Fonterra: Managing the World’s Milk Trade case s

Fonterra: Managing the World’s Milk Trade case study

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Complete the Fonterra: Managing the World’s Milk Trade case study, Answer the three case study with own words. 1.) Describe the various capabilities of SAP GTS. How does using this software help Fonterra manage its export trade? What quantifiable benefits does this system provide?
2.) How would you characterize Fonterra’s global business strategy and structure (review Table 15-3). What kind of a global business is it? Has Fonterra’s structure and strategy shaped its uses of SAP GTS? Would a transnational company choose a different solution?
3.) What influence does the global business environment have on firms like Fonterra, and How does that influence their choice of systems?

(~ global    U’dde has uxpuudcd  mover   q PM( (!I1t il y  in the  1,ISt  :W  yc.rrs,   manv   international    ( nmpa- nics  still  rely  on  outdatr-d      manual    proi.esscs    and paperwork     lor  conuucting     thuir   intumutiuua!      t!”

will  amount      to d   staggering    S l”i  trillion.    That’s     J lit- tle  bigger   tl1

tl1dt   managers    face  when  c onductlng     business    on an international      scale.   Chief   among    these   challenges     is I11Jlwging     the  import   and   export   business     process. Managing    ,111   import-   export   business     involves    man- aging  three   processes:    rompli.mce      with   toruign   and donwstit”   laws,  customs    clearanre      procedures,     .md risk  management.       Each  c ountry    you  export    to has dlflerent    laws  g(Jv(~rnin~  imported     products    .tnd  dif- fl’r(!IH  customs  procedures.     li`”ding     ,H ross  bound-

aries   rilis(!s flnnur  inl aud   routrar.tual     risks.   What  if you export  lo  ,I (orci),lll rornpanv     and it”  t!o(!sn’!  pay vou.’ Wildt  kinds of (;n:dit  assessments    ran  you pcrlorm    in various   rou   ntric-s,’    Wh,tt if    your   goods

arc  stalh.d   nt u fordgn   port   Ii,,· I,wk  ot proper

do( unu-nts.’  Whut  arc the  proper  documents.’ TIl(‘

pOl!!lltial    pltialls    are  111llll!!fOUS.

In the  p.rst, time-c.onsuming  and  error-prone man- ual methods   were   incapable  of handling    the r ornplex challenges    of’ global  trade.   To conduct    business  in other   coururies,  your  company   must comply   with

local  laws.   satisfy   trade   security    Il1UdSlIrf’S, meet  doc- umcntntinn   requirements,   cornplir.ued tariffs arul duties,  anti t.oordinut«    til(! involvement   of all parties,  I I.lnclling  these responsjblliries   manually increases    tlu-  risk 01 r-rrors.   1( r.ording    to

h,ll)dling of  customs    docurnunts.  Poor  1ll;11l,lgcln

01  complinnrr:   and  risk  ,U:,Ollllts  lor I’.V(’11    1110W IClSS(!S.

l nr n’,lsingly,     inturnntioual   tirtns  .In> tllrnil11-: to

(‘llll”rprisc’ slIftware!  (lnd  husim-s»   il1tl’l1igl~n(I: applir.nions     to rna Ililgc:  lh(~i r i11p1ort!  export   husl IWSS proCI’SSI!S   Oil   il  glob .. l scalC’. ()!lC~  world,   OIH~ husil1l!SS, OIl(‘loj  softWdT

the  dn:.llll.   rOl1terra   providl’S     till  C~Xill11ploef ;J  firm


{actually   a cooperative]     that  is implementing      an import/export              process   control   system.

Fontcrrn    is the  world’s   biding    exporter    of dairy products.    Owned   by 11,000 New Zealand dairy thrillers,    font(:rri.l   is .. cooperative     that  exports    9.’) percent    of its  products    to  140 countries-of       all  the dairy   goods  it manufactures,   only  5 percent    are consumed     within   its domestic    market.    Fontcrra    is

primarily    an  exporting    firm.  Fonterra   has  S to billion

in  assets,   annual    revenues    ofS12.1   billion,   and produces    3.0 billion   gallons   of milk  each   year.   If you wonder   how  that’s   possible,   the  answer    is Fonterra relies   on the  rontributtons  of4.3  milllon   New

Zealand   cows,  and  over   IS,OOOemployees.     Funterra accounts    for  over  25 percent of New  Zealand’s    export trade,   and  about   30  percent   of all  global   trade   in milk and  milk  products.

Fomcrr.i’s    operations     generate    a substantial

.. mount   of transactional     data.  “The  volu me  going through    this  platform    is quite   significant    in  hoth dollar   and  transactional      terms,”   says  Clyde   Fletcher;

Document.ulon   Center  Manager at  Fontcrra.  “But we

don’t   just  rely  on  New  Zealand.   We procure    our products      from   multiple    countries    to try  to spread   the risk.  We  also  export   out  of Australla,    the  United

States  Latin  America,    Europe,   and  Asia.” This  data

needs   to he  captured    in an  enterprise     database,    then moved   into  a data  warehouse    so  management      can monitor    the  firms  operations.    To handle    more

complex    import/export       processes,    Fontcrra    turned    to the  SAP BlIsinessOqjc{;ts  Global  Trade   Services


SAP Global   Trade  Services   (SAP GTS) automates import/export       processes,    while  ensuring    that transar.uons  comply   with  all  customs    and  security regulations.     SAP GTS helps  companies     standardize and  streamline     trdd(~ processes    across   their   entire’

r-nterprise       and business units.  And  it fosters lise of”

shared   d,ll

,repl.lCing  high-rnaintenam      e manual  processes.

With   S/I’  GTS,  ronterrCl has  been   nhle  to lower   the cost,  ami  reduce   the  risk,  01″ doing  business    interna- tionally.     ‘Ih   t!atc~, S(I’  GTS hilS   h(!lped   fonlerra    stan’ d,mli7(!  ,tIld streamline     trade   processns across   its

entire   c!nterprisl!   and business units.   And  it has  los·

tercd   tll(! sharing   or data.  gn:L1I1!r  collaboration,     and

sh.lring     of  knowledge     Lhroll~llOut  the firm.  SAP GTS

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