Fonterra sells to the world 24/7 with $10bn service hub

Fonterra's global customer service centre in Auckland is saving the company $50 million a year. Picture / Paul Estcourt

It is the command post for a $10 billion-a-year global operation, so the lights in Fonterra's Auckland customer service centre burn 24 hours a day.

To ensure staff remain alert as they process millions of dollars of Northern Hemisphere orders through the small hours of the morning, special "artificial sunlight" bathes the centre.

An added bonus is that the light is "great for fixing jetlag", says Fonterra operations manager Garrie Hoddinott.

Also pumped into the air, through a sophisticated network of speakers, is "white noise" which blocks out the background hubbub of conversations in the eight languages spoken daily at the centre.

Fonterra opened the customer service centre in its Princes St, Auckland, headquarters last year and estimates it is saving $50 million annually through a new "closed system" that routes all orders, inquiries and transaction monitoring through a single room.

"What used to happen in the days when there were many, many [Fonterra or Dairy Board subsidiary] companies spread across the globe is customers figured out how to cherry pick us," Hoddinott says.

Fonterra customers used to negotiate deals with the dairy giant, then, when their first shipment arrived, would use container labelling to figure out which factory within the vast network had produced the order and phone the factory direct, demanding extra services such as scientific reports and shrink-wrapping.

This, says Hoddinott, would "send the factory into a flap" and "add all these extra costs for the next shipment and have no relation to the sales contract that had been signed".

This type of scam has been scuttled with the central-desk system and Hoddinott says one customer even said to him: "Garrie, we wondered when you silly buggers would wake up to it."

"That alone was probably worth about $50 million a year in savings to us - in terms of having one entering process from the sale contract right through to operation execution across the globe in 124 markets," Hoddinott says.

The service centre has further cut Fonterra's costs by reducing the number of staff involved in order processing from 227 spread across the globe to 150 working out of Auckland.

The consolidation led to the "somewhat embarrassing" discovery that Fonterra had 160 different terms of trade with various customers. That number has since been reduced.

Hoddinott spoke about the service centre at a conference organised by telephony technology company Avaya in Sydney.

Fonterra built the centre using Avaya's internet protocol (IP) technology.

Fonterra exports an annual 2.1 million tonnes of dairy product out of New Zealand and sources a further 400,000 tonnes of product from other countries. This equates to about 500 shipping containers dispatched each day and adds up to about $10 billion of goods sold every year.

The value of goods the contact centre monitors ranges from basic commodities - milk powder, butter and cheese selling from about $US1800 a tonne - to complex lipids, a dairy byproduct used in top-end cosmetics.

Lipids sell for around $US700,000 a tonne and are air-freighted in 1kg lots packed in liquid nitrogen within aluminium containers.

Product orders - seldom under $US40,000 - flood into the Auckland centre by email, fax and phone. Staff work shifts reflecting the office hours of the markets they are covering.

The room is busiest in the early afternoon, when Asian, Australian and American customers are simultaneously at their desks.

About 30 per cent of the centre's staff are fluent in a second language: either Spanish, Portuguese, French, German, Mandarin, Korean or Japanese.

Unlike typical business-to-consumer call centres, where metrics like call duration are intimately scrutinised, that measure means little in Fonterra's business-to-business setting. "I haven't got a clue what the [average] call length is and I don't give a stuff," says Hoddinott.

"It takes what it takes to get a $6.5 million deal across the line. If a ship goes down and hits a reef or a box jumps off in the Tasman Ocean, you've got to fix it."

What is important, and is monitored extensively, is that orders get delivered on time and in full and customer satisfaction remains high.

Customers are each assigned a specific staff member representative at the centre and a back-up rep. They are guaranteed communication in their local language during their local business hours and in English any time outside those hours.

Television screens beam world events into the centre 24 hours a day so staff can chat to their clients about events in their countries.

Problems - such as a recent case where goods were unexpectedly unloaded at a Panama Canal wharf - are sorted out with conference calls between Fonterra staff, shipping agents, port authorities and clients.

Over the course of a year the centre's front-line staff will each process about $100 million in sales and during each 24-hour period they collectively invoice about $30 million of new orders.

"You follow the sun, hopefully everything stays up. You bill 30 million bucks for the day, whack out 500 containers," says Hoddinott.

"Tomorrow's another day and you start again. Six billion US bucks [a year]."