International Dairy Leader Achieves Bottom-Line Results by Institutionalizing Root Cause Analysis

Business NeedFonterra’s twenty-six New Zealand dairy processing sites experienced many of the same problems, mapping with trends in the dairy industry as a whole. When a problem occurred at one of Fonterra’s sites, the company tried to address it. When the operations team called, the corrective action team was very responsive, soliciting ideas from people who played different roles in the plant, along with suppliers and contractors.

Ultimately, though, Fonterra’s corrective action program was not meeting the objective to increase availability and reliability of equipment and systems. The company recognized it would need to improve corrective and preventive maintenance best practices by performing more effective and conclusive investigations on plant breakdowns.

After evaluating a handful of root cause analysis programs based on their suitability to meet the company’s needs, Fonterra chose ARMS Reliability as its provider of Apollo Root Cause Analysis training and consulting. Fonterra then invested in training employees and conducting root cause analyses, which was considered successful not only because RCAs yielded important findings, but because more people were engaged in and supportive of the corrective action process.

However, Fonterra recognized that because each of its 26 sites was approaching RCA in a different way, its RCA program would not truly deliver the desired results. A company-wide strategy was necessary to eliminate conditions like these:• RCA was at risk of becoming a “flavor of the day” because people knew RCA was a big investment of training dollars and time, but did not see the value.• To people at the site management level, RCA was little more than a buzz word. They did not know exactly what RCA was, how it was implemented, or what value it could deliver.• Few of the trained individuals were actually utilizing their newly acquired skills. One reason was the ad hoc basis for choosing the participants, training levels, and assigned roles. • Maintenance and operations personnel exhibited stereotypical tension – maintenance struggled to earn buy-in and engagement from plant operations. • Opinions about the causes and solutions differed and could not easily be reconciled. • RCA quality and results were inconsistent.• Corrective actions were housed in different document formats and filed away where they were rarely accessed, so follow- through was inconsistent and tracking was nearly impossible. • RCA findings and results were not communicated or celebrated so others could learn from them. Reports were kept in a variety of formats and locations.

Action/Solution

Fonterra appointed a root cause analysis program champion dedicated to RCA, so real traction and value could be delivered. Knowing that a more consistent approach would deliver better RCA results, the champion’s mission was to institutionalize root cause analysis throughout the organization, in other words, to “engrain RCA in to their psyche as the way we problem solve.”

Benefits• Fonterra has achieved a reduction in maintenance, expenditures and catastrophic failures.• Processing capacities have increased and product specifications have improved.• RCA is being well utilized; over 500 RCAs are conducted annually.• As problems are fixed, the trigger/threshold levels indicating when an RCA should be conducted continue to be raised. • The RCA program continues to deliver value and results, so people remain engaged.• Throughout the organization there is a solid understanding of root cause analysis. • RCA program champions no longer drive the process alone because operations people take initiative.• A strong partnership has formed between maintenance and operations. Guided by a structured process, people from different viewpoints developed respect and achieved results together.• Senior managers are connected to the real issues at a high level appropriate to their roles. • RCA has become an integral part of a broader “Operational Excellence Program.” • RCA is no longer seen as a project, it is seen as part of “business as usual.”• RCA was a helpful component to have in place and integrate when Fonterra launched LEAN.

About FonterraFonterra is the world’s leading exporter of dairy products and responsible for more than a third of international dairy trade.

Fonterra dairy farmers have long been known for producing quality milk, and today New Zealand is a world leader in large-scale milk procurement and processing. Fonterra’s global supply chain stretches from farms all over New Zealand to customers and consumers in more than 140 countries. Fonterra processes annual milk volume of 14 billion liters with peak milk input of over 68 million liters per day. Totaling two million tons of product per year, the ingredients are used in more than 10,000 products with over 1500 specifications.

www.fonterra.com

About ARMS Reliability ARMS Reliability are industry leaders in providing Asset Reliability Improvement Solutions to blue chip companies across a wide range of industries in Australia, New Zealand, North America and Asia / Pacific.

ARMS Reliability is focused on providing our clients with the skills to achieve Problem Solving Excellence. As authorized training providers and consultants of the Apollo Root Cause Analysis methodology (RCA), we empower our clients (and their teams) through consulting advice, educate our clients (and their teams) through relevant and well-delivered training programs, and equip our clients (and their teams) with software and enabling tools. Apollo Root Cause Analysis is a method of event-based problem solving designed to identify effective solutions that prevent problem recurrence, and uncover proactive solutions that preempt future problems. Apollo is used by professionals, crafts people, managers, and workers of all kinds in a wide variety of industries and disciplines. Companies that undertake our Problem Solving Excellence approach achieve significant measurable results including return on investment; time savings; increased uptime of assets; improved safety; fewer regulatory issues; a more satisfying and safe work environment; reputation management; and a workforce that is more engaged, united and able to embrace change.

ARMS Reliability 3921 Steck AveSuite A120 Austin TXP: 512 795 5291www.globalreliability.com