Case Study - International Hubbing

  • Fonterra Co-operative Group Limited is a New Zealand multinational dairy co-operative owned by New Zealand farmers. The company is responsible for approximately 30% of the world’s dairy exports, with revenue exceeding NZ$20 billion
  • SCC led the refresh of Fonterra’s logistics network strategy, including the expansion of their storage and redistribution network outside of New Zealand borders. The international work stream was critical to developing efficient supply routes into the worlds emerging growth markets, and ensure close alignment with the businesses logistics capabilities and future manufacturing network and end consumers.

Scope

The SCC team led the development of Fonterra’s international logistics strategy, which centered on establishing of strategically located international hubs for storage and redistribution of commodity goods. Four key geographical markets were identified, Middle East Africa, China, South East Asia, and Latin America The team were responsible for both developing the operational framework of forward deploying product into international hubs, along establishment of the physical logistics network and vendor relationships

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Approach

To develop the future operating model, four distinct work streams were established, including:

1. Compliance & regulations     2. Systems and planning
3. In-market logistics                 4. Commercial sales

In conjunction with this the team undertook extensive engagement with New Zealand’s Ministry of Primary Industries in NZ to develop the re-certification model for products redistributed from international hubs.
A detailed commercial evaluation of in-market service offerings was undertaken with the sales and marketing teams. This was critical to determining the immediate value proposition of international hubbing, as a strategic concept.

Outcome

Due to complexity of the compliance and regulatory work stream, and national sensitivities with commoditised goods from New Zealand, it was agreed to initially trial the concept in Jebel Ali, UAE. The trial was commenced established in late 2013, and involved:

  • Sourcing in-market logistics services, with Ceva Logistics awarded the trial contract
  • Implementing sales and marketing evaluation models to assess value of in-market service offering
  • Implementing re-certification model, in collaboration with NZ MPI
  • Distributing 20,000mt of commodity goods through the international hub model

The full evaluation of the trial is due in July, 2014, which will determine the future roll-out of the international hubbing model