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This case study examines the implementation of organisation-wide Information and Communication Technologies (ICT) applications at Fonterra, New Zealand's largest company. The Fonterra case study highlights specific issues relevant to ICT implementations in large companies with very diverse information needs, and implementation of international supply chain co-ordination across nearly fourteen thousand separate businesses. The company has placed considerable emphasis upon the business case and the value chain forming the foundation for ICT developments.

ICT applications are seen by management as an essential "entry ticket" to participating in the global market for milk products, and as one way of maintaining the current competitive advantage as the world's lowest-cost producer of milk resulting from New Zealand's temperate climate. Fonterra has utilised the opportunity to restructure its operations with considerable emphasis on consolidation of information, reduction of information duplication and reduction in reliance upon human information storage. Investment is occurring simultaneously in both computer and organisational applications, with an emphasis upon building the human capital of the company so that employees both better understand the organisation's operations and are able to use information, supported by the firm's ICTs, to make better and more timely decisions that will improve the company's productivity.

The co-operative nature of the company may have facilitated development of farmer-linked systems in ways not available to dairy processors owned by investors other than suppliers.¹ The existing organisational structures linking farmers have undoubtedly been a factor in Fonterra facilitating the first national farmer-owned broadband network in the world to service on-farm and farm-to-Fonterra information exchanges.² Furthermore, the alignment of farmer incentives with dairy processing company returns may remove many of the privacy and information ownership obstacles that have impeded the development of integrated supply chain applications in other industries.

Thus Fonterra appears well placed to take advantage of some significant productivity and competitiveness benefits relative to its foreign rivals.

¹Hansmann (1996) contains a discussion of the specific economic advantages of suppliers owning the processing, marketing and distribution aspects of businesses where economies of scale and characteristics of processing leave supplier businesses at risk of exploitation by large firms. The nature of dairy processing, including the very short life and toxic nature of raw milk, predispose this industry to potentially greater benefits from co-operative ownership of processing, marketing and distribution than other agricultural produce such as timber or grapes (see Boyd, Evans and Quigley, 1999 and Evans and Quigley, 2001).

²To the knowledge of the authors and Fonterra management, there is no comparable network in the dairy industry, although a similar infrastructure services is provided by the Columbian Coffee Growers Federation.