From farm to table: how Fonterra optimizes with PROS

May 3, 2023

Andrea Hern

Fonterra is a publicly traded, multinational New Zealand dairy company with revenue that exceeds NZ $22B. As the largest company in the nation, they have a unique business model and outlook on the world. Fonterra is a co-operative, owned and operated by farmers with the shared goals of sustainability, innovation, and spreading the goodness of New Zealand dairy around the world.

Fresian cow, picture Fonterra, picture

Their brand portfolio includes NZMP Ingredients, Anchor Food Professionals, Anchor, Mainland, Anmum, Nutiani and Anlene. NZMP has been at the forefront of dairy protein innovation for decades. They were early producers of whey protein concentrate in the 1970s and are continuously developing new and better ways for the world to produce and consume dairy products.

Manual processes no longer supported innovation

Fonterra had been reliant on manual processes for their pricing and selling workflows. This strategy led to challenges, including:

Difficulty bringing in data from internal and external sources
The inability to make dynamic pricing changes
Limited visibility into the profitability of pricing changes
Slow and inefficient quote creation
Slow customer response times

All these challenges were costing Fonterra in revenue and margin. The company was spending money to change price conditions in SAP, as well as fix contract mistakes. Fonterra knew they needed to start making changes to their pricing and selling strategy to achieve their long-term goals of growth and sustainability.

In 2015, Fonterra decided to start improving their quoting processes with PROS. They started by using PROS price optimizer, analytics, and CPQ integrated into their SAP ERP. These products are equivalent to AI-powered Quoting by PROS, and AI-powered Pricing by PROS today. AI-powered Quoting by PROS helped the company deliver faster quotes, while AI-powered Pricing by PROS gave them better pricing guidance.

These solutions were helping the company optimize their revenue, but they saw they could do more by changing the way SAP is used within their processes, utilizing it as their system of record. The company was spending thousands of dollars each time a change was needed to be made in SAP to keep up with the dynamic dairy market and to launch new products. In 2018, Fonterra worked with PROS to move their pricing strategy completely away from manual processes in exchange for more flexibility and power.

The changes gave the company a single, all-encompassing pricing and selling solution that offered pricing guidance, automation, access to real-time commodity markets, and more.

“We use the PROS toolsets within our business to enable pricing updates to be made much more quickly, with less opportunity for error- enabling our sales teams to trust the pricing data more and spend more time focused on the offer and final price negotiations with customers”

Alistair Draper, Head of Strategic Pricing

Fonterra uses PROS to power a solution they call, Price Risk Management. When looking for a solution, this aspect was one of Fonterra’s non-negotiables and PROS was able to understand the business problem and develop their solutions in a way that other companies couldn’t.

If you’re interested in learning how PROS can help solve your business problems, you can connect with an industry expert today. To learn more about how Fonterra optimizes with PROS, download the one-pager or watch this clip from Fonterra, "Outperform LIVE! Fonterra's Real-Time Pricing Engine Success."