Engineering and Manufacturing Solutions

Engineering and Manufacturing Solutions

ENGINEERING AND MANUFACTURING SOLUTIONS YOUR INVESTMENT GETTING IT RIGHT! Global demand for dairy products continues to grow and you are considering new investment in processing assets. To know that your investment will perform to expectations, you need to know you have the right end to end solution. Fonterra has decades of experience in addressing these same challenges. Fonterra s team of engineering and commercial professionals specialise in matching asset design and build specification to business needs. We provide services in the management of a dairy asset from build, through commissioning, the commercial operation and ongoing asset care and replacement strategies. Our solutions leverage Fonterra s global dairy expertise with a legacy of 100+ years of dairy manufacturing. Gain access to our proven processes, techniques and people and enhance your asset performance with help from Fonterra.

Fonterra s Engineering and Manufacturing solutions are split into four key areas: ENGINEERING AND MANUFACTURING SOLUTIONS SPECIFICATION AND CONTRACT DEVELOPMENT BUILD AND OPERATE ASSETS PLANT COMMISSIONING SUPPORT ASSET CARE STRATEGIES Our solutions cover the full lifecycle of your dairy asset and we can assist in part or all of your asset investment cycle. ASSET SPECIFICATION AND EVALUATION Identifying the assets you require and the specifications to ensure functional fit Contractor evaluation, selection and processes ASSET CARE STRATEGIES Eliminate wish lists through comprehensive evaluation of each component in your dairy asset Criticality and required longevity are assembled into a process of targeted asset maintenance spend Save money and improve long term asset effectiveness CLIENT REPRESENTATION FOR CONTRACT MANAGEMENT THROUGHOUT THE PROJECT BUILD Managing key project cost, performance and schedule risks Ensuring aligned contractor and client goals Facilitating effective decision processes OPERATIONS MANAGEMENT COMMISSIONING SUPPORT World class dairy management expertise The benefit of Fonterra s process management systems Take the risk out of creating a high performance management team from scratch Additional resources to bring the asset to performance fast Key technical dairy expertise when you need it, in all facets of manufacturing

SPECIFICATION AND CONTRACT DEVELOPMENT Fonterra s specification and contract development service is a comprehensive process. All aspects of the asset strategy are considered, from the point of conceptualising to the installed plant. SPECIFICATION AND CONTRACT DEVELOPMENT Design The design of your asset must reflect the business requirements, and clear commercial performance requirements should be established. Our team guides the specification design that will ensure new or upgraded assets are the right solution. Delivery Model We work with you to define the project value chain steps, providing a comprehensive methodology that enables you to determine how many contracts are required, whether the project scope needs to be split, and the optimal split of scope between the contractors. Contract Award Contract award is a critical phase - the point at which a client entrusts the execution of a project to a supplier. Fonterra s experienced project team offers a set of proven tools and techniques, making the navigation of this phase efficient and focused. Some of the areas we consider are: What is the most appropriate tender concept? How many and which suppliers/contractors should be invited? What is the optimal level of partnership? What is the best supplier interaction model before the tender process? Risk Management Our experienced team offers a methodology for working through the Contract Terms in the same way as the delivery model and contract award ensuring identification of the key project costs, performance and schedule risks. Some of the aspects we consider include: Who is the natural owner of the risk? What mechanisms exist to offset or share risk? How can objectives be aligned between owner and contractor to ensure an efficient execution through compensation elements incentives, warranties and penalties etc? SUCCESS STORIES Fixed price and incentive structure delivered in excess of $5 million for boiler project Through rigorous fixed cost contract management, risk hedging and targeted incentives, the instalment of a new boiler and associated services was achieved with significant savings on budget. Stringent application of risk processes identified $17 million potential losses By application of the risk management methodology, Fonterra project managers ensured that the warranties and performance incentives were clearly aligned. The natural ownership of the risk for critical parts of the contract was identified and allowed the risk for the asset owner to be reduced. Life cycle costing focus in the detail design phase identified $10 million savings in lifetime maintenance cost The selection of equipment, and layout of the facility when carrying out the detailed design of a spray drying plant, allowed maintenance costs to be reduced on an annual basis with large net present benefit.

BUILD AND OPERATE ASSETS You could be a milk supplier keen to move up the value chain, or an investor wanting long term secure exposure to dairy commodities. Perhaps you are a brand owner wanting to move focus toward markets and sales rather than manufacturing and supply chains. Fonterra s manufacturing experts are capable of building, operating and maintaining dairy processing capability for you in global locations. In a model commonly employed in the energy sector, you own the asset while employing Fonterra s expertise to manage the build, commission the asset and run the operations for you. The benefits to you: A partial or total outsource solution for dairy processing An enabler for third party investment in dairy processing Access to world class dairy engineering and management expertise Unparalleled depth of technical dairy resources for short and long term support Lower risk in dairy manufacturing investments No need to build your own teams Access to Fonterra s quality systems, tools and global dairy supply chain BUILD AND OPERATE ASSETS PLANT COMMISSIONING SUPPORT When replacing or growing assets, your investors, customers and suppliers rely on you to get up and running on time if not sooner. Fonterra s pre-deployment planning and commissioning expertise gets you there. Fonterra is able to assemble a specialist team with the necessary equipment, process, and product experience to assist you quickly and efficiently through your commissioning. By bringing in Fonterra s expertise only for the duration of the commissioning, additional permanent resource in your own teams is avoided. We provide the short term resource input then leave your production and quality teams to take over, well equipped for high performance production. EFFICIENT COMMISSIONING + DIAGNOSTIC AND PROBLEM SOLVING + INCREASE KNOWLEDGE = FASTER RESULTS PLANT COMMISSIONING SUPPORT Efficient commissioning with less wastage Quick diagnostic and problem solving of equipment issues Increase staff skill and knowledge Product to market faster CASE STUDY FMCG START-UP A customer requested our assistance in commissioning a new process. Fonterra was able to provide specialists to join the customers own commissioning team covering the operational aspects of the five unit operations from ingredient reconstitution to product packing. The team focused on product formulations, process tuning for optimum product functionality, and product quality assessment. The commission was completed ahead of time, removing risk and ensuring the commercial launch date was achieved. A successful start to this project with good consumer uptake allowed the manufacturer to launch a number of other product range extension variants, and exploit export opportunities.

ASSET CARE STRATEGIES Financial re-investment practices based on depreciation or replacement value often results in waste from unreliable plant performance, unplanned capital replacements, and a higher than necessary total cost of ownership. The Asset Care Assessment Process (ACAP) defines an asset s position in its life cycle: What is causing deterioration? What plans are required to keep the asset operating to requirements? What is required to meet the strategic goals for the business? The ACAP program combines the asset management life cycle models of condition, technology and product lifecycle. The framework and language is easily translated across all areas and levels of your business and is intuitive and fast to deploy. ASSET CARE STRATEGIES CASE STUDY CAPITAL EXPENDITURE REDUCED A manufacturing plant spent an average of $7m capital per year replacing existing assets that were considered old and no longer fit for purpose. A methodology was needed to objectively define the condition of the assets and their remaining life in order to aid prioritisation of replacements and develop solutions to extend asset usable life. The condition assessment process defined the extent and severity of deterioration. This was compared to ACAP standards which defined the assets remaining life. Analysis of the detailed condition description data by Fonterra Engineers enabled the root cause of the deterioration to be identified and strategies developed to mitigate this and extend asset life. This resulted in capital expenditure reduced to $3m per year with no reduction in performance or increase in risk to the business. TALK TO THE EXPERTS www.fonterra.com