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 ..ar 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, underst.md 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
solution,
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
111,1I1agesthe com