How AI is helping Fonterra work differently across the co-operative

For Fonterra, operating at global scale means managing constant complexity. As New Zealand’s largest business, the co‑operative serves customers in more than 100 countries and processes around 22 billion litres of milk solids each season. In that context, even small improvements in quality, consistency, sustainability and productivity can add up. AI is increasingly becoming a practical way to cut through complexity rather than add to it, supporting better decisions and more consistent ways of working.

Since partnering with Microsoft six years ago to move core operations onto Azure, Fonterra has taken a deliberate, measured approach to embedding AI in support of its multiple strategic priorities.

AI on the factory floor

Some of the clearest examples are in manufacturing. At Fonterra’s Clandeboye site in South Canterbury, AI is being used to monitor butter packaging across multiple stages of production, pausing the line when faults are detected. Instead of scheduling production using spreadsheets, teams are now using AI to do it automatically.

Meanwhile, real-time IoT data flows from machinery across more than 100 plants into the Microsoft cloud, enabling a more predictive approach to maintenance, so plants stay up and running with less costly downtime and disruption.

Building AI into everyday work

Across its offices, AI has also been a huge timesaver. Fonterra was one of New Zealand’s earliest adopters of Microsoft 365 Copilot through the Early Adopter Programme, identifying hundreds of use cases across the business. By February 2026, 35 per cent of its global workforce was actively using AI tools, generating nearly one million interactions in a single month across Copilot Chat, Copilot Studio agents, GitHub Copilot and Fonterra’s own Co-op GPT. Those tools are being used in practical ways, from summarising meetings and capturing actions to accelerating policy drafting and helping teams ask the right questions of each other to get jobs done quickly, challenging biases and existing ways of thinking and doing. The benefit is not only in time saved. It’s also giving people more space to focus on judgement, collaboration and decision-making to better support the co-operative’s strategy.

Using Microsoft Copilot Studio, Fonterra’s IT Delivery team partnered with EY to build three production agents. 

The first, an Idea Submission Coach, helps people put together strong investment proposals. It tests their ideas and gives them tips on making their submissions stronger, ensuring every submission arrives complete and ready for assessment, which helps make investment decisions easier and faster. An Architecture Assessment Agent supports the IT team in reviewing their technical architecture, helping reduce the manual work involved in ensuring solutions meet governance requirements as well as technical needs. Lastly, a Technical Accounting Assessment Agent strengthens consistency in financial assessment, ensuring everything is audit-ready – something that saves enormous amounts of time and effort down the track. Together, these tools support more auditable workflows by automating common requests, triaging incidents and helping create more consistency.

“What stands out is how practical Fonterra has been in its use of AI,” says Brendan Bain, Director Enterprise Commercial at Microsoft New Zealand. “From the beginning, the focus has been on real business needs – not experimentation for its own sake. AI has grown out of their cloud journey into something that’s now part of everyday work, helping teams plan, make decisions and collaborate across the business.”

Raising the bar for NZ Inc – and the world

This work is still at an early stage. Fonterra and Microsoft have mapped an AI acceleration programme designed to steadily extend across the co‑operative, from foodservice and finance to people and culture, and corporate affairs. It’s supported by shared sustainability priorities, with Microsoft’s commitment to renewable‑powered New Zealand datacentres aligning closely with Fonterra’s own environmental ambitions, reinforcing that productivity, resilience and sustainability can progress together.