Dairy Board and Carters strike novel supply deal

By Mark Reynolds


The Dairy Board and Carter Holt Harvey have struck a deal that will see them share information usually regarded as commercially sensitive.

The two companies have formed a partnership that will initially see Carter Holt Harvey be the sole supplier of the dairy industry's dry product packaging for the next three years, with a two-year right of renewal.

But the arrangement has much wider scope in that the companies will work together to develop new packaging and improve existing products.

The contract is a departure from traditional supply contracts for the Dairy Board, which usually are renewed every 12 months.

The aim of the new arrangement is to bring about greater transparency in terms of operating efficiencies and research and development opportunities. This will lead not only to cost reductions, but is also expected to develop new business for the two companies.

"It will be a much closer relationship than a traditional supplier-purchaser situation," said Ian Unwin, chief executive of packaging for Carter Holt Harvey.

"We will work together to develop the industry and that should help to lift the benefit for both of us," he said.

David Pilkington, group general manager of operations for the Dairy Board, said the contract represented a strategic approach.

"We are going to look at how we can work together over the long term to develop something on behalf of the industry, rather than just going into a room and beating each other up over price," he said.

The new method involves having a much more open attitude toward the exchange of information, and that has meant having a great deal of trust, he said.

"There are some quite firm undertakings in terms of agreements to research and work together, but the real benefit of this will be in having a sense of partnership and an attitude that it is a win-win situation for both companies," Mr Pilkington said..

The agreement gives the Dairy Board leeway to look at new products that might be developed by other packaging suppliers, but that must be done in partnership with Carter Holt.

"What we want to recognise is that there is strength in having a long term relationship with someone who has a specialist knowledge of an industry," Mr Pilkington said.

Some of the practical aspects of the arrangement are that Carter Holt and Dairy Board representatives will travel to trade shows and visit customers together, so that they can both see what the market wants and deliver a product.