andrei’s appointment recognises that this extended partnership requires special focus and a new level of commitment and resources if Fonterra is to supply more and higher-value products and services to these customers. The emphasis placed on Ingredients through Mr Mikhalevsky’s new position reflects Fonterra’s strong commitment to growing this business during the coming years.”

Mr Ferrier added that Fonterra’s regional consumer brands businesses would continue to operate as strategic business units.

“These businesses, in Australia/NZ, Asia/ Africa Middle East and Latin America, are contributing well to Fonterra’s earnings and are showing strong growth. They provide a welcome profit buffer above commodity returns, which is particularly important in times of low commodity prices,” he said.

As a result of the changes announced today Fonterra’s Director of Milk Supply, Barry Harris, has decided to leave his role at the end of July but will continue to advise the co-operative to the end of the year. Mr Ferrier praised his contribution, particularly hisimput into crating a sustainability strategy that will guide future growth.