fauji fertilizers

FAUJI FERTILIZER COMPANY LIMITED

GROUP MEMBERS

Muhammad Hassaan Tirmizi

Taimoor Khalid Butt

Muhammad Irfan Ali

Mohsin Ali

SUBJECT

TOTAL QUALITY

MANAGEMENT

CLASS

MBA-3B

TOTAL QUALITY MANAGEMENT MBA 3-B

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Contents ACKNOWLEDGEMENT ............................................................................................................................. 3

DISTRIBUTION OF WORK ........................................................................................................................ 4

TEACHER’S REMARKS .............................................................................................................................. 5

ABSTRACT ................................................................................................................................................ 6

INTRODUCTION ....................................................................................................................................... 7

FERTILIZER INDUSTRY.............................................................................................................................. 7

FAUJI FOUNDATION ................................................................................................................................ 8

FAUJI FERTILIZER COMPANY LIMITED ..................................................................................................... 9

VISION ................................................................................................................................................... 11

MISSION ................................................................................................................................................ 11

PROJECT DESIGN ................................................................................................................................... 12

IMPLEMENTATION ................................................................................................................................ 12

THE REPORT .......................................................................................................................................... 13

INTEGRATED MANAGEMENT SYSTEM .................................................................................................. 13

QUALITY COUNCIL ................................................................................................................................. 14

CODE OF ETHICS AND STANDARDS OF CONDUCT ................................................................................ 14

PROCESS IMPROVEMENT ...................................................................................................................... 15

CUSTOMERS .......................................................................................................................................... 16

EMPLOYEES ........................................................................................................................................... 17

SUPPLIERS ............................................................................................................................................. 18

BENCHMARKING ................................................................................................................................... 19

SWOT ANALYSIS .................................................................................................................................... 21

Strengths ............................................................................................................................................... 21

Weaknesses .......................................................................................................................................... 21

Opportunities ........................................................................................................................................ 21

Threats .................................................................................................................................................. 22

OBSTACLES ............................................................................................................................................ 22

LONG TERM PLAN ................................................................................................................................. 22

CONCLUSION ............................................................................................ Error! Bookmark not defined.

RECOMMENDATIONS ........................................................................................................................... 23

REFERENCES .......................................................................................................................................... 25

APPENDIX .............................................................................................................................................. 26


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ACKNOWLEDGEMENT We would like to thank Almighty ALLAH for giving us the strength and intellect to

complete this project. This was the most difficult project we had come across so far

but it was due to the mercy and blessings of the Almighty ALLAH that we persevered

and completed our project.

We would also like to thank our respected teacher, Colonel Manzoor Iqbal Awan, for

helping us with the completion of this project. You continuously guided us towards

the proper completion of the project. The mistakes you pointed out from our drafts

helped us in refining our project and making it better in terms of quality as well as in

terms of aesthetics.

Finally we would like to thank Mr Muhammad Hasan Qureishi, Manager HR at FFC

Head Office, Rawalpindi and Mr Tariq Javed, Manager Manufacturing and

Operations at the FFC Production plant in Rahimyar Khan.You provided us with the

vital information that was required to complete this project. Your help in that regard is

much appreciated and acknowledged.


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DISTRIBUTION OF WORK

Muhammad Hassaan Tirmizi

Had to develop the project design, ensure its implementation and write the

report.

Taimoor Khalid Butt

Had to write the introduction and help with the project design

Muhammad Irfan Ali

Had to help with the abstract and design the layout of the report.

Mohsin Ali

Had to write the conclusion and give the recommendation


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TEACHER’S REMARKS


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ABSTRACT This is a project where we had to examine Fauji Fertilizer against the backdrop of

Total Quality Management. TQM is the art of managing the whole to achieve

excellence. Therefore we had to see how FFC was managing its entire range of

operations while maintaining it very high standards and product quality.We found out

that FFC is a quality conscious company and it takes the quality of its products very

seriously. It has a great relationship with its customers and the basis of that

relationship is the customers’ trust that FFC will provide them with quality products.

Also FFC tends to be very careful in selecting suppliers and undertakes thorough

investigation before selecting a supplier.FFC is continuously looking to improve its

process and as a result increasing production capacity. This increased production

would lead to an expanded market share for FFC. The company is a dynamic

organization which is using every tool at its disposal to be flexible with the changing

environment.

Keywords:

Quality

Fauji Fertilizer Company Limited

Benchmarking

Customers

Employees

Suppliers

Integrated management system

Quality council

Process improvement

Engro fertilizer

Code of Ethics

Standard of Conduct

Fertilizer Industry


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INTRODUCTION

FERTILIZER INDUSTRY As Pakistan’s economy is agriculture based therefore the fertilizer sector assumes a

central role in the development of the country. A good quality fertilizer increases yield

therefore increasing production of crops and earning foreign exchange for Pakistan

through exports. Not only does the quantity of production increase but the quality

also increases. This increases the exports of our country which in turn helps us

correct our adverse balance of trade with other countries. Therefore it is necessary

to have a vibrant fertilizer industry in Pakistan. The good news is that future outlook

for the fertilizer industry looks bright because of supportive government policies and

favourable climatic conditions. The government almost always comprises of feudal

lords and they always try to implement encouraging agricultural policies because

their aim is also to maximize yield. Thus the fertilizer sector gets a boost in terms of

subsidized gas rates and lesser hours of load shedding.


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FAUJI FOUNDATION Fauji Foundation is one of the largest conglomerates in Pakistan.Its interests include

energy, cement, and power generation, food, fertilizer, education, security and

employment services. It was setup as a charity in 1954 and its main purpose was the

welfare of ex-army personnel and their dependents. It is run by retired army

officers.Its headquarters is in Rawalpindi Cantonment. Some of the organizations

owned by this group are as follows:

1. Fauji Fertilizer Company

2. Fauji Cereals

3. Foundation Gas

4. Foundation University

5. Fauji Cement Company

6. Foundation Security

7. Fauji Kabirwala Power Company

8. Fauji Sugar Mills

9. Fauji Security Services

10. Fauji Fertilizer Bin Qasim


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FAUJI FERTILIZER COMPANY LIMITED

HISTORY

Fauji Fertilizer Company was incorporated in 1978 as a joint venture between Fuji

Foundation and Haldor Topsoe A/S of Denmark. Its head office is located on Mall

Road in Rawalpindi Cantonment. FFC has two plants. One is located at Goth Machhi

in Rahimyar Khan while the other one is situated at Mirpur Mathelo in Ghotki.The

initial share capital of the company was Rs. 813.9 million. The present share capital

of the company stands above Rs. 8.48 billion. Additionally, FFC has more than Rs.

8.3 billion as long term investments which include stakes in the subsidiaries FFBL,

FFCEL and associate FCCL.FFC commenced commercial production of urea in

1982.FFC participated as major shareholders in a new DAP/Urea manufacturing

complex with participation of major international/national institutions. The new

company Fauji Fertilizer Bin Qasim Limited (formerly FFC-Jordan Fertilizer Company

Limited) commenced commercial production with effect from January 01, 2000. The

facility is designed with an annual capacity of 551,000 metric tons of urea and

445,500 metric tons of DAP, revamped to 670,000 metric tons of DAP.


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CURRENT

Today, Fauji Fertilizer is the biggest fertilizer company in Pakistan with a 60% share

in urea manufacturing and urea marketing in Pakistan. It is a name synonymous with

quality and excellence. It has production plants located in Rahimyar Khan in Punjab

and Ghotki in Sindh. Its head office is located in Rawalpindi Cantonment. Its

production plants have a combined production capacity of almost 2 million Met/year

of urea and 1.15 million Met/year of ammonia. It shares are trading at Rs. 110.75 per

share in the Karachi Stock Exchange as of April, 2013. Fauji fertilizer has also been

the recipient of many awards. For its exceptional safety standards it has won 15

awards of honour from the National Safety Council, USA since 1982. It has also won

the award for best corporate report from Institute of Chartered Accountants of

Pakistan (ICAP) and Institute of Cost and Management Accountants of Pakistan

(ICMAP) for 2010 and 2011.


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VISION “In a nation of increasing population, we believe there is substantial opportunity of

growth for FFC in the years to come.

FFC's vision is to play a leading role in the industrial and agricultural advancement of

the country pursuing new growth opportunities offering the convenience of multiple

products, brands and channels within and beyond the territorial limits of Pakistan, to

the benefit of our customers and our shareholders, elevating our image as a socially

responsible and ethical company that is watched and emulated as a model of

success. ‘’

MISSION “FFC is a market-focused, process-centred organization delivering successful

performance through a strong focus on quality.

Our mission is to stand above the competition and provide our customers with

premium quality fertilizer products in a safe, reliable, efficient and environmentally

sound manner, deliver exceptional services and unparalleled customer support,

produce predictable earnings for our shareholders, and provide a dynamic and

challenging environment for our employees.’’


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PROJECT DESIGN

To collect data from the assigned company i.e. Fauji Fertilizer we used a

questionnaire. This was done because we felt that a questionnaire would provide us

with the information that we required to complete our project. Also a questionnaire is

a practical and time effective method of collecting information. In this questionnaire

we formulated questions that would provide us with a comprehensive body of

knowledge that would help us in obtaining a detailed picture of the quality

management in effect at Fauji Fertilizer Company Limited. It was decided that each

group member would prepare separate sets of questions and before going for the

interview the best ones would be chosen for the final questionnaire.

IMPLEMENTATION

We wanted to ask the questions face to face with someone from the quality

department but we were told that FFC has its quality control department at its plant

site in Rahimyar Khan. This was really disappointing for us because we knew that

we would not be able to conduct a face to face interview. We had to change our

plan. We contacted a friend of ours who works in the Human Resource department

at FFC head office in Rawalpindi. Through him we sent the questionnaire to the

Manager, Manufacturing and Operations in Rahimyar Khan. We had never intended

to have the questionnaire filled; rather we had prepared it for our own reference so

that during the interview if we forgot any question, we would consult it. But due to

circumstances beyond our control we had to have had it filled. We were also told that

the Manager, Manufacturing and Operations at the plant sit would not attend our

phone calls because he was a very busy man. Anyway we altered the questions and

had the questionnaire filled. It did not provide us a complete picture but did give us

enough information to complete our report. For some of the information like the

Integrated Management System we were told to consult the official website of Fauji

Fertilizer Company Limited and use the data available there.


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THE REPORT

The objective of our report was to find out about the quality management systems

employed by Fauji Fertilizer (FFCL). Based in Rawalpindi, FFCL is the largest

chemical fertilizer producer of Pakistan. This report examines the management

systems that are in place to maintain the quality standards of FFCL.

INTEGRATED MANAGEMENT SYSTEM

FFCL uses the Integrated Management System for the purpose of quality

management. Integrated Management Systems International Standards like ISO

9001, ISO 14001 and OHSAS 18001 have the common purpose of assisting

organizations for risk management, improved product quality, customer satisfaction

and continual improvement. These standards provide a foundation for organizations

to achieve business excellence.

Quality in all areas has been a hallmark of the FFCLright from the beginning and

their product "SONA UREA" has already established its prestigious place in the

market.

One major landmark for Fauji Fertilizer Company over the years is Management

Systems Certifications for International Standards (Quality, Occupational Health &

Safety and Environment) for its plant sites at Goth Machhi and Mirpur Mathelo.

To bring Management Systems (Q, OH&S and E) in line with the internationally

recognized Standards, FFCL achieved International Standards certifications for ISO

9001:2008, ISO 14001:2004 and OHSAS 18001:2007.

Quality Management System certification at FFCL plant in Goth Machhi was first

achieved in November 1997. This was an honour for FFCL because it became the

1st Fertilizer Plant in Pakistan to achieve this certification.

Good operating practices established by FFCL are consolidated in its Integrated

Management Systems (Q, OH&S and E) and aligned with the requirements of

Quality, Occupational Health & Safety and Environmental Management System

International Standards. The implementation of these standards is the most

important corporate strategy of FFCL.


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QUALITY COUNCIL

This is also where the Quality Council comes in. Its purpose is to watch the overall

quality of the organization keep a close eye on every aspect of the organization

through a properly formulated quality policy. It consists of the senior managers and

the directors of the organization. They ensure that the company follows the

guidelines and does not deviate from its quality principles.

OUR VIEWS:In our view every company has to have an effective quality council so

as to have its quality policy implemented. Therefore FFC has constituted a quality

council consisting of the senior most members of the organization’s hierarchy. This

means that the top management will ensure the enforcement of the quality policy

which will be beneficial for the organization.

CODE OF ETHICS AND STANDARDS OF CONDUCT

It is the policy of FFC to follow the highest business ethics and standards of conduct.

All the employees are obligated to act responsibly i.e. to be honest, trustworthy,

conscientious and dedicated to the highest standards of ethical business practice.

The company’s reputation depends on the conduct of its employees therefore each


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employee mustendeavour to act according to the highest ethical standards and

abide by the rules and regulations.FFC enforces its Code of Business Ethics and

Standards of Conduct at all levels fairly and without any prejudice or bias. All the

employees and directors of the organization are morally as well as legally bound to

follow these rules. The following are the core values that are followed by FFC:

1. Honesty

2. Excellence

3. Compassion

4. Consistency

5. Fairness

OUR VIEWS:In our view the company has developed an exemplary Code of Ethics.

FFC has been following this code of ethics as well as these standards of conduct

which is proved by the various quality achievement awards that they have won over

the years. This is testament to good management skills and an excellent grasp of

Total Quality Management.

PROCESS IMPROVEMENT

FFC seeks uncompromising integrity through each individual’s effort towards quality

product for their customers.. FFC also strives to achieve consistency in its products

i.e. not only achieving high quality but also maintaining it. This is a difficult task but

FFC tries its best to consistently achieve the high standard that it has set for itself.

Another component of their quality policy is fairness to employees, stakeholders,

partners, suppliers and customers through adherence to merit and the applicable

laws. As an organization FFC is always improving so as to remain up to date with the

ever changing external and internal environment. Training programs and

performance evaluation systems are part of this continuous improvement process.

Training is given to employees regarding the use of machines, handling of customer

complaints and dealing with suppliers. This is done so as to ensure the highest

standards of quality and to maintain the prestige of FFC.

OUR VIEWS: Continuous Process Improvement is the cornerstone of Total Quality

Management. It means that the organization is constantly trying to improve and


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increase its productivitywhile keeping its employees happy. The customers are given

the best possible products and better production facilities and techniques are

developed. FFC also follows continuous process improvement and is always looking

to improve its production process by bringing innovation in the various techniques

employed in the organization.

CUSTOMERS The business success of FFC is dependent on trusting relationships with their

customers. Excellent products and services to their customers further strengthen this

relationship. Most of FFC’s customers are concerned with the price of the product.

This may be due to the perception that any product of FFC will certainly be high

quality. Therefore customers are not bothered about it. But still the company tries to

maintain that high quality so as not to break the trust of its customers. Although FFC

is the market leader in the fertilizer sector, it constantly tries to increase its market

share. To do that it increases the quantity produced, lowers the price of its products,

maintains very high quality, uses a proper supply chain system and brings into use

an effective distribution network. In order to expand its market share, FFC tries to

increase sales. To do that it uses its marketing department which conceives

advertising campaigns to increase awareness about FFC and its products. FFC also


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maintains highest standards of quality so as to earn a place in the customers’ hearts.

A high quality product will always be preferred by the customers because it gives

increased yield and that is the ultimate aim of every farmer.

OUR VIEWS:FFC takes care of its customers. It always tries to develop the best

possible products for its customers. It has a very effective distribution system that

makes sure its products reach the market rapidly. But one thing that the FFC

management did not share was how they collected feedback from their customers. In

our view FFC should go to rural areas and take personal feedback from farmers.

This would further enhance their relationship with their customers.

EMPLOYEES FFC trains its managers to handle customer complaints and also to motivate

employees. This is done via business courses, marketing modules and leadership

seminars. Employee morale is also improved by various other methods. FFC

encourages innovation from its workers and wants them to think outside the box.

That is why they are rewarded for their creativity. This recognition and reward

system positively affects employee performance and motivates the thus increasing

the organization’s productivity and contributing to an overall happy environment. The

rewards and recognition are given for the performance of an employee during a


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quarter i.e. 3 months. Another method that improves employee morale and keeps

them happy is taking their input in the decision making process. Every major

decision that the organization makes is taken after consultation with its employees.

This gives the employees a sense of ownership as well as responsibility which

makes them feel like a pivotal part of the organization. This not only improves

morale, it also boosts productivity leading the organization to post higher revenues

and therefore higher profits. Most importantly, FFC believes in open communication

among its employees and between the top management and the lower level

employees. The employees know everything that goes on in the company. This

prevents grapevine and gossip from developing which in turn creates a stable

environment in the organization.

OUR VIEWS:TQM gives us eight basic concepts to achieve a motivated workforce

and FFC employs at least five of those concepts i.e. establish a positive attitude,

share the goals, develop interesting work, communicate effectively and celebrate

success. With the implementation of these concepts, FFC has achieved a motivated

workforce which works for the betterment of the company without being constantly

prompted by the supervisors.

SUPPLIERS FFC believes in communicating openly with the company’s suppliers. The company

makes sure that it conveys its requirements to its suppliers so that the material that

they get is in accordance with their needs and is of the quality that they desire. This

also helps the suppliers because they know what to deliver to the company. This

saves them time and money as well as the embarrassment of having their goods

rejected.Regarding selection and certification of suppliers, FFC has a strict

procedure. This process has four stages. In the first stage the potential supplier’s

products are carefully examined. It is made sure that they are in accordance with the

quality standards of FFC. In the second stage the supplier’s service quality is

gauged. Only the suppliers with the best service quality are chosen. In the third

stage the past record of the suppliers is verified. Suppliers with the experience of

delivering goods to large organizations are preferred. In the final stage the price is

decided. The supplier which has passed the previous three stages now has to have

a reasonable price to be selected. All these factors are investigated thoroughly and


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the company makes sure that the supplier will be able to meet the high quality that

people expect of FFC.

OUR VIEWS: We think that FFC follows the correct procedure when selecting its

suppliers because in their four stage process they look at all aspects of the supplier

and its products. This means that suppliers are selected on merit and everyone is

given an equal opportunity to become FFC’s supplier. This also ensures that only the

best suppliers are associated with FFC and the highest quality standards are met.

BENCHMARKING Being the market leader, FFC does not follow any other company’s benchmarks. On

the contrary, almost all other fertilizer companies benchmark FFC. That is because

not only is FFC the market leader but it also has some excellent policies pertaining to

quality management. This motivates other companies to follow FFC in a bid to be

like FFC. Although not benchmarking other companies, FFC does look at its biggest

competitor i.e. Engro Fertilizer. This is done because Engro has increased its market

share rapidly and FFC does not want it to take over its position as the market leader.

FFC looks at the policies of Engro and ensures that its policies are always better

than Engro’s policies. If Engro introduces a low price fertilizer, FFC will also launch a


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low price fertilizer. Similarly Engro always tries to get the better of FFC due to its

position as the market leader in the fertilizer sector.

OUR VIEWS:Benchmarking is an important facet of quality management. On the

face of it FFC looks like it is overconfident and is relying on its position as market

leader to achieve success. Its lack of benchmarking shows signs of corporate

arrogance. FFC is advised to use benchmarking. If it is the market leader it should

benchmark itself against other international companies. Fertilizer sector is strong in

agrarian economies in such as India. Therefore FFC is advised to benchmark itself

against a fertilizer company which is bigger than itself.


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SWOT ANALYSIS

Strengths

1. The market leader in the fertilizer sector.

2. Enjoys a very good reputation among the general public as well as the

corporate sector.

3. High quality products.

4. Friendly atmosphere in the organization which leads to motivated employees

and higher productivity.

Weaknesses

1. Armed forces management. The ex-army officers lack business acumen and

could be found wanting if Engro launches a hostile marketing offensive.

2. Lack of marketing. FFC products are rarely seen on satellite TV channels.

Opportunities

1. Further increase their production capacity.

2. Introduce even better quality products.

3. Expand into neighboring countries like Afghanistan and Iran.

4. In the absence of little competition, FFC can further increase its market share.


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Threats 1. Engro Fertilizer is the biggest threat to Fauji Fertilizer due to its rapidly

increasing market share and sound financial backing.

2. Adverse agricultural policies by the government could also affect FFC.

OBSTACLES According to FFC, they do not face any obstacles implementing their quality policies

and that their policies are always implemented. Minor problems do occur but

everything is always under control and does not cause any obstacle in the

achievement of their targets, both in terms of productivity as well as quality.

OUR VIEWS: We think that every organization faces obstacles in the achievement of

quality and that FFC was trying to portray an aura of perfection. This would either be

because they were being secretive or the really were very confident in their

organizational abilities.

LONG TERM PLAN FFC formulates its strategic plan in the light of the company philosophy. The vision

and mission of FFC are the guiding principles when the company decides its annual

objectives and its long term corporate strategy. FFC continuously strives to improve

its products and in the process increase its market share further. Rather than sitting

back and relaxing, FFC is looking to further consolidate its position as the biggest

fertilizer company in Pakistan.

OUR VIEWS:The long term plan of FFC is very encouraging and speaks volumes

about the company’s confidence in its bright future. The company wants to

consolidate its position as the market leader and wants to expand its market share in

the country’s fertilizer sector.


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RECOMMENDATIONS We recommend that FFC should continue to follow these quality principles. These

principles have served it well. They have made FFC the company that it is today. It is

recommended that FFC should use its position as a market leader in the fertilizer

sector and expand its operations in other countries as well. Neighbouring countries

like Afghanistan and Iran are ideal for this type of expansion. FFC is also advised to

maintain its high quality because in a situation like this it is very easy for a company

to get complacent and start neglecting the quality of its products. The company is

also advised to start working hard because Engro is gaining market share quickly

and if FFC does not do something about it then very soon FFC will have to relinquish

its status as the market leader.


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CONCLUSION Fauji Fertilizer Company Limited is a chemical fertilizer company. It is the largest

fertilizer company in Pakistan. We looked at the quality practices of Fauji Fertilizer

Company Limited. FFC employs the best quality practices at its production plants as

well as in the entire organization. Its production plants are located in Rahimyar Khan

and Ghotki while its head office is in Rawalpindi. Overall FFC is in a strong position

both financially as well as in terms of quality practices. They just need to continue

these practices so that they not only retain their position as the market leaders but

build upon it and further expand their market share.


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REFERENCES

Data Sources:

1. Introduction to FFC….http://www.ffc.com.pk/

2. Integrated Management Systems….http://www.ffc.com.pk/ims.aspx

3. Vision and Mission…..http://www.ffc.com.pk/vision-statement.aspx

Image Sources:

1. Integrated Management system……http://www.afoes.ae/aha/wp-

content/uploads/2010/12/IMS.jpg

2. SWOT

Analysis......http://st.depositphotos.com/1743352/1271/i/950/depositphotos_1

2712164-SWOT-Analysis-Diagram.jpg

3. Engro Fertilizer…..http://engro.pakissan.com/images/top2.jpg

http://www.ffc.com.pk/

http://www.ffc.com.pk/ims.aspx

http://www.ffc.com.pk/vision-statement.aspx

http://www.afoes.ae/aha/wp-content/uploads/2010/12/IMS.jpg

http://www.afoes.ae/aha/wp-content/uploads/2010/12/IMS.jpg

http://st.depositphotos.com/1743352/1271/i/950/depositphotos_12712164-SWOT-Analysis-Diagram.jpg



http://engro.pakissan.com/images/top2.jpg


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APPENDIX

The Questionnaire

Q1. What is the code of ethics for your organization?

Q2. Do you have a quality council?

Q3. What is the composition of the Quality Council? What are its functions?

Q4. What is your company’s philosophy?

Q5. What do you think is the main concern of your customers, price of the product or

quality of service?

Q6. What is the best way for your company to increase its market share?

Q7. How do you train your frontline managers to handle complaints from customers?

Q8. What are the ways you use to boost the morale of your employees?

Q9. Do recognition and reward affect the motivation of employees?

Q10. What are the various techniques you use to initiate and sustain process

improvement?

Q11. How do you select your suppliers?

Q12. How do you formulate your strategic plan and annual objectives?

Q13. How do you use the service department to encourage future sales?

Q14. Do you utilize 6-sigma strategies in your organization?

Q15. How do you use benchmarking in your organization?

fauji fertilizers

Business

integrated

integrated

occupational

continuous

total quality

biggest fertilizer

ffc head office

head office