total quality management mba 3

8/12/2019 Total Quality Management Mba 3

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1. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 3ACKNOWLEDGEMENTWe would like to thank Almighty ALLAH for giving us thestrength and intellect tocomplete this project. This was the most difficult project we had come across so farbut it was due to the mercy andblessings of the Almighty ALLAH that we perseveredand completed our project.We would also like to thank our respected teacher, ColonelManzoor Iqbal Awan, forhelping us with the completion of this project. You continuously guided us towardsthe proper completion of theproject. The mistakes you pointed out from our draftshelped us in refining our project and making it better in terms of quali ty as well asinterms of aesthetics.Finally we would like to thank Mr Muhammad Hasan Qureishi, Manager HR at FFCHead Office, Rawalpindi and MrTariq Javed, Manager Manufacturing andOperations at the FFC Production plant in Rahimyar Khan.You provided us with thevital informationthat was required to complete this project. Your help in that regard ismuch appreciated and acknowledged.

2. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 4DISTRIBUTION OF WORKMuhammad Hassaan TirmiziHad to develop the projectdesign, ensure its implementation and write thereport.Taimoor Khalid ButtHad to write the introduction and help with the projectdesignMuhammad Irfan AliHad to help with the abstract and design the layout of the report.Mohsin AliHad to write the conclusion and givethe recommendation

3. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 5TEACHERS REMARKS4. Fertilizer IndustryStandard of ConductCode of EthicsEngro fertilizerProcess improvementQuality councilIntegrated

management systemSuppliersEmployeesCustomersBenchmarkingFauji Fertilizer Company LimitedQualityTOTAL QUALITYMANAGEMENT MBA 3-BPage | 6ABSTRACTThis is a project where we had to examine Fauji Fertilizer against the backdrop ofTotal QualityManagement. TQM is the art of managing the whole to achieveexcellence. Therefore we had to see how FFC was managing its entire rangeofoperations while maintaining it very high standards and product quality.We found outthat FFC is a quality conscious company and it takesthe quality of its products veryseriously. It has a great relationship with its customers and the basis of thatrelationship is the customers trustthat FFC will provide them with quality products.Also FFC tends to be very careful in selecting suppliers and undertakesthoroughinvestigation before selecting a supplier.FFC is continuously looking to improve itsprocess and as a result increasing productioncapacity. This increased productionwould lead to an expanded market share for FFC. The company is a dynamicorganization which is usingevery tool at its disposal to be flexible with the changingenvironment.Keywords:

5. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 7INTRODUCTIONFERTILIZER INDUSTRYAs Pakistans economy is agriculture basedtherefore the fertilizer sector assumes acentral role in the development of the country. A good quality fertilizer increases yieldthereforeincreasing production of crops and earning foreign exchange for Pakistanthrough exports. Not only does the quantity of production increasebut the qualityalso increases. This increases the exports of our country which in turn helps uscorrect our adverse balance of trade with othercountries. Therefore it is necessaryto have a vibrant fertilizer industry in Pakistan. The good news is that future outlookfor the fertilizerindustry looks bright because of supportive government policies andfavourable climatic conditions. The government almost always comprisesof feudallords and they always try to implement encouraging agricultural policies becausetheir aim is also to maximize yield. Thus thefertilizer sector gets a boost in terms ofsubsidized gas rates and lesser hours of load shedding.

6. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 8FAUJI FOUNDATIONFauji Foundation is one of the largest conglomerates inPakistan.Its interests includeenergy, cement, and power generation, food, fertilizer, education, security andemployment services. It wassetup as a charity in 1954 and its main purpose was thewelfare of ex-army personnel and their dependents. It is run by retiredarmyofficers.Its headquarters is in Rawalpindi Cantonment. Some of the organizationsowned by this group are as follows:1. Fauji FertilizerCompany2. Fauji Cereals3. Foundation Gas4. Foundation University5. Fauji Cement Company6. Foundation Security7. Fauji KabirwalaPower Company8. Fauji Sugar Mills9. Fauji Security Services10.Fauji Fertilizer Bin Qasim

7. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 9FAUJI FERTILIZER COMPANY LIMITEDHISTORYFauji Fertilizer Company wasincorporated in 1978 as a joint venture between FujiFoundation and Haldor Topsoe A/S of Denmark. Its head office is located on MallRoad inRawalpindi Cantonment. FFC has two plants. One is located at Goth Machhiin Rahimyar Khan while the other one is situated at MirpurMathelo in Ghotki.Theinitial share capital of the company was Rs. 813.9 million. The present share capitalof 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,FFCELand associate FCCL.FFC commenced commercial production of urea in1982.FFC participated as major shareholders in a new DAP/Ureamanufacturingcomplex with participation of major international/national institutions. The newcompany Fauji Fertilizer Bin Qasim Limited(formerly FFC-Jordan Fertilizer CompanyLimited) commenced commercial production with effect from January 01, 2000. Thefacility isdesigned with an annual capacity of 551,000 metric tons of urea and445,500 metric tons of DAP, revamped to 670,000 metric tons of DAP.

8. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 10CURRENTToday, Fauji Fertilizer is the biggest fertilizer company in Pakistan with a60% sharein urea manufacturing and urea marketing in Pakistan. It is a name synonymous withquality and excellence. It has productionplants located in Rahimyar Khan in Punjaband Ghotki in Sindh. Its head office is located in Rawalpindi Cantonment. Itsproduction plantshave a combined production capacity of almost 2 million Met/yearof urea and 1.15 million Met/year of ammonia. It shares are trading at Rs.110.75 pershare in the Karachi Stock Exchange as of April, 2013. Fauji fertilizer has also beenthe recipient of many awards. For itsexceptional safety standards it has won 15awards of honour from the National Safety Council, USA since 1982. It has also wonthe award forbest corporate report from Institute of Chartered Accountants ofPakistan (ICAP) and Institute of Cost and Management Accountants ofPakistan(ICMAP) for 2010 and 2011.

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TOTAL QUALITY MANAGEMENT MBA 3-BPage | 11VISIONIn a nation of increasing population, we believe there is substantial opportunityofgrowth for FFC in the years to come.FFCs vision is to play a leading role in the industrial and agricultural advancement ofthe countrypursuing new growth opportunities offering the convenience of multipleproducts, brands and channels within and beyond the territorial limitsof Pakistan, tothe benefit of our customers and our shareholders, elevating our image as a sociallyresponsible and ethical company that iswatched and emulated as a model ofsuccess. MISSIONFFC is a market-focused, process-centred organization deliveringsuccessfulperformance through a strong focus on quality.Our mission is to stand above the competition and provide our customerswithpremium quality fertilizer products in a safe, reliable, efficient and environmentallysound manner, deliver exceptional services andunparalleled customer support,produce predictable earnings for our shareholders, and provide a dynamic andchallenging environment forour employees.

10. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 12PROJECT DESIGNTo collect data from the assigned company i.e. Fauji Fertilizer weused aquestionnaire. This was done because we felt that a questionnaire would provide uswith the information that we required to completeour project. Also a questionnaire isa practical and time effective method of collecting information. In this questionnairewe formulated


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questions that would provide us with a comprehensive body ofknowledge that would help us in obtaining a detailed picture of thequalitymanagement in effect at Fauji Fertilizer Company Limited. It was decided that eachgroup member would prepare separate sets ofquestions and before going for theinterview the best ones would be chosen for the final questionnaire.IMPLEMENTATIONWe wanted to askthe questions face to face with someone from the qualitydepartment but we were told that FFC has its quality control department at itsplantsite in Rahimyar Khan. This was really disappointing for us because we knew thatwe would not be able to conduct a face to faceinterview. We had to change ourplan. We contacted a friend of ours who works in the Human Resource departmentat FFC head office inRawalpindi. Through him we sent the questionnaire to theManager, Manufacturing and Operations in Rahimyar Khan. We had neverintendedto have the questionnaire filled; rather we had prepared it for our own reference sothat during the interview if we forgot any question,we would consult it. But due tocircumstances beyond our control we had to have had it filled. We were also told thatthe Manager,

Manufacturing and Operations at the plant sit would not attend ourphone calls because he was a very busy man. Anyway we altered thequestions andhad the questionnaire filled. It did not provide us a complete picture but did give usenough information to complete our report.For some of the information like theIntegrated Management System we were told to consult the official website of FaujiFertilizer CompanyLimited and use the data available there.

11. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 13THE REPORTThe objective of our report was to find out about the quality managementsystemsemployed by Fauji Fertilizer (FFCL). Based in Rawalpindi, FFCL is the largestchemical fertilizer producer of Pakistan. This reportexamines the managementsystems that are in place to maintain the quality standards of FFCL.INTEGRATED MANAGEMENTSYSTEMFFCL uses the Integrated Management System for the purpose of qual itymanagement. Integrated Management SystemsInternational Standards like ISO9001, ISO 14001 and OHSAS 18001 have the common purpose of assistingorganizations for riskmanagement, improved product quality, customer satisfactionand continual improvement. These standards provide a foundation fororganizationsto achieve business excellence.Quality in all areas has been a hallmark of the FFCLright from the beginning andtheir product"SONA UREA" has already established its prestigious place in themarket.One major landmark for Fauji Fertilizer Company over the years isManagementSystems Certifications for International Standards (Quality, Occupational Health &Safety and Environment) for its p lant sites atGoth Machhi and Mirpur Mathelo.To bring Management Systems (Q, OH&S and E) in l ine with the internationallyrecognized Standards,FFCL achieved International Standards certifications for ISO9001:2008, ISO 14001:2004 and OHSAS 18001:2007.Quality ManagementSystem certification at FFCL plant in Goth Machhi was firstachieved in November 1997. This was an honour for FFCL because it becamethe1st Fertilizer Plant in Pakistan to achieve this certification.Good operating practices established by FFCL are consolidated in itsIntegratedManagement Systems (Q, OH&S and E) and al igned with the requirements ofQuality, Occupational Health & Safety andEnvironmental Management SystemInternational Standards. The implementation of these standards is the mostimportant corporate strategyof FFCL.

12. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 14QUALITY COUNCILThis is also where the Quality Council comes in. Its purpose is towatch the overallquality of the organization keep a close eye on every aspect of the organizationthrough a properly formulated quality policy.It consists of the senior managers andthe directors of the organization. They ensure that the company follows theguidelines and does notdeviate from its quality principles.OUR VIEWS:In our view every company has to have an effective quality council soas to have its qualitypolicy implemented. Therefore FFC has constituted a qualitycouncil consisting of the senior most members of the organizations hierarchy.Thismeans that the top management will ensure the enforcement of the quality policywhich will be beneficial for the organization.CODE OFETHICS AND STANDARDS OF CONDUCTIt is the policy of FFC to follow the highest business ethics and standards of conduct.All theemployees are obligated to act responsibly i.e. to be honest, trustworthy,conscientious and dedicated to the highest standards of ethicalbusiness practice.The companys reputation depends on the conduct of its employees therefore each

13. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 15employee mustendeavour to act according to the highest ethical standards andabideby the rules and regulations.FFC enforces its Code of Business Ethics andStandards of Conduct at all levels fairly and without any prejudiceor bias. All theemployees and directors of the organization are morally as well as legally bound tofollow these rules. The following are thecore values that are followed by FFC:1. Honesty2. Excellence3. Compassion4. Consistency5. FairnessOUR VIEWS:In our view the companyhas developed an exemplary Code of Ethics.FFC has been following this code of ethics as well as these standards of conductwhich isproved by the various quality achievement awards that they have won overthe years. This is testament to good management skills and anexcellent grasp ofTotal Quality Management.PROCESS IMPROVEMENTFFC seeks uncompromising integrity through each individualseffort towards qualityproduct for their customers.. FFC also strives to achieve consistency in its productsi.e. not only achieving high qualitybut also maintaining it. This is a difficult task butFFC tries its best to consistently achieve the high standard that it has set for itself.Anothercomponent of their quality policy is fairness to employees, stakeholders,partners, suppliers and customers through adherence to merit andthe applicablelaws. As an organization FFC is always improving so as to remain up to date with theever changing external and internalenvironment. Training programs andperformance evaluation systems are part of this continuous improvement process.Training is given toemployees regarding the use of machines, handling of customercomplaints and dealing with suppliers. This is done so as to ensure thehigheststandards of quality and to maintain the prestige of FFC.OUR VIEWS: Continuous Process Improvement is the cornerstone of TotalQualityManagement. It means that the organization is constantly trying to improve and

14. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 16increase its productivitywhile keeping its employees happy. The customers aregiventhe best possible products and better production facilities and techniques aredeveloped. FFC also follows continuous processimprovement and is always lookingto improve its production process by bringing innovation in the various techniquesemployed in theorganization.CUSTOMERSThe business success of FFC is dependent on trusting relationships with theircustomers. Excellent products andservices to their customers further strengthen thisrelationship. Most of FFCs customers are concerned with the price of the product.This may

be due to the perception that any product of FFC will certainly be highquality. Therefore customers are not bothered about it. But still thecompany tries tomaintain that high quality so as not to break the trust of its customers. Although FFCis the market leader in the fertilizersector, it constantly tries to increase its marketshare. To do that it increases the quantity produced, lowers the price of its products,maintainsvery high quality, uses a proper supply chain system and brings into usean effective distribution network. In order to expand its market share,FFC tries toincrease sales. To do that it uses its marketing department which conceivesadvertising campaigns to increase awareness aboutFFC and its products. FFC also

15. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 17maintains highest standards of quality so as to earn a place in the customers hearts.Ahigh quality product will always be preferred by the customers because it givesincreased yield and that is the ultimate aim of everyfarmer.OUR VIEWS:FFC takes care of its customers. It always tries to develop the bestpossible products for its customers. It has a veryeffective distribution system thatmakes sure its products reach the market rapidly. But one thing that the FFCmanagement did not share washow they collected feedback from their customers. Inour view FFC should go to rural areas and take personal feedback from farmers.Thiswould further enhance their relationship with their customers.EMPLOYEESFFC trains its managers to handle customer complaints and also


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to motivateemployees. This is done via business courses, marketing modules and leadershipseminars. Employee morale is also improved byvarious other methods. FFCencourages innovation from its workers and wants them to think outside the box.That is why they are rewardedfor their creativity. This recognition and rewardsystem positively affects employee performance and motivates the thus increasingtheorganizations productivity and contributing to an overall happy environment. Therewards and recognition are given for the performance of anemployee during a

16. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 18quarter i.e. 3 months. Another method that improves employee morale and keepsthemhappy is taking their input in the decision making process. Every majordecision that the organization makes is taken after consultation with itsemployees.This gives the employees a sense of ownership as well as responsibility whichmakes them feel like a pivotal part of the

organization. This not only improvesmorale, it also boosts productivity leading the organization to post higher revenuesand therefore higherprofits. Most importantly, FFC believes in open communicationamong its employees and between the top management and the lowerlevelemployees. The employees know everything that goes on in the company. Thisprevents grapevine and gossip from developing which inturn creates a stableenvironment in the organization.OUR VIEWS:TQM gives us eight basic concepts to achieve a motivated workforceandFFC employs at least five of those concepts i.e. establish a positive attitude,share the goals, develop interesting work, communicateeffectively and celebratesuccess. With the implementation of these concepts, FFC has achieved a motivatedworkforce which works for thebetterment of the company without being constantlyprompted by the supervisors.SUPPLIERSFFC believes in communicating openly with thecompanys suppliers. The companymakes sure that it conveys its requirements to its suppliers so that the material thatthey get is inaccordance with their needs and is of the quality that they desire. Thisalso helps the suppliers because they know what to deliver to thecompany. Thissaves them time and money as well as the embarrassment of having their goodsrejected.Regarding selection and certificationof suppliers, FFC has a strictprocedure. This process has four stages. In the first stage the potential suppliersproducts are carefullyexamined. It is made sure that they are in accordance with thequality standards of FFC. In the second stage the suppliers service qualityisgauged. Only the suppliers with the best service quality are chosen. In the thirdstage the past record of the suppliers is verified. Supplierswith the experience ofdelivering goods to large organizations are preferred. In the final stage the price isdecided. The supplier which haspassed the previous three stages now has to havea reasonable price to be selected. All these factors are investigated thoroughly and

17. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 19the company makes sure that the supplier will be able to meet t he high qualitythatpeople expect of FFC.OUR VIEWS: We think that FFC follows the correct procedure when selecting itssuppliers because in their four

stage process they look at all aspects of the supplierand its products. This means that suppliers are selected on merit and everyone isgivenan equal opportunity to become FFCs supplier. This also ensures that only thebest suppliers are associated with FFC and the highest qualitystandards are met.BENCHMARKINGBeing the market leader, FFC does not follow any other companys benchmarks. Onthe contrary,almost all other fertilizer companies benchmark FFC. That is becausenot only is FFC the market leader but it also has some excellentpolicies pertaining toquality management. This motivates other companies to follow FFC in a bid to belike FFC. Although not benchmarkingother companies, FFC does look at its biggestcompetitor i.e. Engro Fertilizer. This is done because Engro has increased its marketsharerapidly 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 policiesare always betterthan Engros policies. If Engro introduces a low price fertilizer, FFC will also launch a

18. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 20low price fertilizer. Similarly Engro always tries to get the better of FFC due toitsposition as the market leader in the fertilizer sector.OUR VIEWS:Benchmarking is an important facet of quality management. On theface ofit FFC looks l ike it is overconfident and is relying on its position as marketleader to achieve success. Its lack of benchmarking shows signs ofcorporatearrogance. FFC is advised to use benchmarking. If it is the market leader it shouldbenchmark itself against other internationalcompanies. Fertilizer sector is strong inagrarian economies in such as India. Therefore FFC is advised to benchmark itselfagainst a fertilizercompany which is bigger than itself.

19. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 21SWOT ANALYSISStrengths1. The market leader in the fertilizer sector.2. Enjoys a verygood reputation among the general public as well as thecorporate sector.3. High quality products.4. Friendly atmosphere in the organizationwhich leads to motivated employeesand higher productivity.Weaknesses1. Armed forces management. The ex-army officers lack businessacumen andcould be found wanting if Engro launches a hostile marketing offensive.2. Lack of marketing. FFC products are rarely seen onsatellite TV channels.Opportunities1. Further increase their production capacity.2. Introduce even better quality products.3. Expand intoneighboring countries like Afghanistan and Iran.4. In the absence of little competition, FFC can further increase its market share.

20. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 22Threats1. Engro Fertilizer is the biggest threat to Fauji Fertilizer due to itsrapidlyincreasing market share and sound financial backing.2. Adverse agricultural policies by the government could also affectFFC.OBSTACLESAccording to FFC, they do not face any obstacles implementing their quality policiesand that their policies are alwaysimplemented. Minor problems do occur buteverything is always under control and does not cause any obstacle in theachievement of theirtargets, both in terms of productivity as well as quality.OUR VIEWS: We think that every organization faces obstacles in the achievementofquality and that FFC was trying to portray an aura of perfection. This would either bebecause they were being secretive or the really werevery confident in theirorganizational abilities.LONG TERM PLANFFC formulates its strategic plan in the light of the company philosophy. Thevisionand mission of FFC are the guiding principles when the company decides its annualobjectives and its long term corporate strategy.FFC continuously strives to improveits products and in the process increase its market share further. Rather than sittingback and relaxing,FFC is looking to further consolidate its position as the biggestfertilizer company in Pakistan.OUR VIEWS:The long term plan of FFC is veryencouraging and speaks volumesabout the companys confidence in its bright future. The company wants toconsolidate its position as themarket leader and wants to expand its market share inthe countrys fertilizer sector.

21. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 23RECOMMENDATIONSWe recommend that FFC should continue to follow thesequality principles. Theseprinciples have served it well. They have made FFC the company that it is today. It isrecommended that FFC shoulduse its position as a market leader in the fertilizersector and expand its operations in other countries as well. Neighbouring countrieslikeAfghanistan and Iran are ideal for this type of expansion. FFC is also advised tomaintain its high quality because in a situation like this it isvery easy for a companyto get complacent and start neglecting the quality of its products. The company isalso advised to start working hardbecause Engro is gaining market share quicklyand if FFC does not do something about it then very soon FFC will have to relinquishits statusas the market leader.

22. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 24CONCLUSIONFauji Fertilizer Company Limited is a chemical fertilizer company. It isthe largestfertilizer company in Pakistan. We looked at the quality practices of Fauji FertilizerCompany Limited. FFC employs the best qualitypractices at its production plants aswell as in the entire organization. Its production plants are located in Rahimyar Khanand Ghotki while itshead office is in Rawalpindi. Overall FFC is in a strong positionboth financially as well as in terms of quality practices. They just need to


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continuethese practices so that they not only retain their position as the market leaders butbuild upon it and further expand their marketshare.

23. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 25REFERENCESData Sources:1. Introduction to FFC.http://www.ffc.com.pk/2.Integrated Management Systems.http://www.ffc.com.pk/ims.aspx3. Vision and Mission..http://www.ffc.com.pk/vision-statement.aspxImage Sources:1. Integrated Management systemhttp://www.afoes.ae/aha/wp-content/uploads/2010/12/IMS.jpg2.SWOTAnalysis......http://st.depositphotos.com/1743352/1271/i/950/depositphotos_12712164-SWOT-Analysis-Diagram.jpg3. EngroFertilizer..http://engro.pakissan.com/images/top2.jpg

24. TOTAL QUALITY MANAGEMENT MBA 3-BPage | 26APPENDIXThe QuestionnaireQ1. 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 companysphilosophy?Q5. What do you think is the main concern of your customers, price of the product orquality of service?Q6. What is the best wayfor 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 processimprovement?Q11. How do you select your suppliers?Q12. How doyou formulate your strategic plan and annual objectives?Q13. How do you use the service department to encourage future sales?Q14. Doyou utilize 6-sigma strategies in your organization?Q15. How do you use benchmarking in your organization?

total quality management mba 3

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