TOTAL QUALITY MANAGEMENT

FINAL PROJECT

SUBMITTED TO:
DR.NAWAR KHAN

SUBMITTED BY:
SAADAT ULLAH (01-120092-050) OMER SALIM TIPU

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DEDICATION
Dedicated to our beloved parents and to all those,
whose prayers always pave the way to success for us.

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ACKNOWLEDGEMENT
First of all we would like to thanks a millions to Almighty ALLAH, whose blessing endowed us to complete this project timely and successfully. We would also like to pay tribute to the Holy Prophet Muhammad S.A.W (Peace be upon him), whose life is perfect model for whole humanity. We owe this success to our parents, who are real source of encouragement forever.

Thanks to Almighty Allah for giving us knowledge, power and strength to accomplish this task. We learned a lot while doing this project and this will certainly help us in our forth coming life. Many friends of us helped us during this project but we are really thankful to the help and support of Dr. Nawar khan from the Institute of management sciences, who helped us in all the phases of this project. His supervision helped us a lot during the times of difficulties. In the end we would like to thank all of our friends for their support and encouragement.

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THE GROUP IN BRIEF The ICI Group is one of the largest specialty products, coatings and materials companies. ICI has over 50,000 products more than 200 manufacturing sites and offices in over 55 countries; some 59,000 employees worldwide. ICI has leading international positions in industrial adhesives, specialty starches, electronic and engineering materials, fragrances, flavors, food ingredients, specialty agrochemicals, catalysts, synthetic lubricant base stocks and formulations, personal care ingredients, paints, acrylics, polyurethane chemical and systems based on MDI (diphenylmethane diisocyanate), ozone benign refrigerants and titanium dioxide pigments.

STRUCTURE
ICI BOARD The ICI Board consists of the Chairman, five Executive Directors and five Non-executive Directors. The Board is responsible for determining the direction and board policies of the Group consistent with the objective of being the industry leader in creating value for customers and shareholders. EXECUTIVE MANAGEMENT TEAM The management of ICI is through an Executive Management team headed by the Chief Executive and comprising the Vice Chairman, Chief Operating Officer, Chief Financial Officer, five Executive Vice Presidents, the Senior Vice President of Human Resources and the General Counsel.
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INTERNATIONAL BUSINESS An Executive Vice President or a Chief Executive Officer heads ICIs International Businesses. Each is responsible for the financial performance of their business under the strategic general guidance of the Executive Management Team.

VISION
Today's ICI is about winning - winning to achieve the vision of becoming the industry leader in creating value for customers and shareholders and to become the most admired specialty products, paints and materials company in the world. ICI aims to achieve this through: Market-driven innovation in products and services. Winning in quality growth markets worldwide ICI will invest in growth markets in which it has leading market positions. ICI's aim is to have all its businesses in such positions and it will do this by concentrating efforts on the best quality opportunities around the globe. Inspiration and reward of talented people ICI is determined to create a way of working that releases the energy and talents of everyone in the Group. Exemplary performance in safety and health. ICI's goal is to have an exemplary performance in safety and health and become the world leader. Responsible care for the environment. Relentless pursuit of operational
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excellence

HISTORY
ICI was formed on December 7, 1926, by the merger of four of the largest chemical companies in the UK. Its purpose was to create a British company capable of competing in world markets with large corporations in America and in Germany. The four companies merged were Brunner, Mond & Company Limited, Nobel Industries Limited, British Dyestuffs Corporation Limited and United Alkali Company Limited. The plan for the new company was agreed on board the Cunard Line vessel, Aquitania, on a voyage from New York to Southampton. The architects of the merger were Sir Harry McGowan, Chief Executive of Nobel Industries, and Sir Alfred Mond, later Lord Melchett, the Chairman of Brunner, Mond & Company, who became the first ICI Chairman. With 33,000 employees, ICI's main products included chemicals, explosives and accessories, fertilizers, insecticides, dyestuffs, domestic chemicals, leather cloth, printing, sporting ammunition and paints. In its first year of business, ICI sold GBP 27 million worth of these products and made a pretax profit of GBP 4.5 million. Throughout its history, ICI has been at the forefront of scientific discovery and developing inventions for the marketplace with products such as fertilizers, plastics, manmade fibres, anaesthetics, heart drugs, herbicides, pesticides, commercial explosives, waterborne paints, reactive dyes and
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biodegradable plastics. In 1993, ICI demerged its bioscience businesses of pharmaceuticals, agrochemicals, specialities, seeds and biological products into a separate, publicly listed company, Zeneca Group PLC. ICI has always emphasized research and innovation and is continually engaged in development programs. The Group relies on 4,000 research, technology and engineering specialists to maintain a strong technical base and ensure competitive advantage through the development of new or improved products and processes. The ICI Group today is one of the largest chemical companies in the world, with international strengths in the areas of paints, materials, explosives and industrial chemicals. ICI operates its main businesses on an international basis. In addition, regional businesses located in Pakistan, India, Argentina etc. reinforce the Group's worldwide competitive strengths.

ICI IN PAKISTAN

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ICI in Pakistan, a leader in industrial chemicals and paints, manufactures and sells a diversified range of products. The Company's vision is to be the industry leader in creating value for customers, shareholders, suppliers and employees. ICI in Pakistan has played an active role in the Country's industrial development and progress, for well over half a century, and continues to do so, with investment in the future.

AGROCHEMICAL & SEEDS

PAINTS POLYESTER FIBRE

OUR BUSINESSES?
PHARMACEUTICALS SODAASH

A S H
PURE TEREPHTHALIC ACID CHEMICALS

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ICI Pakistan Limited's predecessors have been operating in the country well before independence. Its first manufacturing plant for Soda Ash in Khewra was established over fifty years ago. Since then, it has progressively moved to produce a diversified range of products including decorative, refinish and industrial paints, polyester fibre, sodium bicarbonate, agrochemicals, specialty chemicals and pure terephthalic acid. The Company also markets toll manufactured, pharmaceuticals and animal health products, in addition to a range of imported industrial chemicals and seeds. In June 1998 ICI Pakistan's latest investment in a USD 490 m plant to annually produce 400,000 tonnes of Pure Terephthalic Acid (PTA) was commissioned. This is ICI Pakistan's largest single investment to-date. With annual sales of over Rs 11 billion in 1998 and a sustained record of financial viability, the Company continues to add value for its shareholders. ICI in Pakistan is investing in the future, in order to respond to and meet the challenges of the coming century. By developing an ability to compete internationally, focusing sharply on customer needs and having a culture of continuous improvement, ICI Pakistan plans to achieve its vision of enhancing value for the shareholders and the customers, also meet the challenging targets it has set for the Company's safety, health and environmental performance by the year 2000.

Mission Statement
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The ICI paints team intends to remain market leaders in the Paints Business. We wish to be recognized for offering the best products & excellent customer services. We will run a high quality, profitable and growth oriented business in an exciting and safe environment.

Introduction of Paint Industry

Paint A chemical oriented liquid used to protect and decorate different kind of surfaces Paint industry is divided into sectors: 1. Organized Sector 2. Mushroom Sector Organized Sector It includes the companies listed in Stock Exchange or the firms registered, having planned promotional activities with relatively high prices. They fall under the capacity tax system and distribute in more the one province. Mushroom Sector It includes the unregistered firms, having city based distribution with seasonal brands, having lower prices with no planned promotional activities. They fall under fixed tax system.

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Companies listed in stock exchange are: ICI Dulux Berger Paints Pakistan Ltd. Buxly Pains Kausar Paints. Competitors of ICI Berger Master paints Mushroom industry Baxley paints

ICI DULUX------ THE MARKET LEADERS

ICI Dulux is the market leader not only w.r.t the quality but also with respect to turnover. ICI has an edge over it competitors due to its diversified fields. It is known throughout the world and has good name in other sectors as well, which has given the advantage to Dulux in paints. As far as the government is concerned, ICI Dulux is paying all its taxes properly and so it is not being bothered different government policies.

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PRODUCTION
Product Lines ICI has diversified product lines like: Paints Polyester Staple fiber Soda ash Specialty chemicals Medicines Market share of different Product line in Pakistan: Paints Soda ash Polyester Medicines 70% 80% 25% 45%

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Product range (Paints Business) ICI Dulux is producing both WATER BASED paints as well as OIL BASED paints. Water Base Paints Dulux Pentalite Special Plastic Emulsion (Washable, for masonry surfacestone structure) Dulux Pentalite Natural Whites (for sensitive people from smell, washable with smooth and durable finish Dulux Weather Shield (protective paints against extreme weather) Paintex Plus Emulsion ( for price sensitive people) Maxilite (Economical , quality distemper) Solvent Base Paints Dulux systhetic Enamel (for wood & metal surfaces) Dulux Pearl Glo (for all surface) Dulux Prime ON (perfect base for emulsion coating) Dulux Red Oxide And Zinc Primer ( to protect metal rust) Dulux Water Repellent (prevents from water and fungal attacks) Dulux Aluminum (for resisting high heat)

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Production Process (Paints)

Dispersion Section In this stage raw materials (Pigment, Resin & Solvent additives) are issued from the material control department to production department according to the requirement. In production department raw material are first sent to dispersion section where Wall Mixer Machine is used to mix all the ingredients. Once the ingredients are mixed then they are sent to various Grinding Mill Base Machines (Sand Mill, Basket Mill, Bead Mill). These mills process and grind ingredients for smoothness and dispersion. Here the Gage plate (0-50 microns) is used to check to smoothness/dispersion. In this section mixture is thicker. Mixing Section In this section, adding more Resin & Solvent, Additives does further mixing process to reduce thickness of the mixture. Resin is added to increase the quality, volume and for further smoothness. Other chemicals are also used to kill the germs and to create fragrance. Color Match & Quality Control Section In this section, special chemicals called Tinters are to add color to the
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mixture according the requirement of customers. After adding the color then the quality is checked in the Quality control laboratory where the followings things are checked: Color Viscosity (thickness) Weight per liter Glass (shinning) Drying In color checking, the company has set predetermined color standards (according to the customer demand) and stable product color is matched according to the standards. If there is variation then more or less tinters are used to make it according to the standards. Filling Section After matching the colors, the finished product is sent to the Filling Section where Fix Mixers are used to fill the tins/containers according to their capacity. Ink Jet Machine is used to print the manufacturing date, expiry date, product price, sales tax, color, quantity/volume and product codes. After filling the containers, weight is measured on the computerized scale. Now the paints are filled in plastic containers for the customer benefits.

LOCATION
The location of businesss facilities has a significant impact on companys operating cost, the price it charges, and its ability to compete in the market.
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ICI started operation in Pakistan 1964, its manufacturing plant for paints Business situated at 346 Ferozepur Road, Lahore. Corporate offices Lahore Islamabad Peshawar Hyderabad Faisalabad Multan Regional Offices Rahim Yar Khan Vehari Quotta Sahiwal Gujranwala Warehouses Karachi Multan Hydraabad Islamabad

FACTORS AFFECTING LOCATION SELECTION

Following are a few of the factors that can affect the decision of location
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selection: Proximity to markets. State & local Government policies. Labor cost. Labor availability. Utilities, taxes & real estate costs. Transport available. Quality of life. Community attitude. Expansion potential etc. Capacity It is the maximum rate of output for a facility that even achieved. NO. OF PLANT AND THEIR CAPACITY ICI has one plant for paints manufacturing located at Lahore. The total capacity of this plant is 18 million liters per year UTILIZATION Maximum Total capacity = 18 million liters per year = 14 million liters per year Actual production

Normally they are using two shifts per day. Utilization ( %) = actual capacity/max capacity = 77.77% Capacity cushion= 100%-77.77% = 22.23% FORECASTING It is a prediction of future events used for planning purposes. ICI uses
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following approaches in forecasting.

APPROACHES TOWARDS FORECASTING

Forecasting is a function of demand, and three approaches are normally available for making the forecast of future demand as: (A) QUALITATIVE APPROACH This approach incorporates important factors like decision makers emotions, experience, judgment, etc. It includes: Executive opinion Sales force forecast Consumer market survey (B) QUALITATIVE APPROACH This approach employs a variety of mathematical models that use historical data to make a demand forecast but ICI uses average method on the basis of historical data. Demand Pattern ICI Paints have a seasonal demand pattern. They have a greater demand in peak periods like September, October , November, February and March due to Eid and marriage occasions. But they have demand is less in rainy seasons. INVENTORY & MATERIAL MANAGEMENT Material management is concerned with following tasks
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 Inventory control at stores etc. Supplier selection Issuing purchase releases Work force schedules Inbound transportation & Outbound transportation Inventory control at distribution center Inventory level determination and inventory management is the crucial events for any organization. Determination of inventory level depends on the future demand.

USES OF INVENTORY
Inventory is used to Provide the stock of goods to meet anticipated demand De-couple production from distribution Take advantage of quantity discounts Hedge against inflation Protect against shortage Permit operations to continue

TYPES OF INVENTORY
Following are the types of inventory that might be found in any organization Raw material inventory Work-in-process inventory Finished goods inventory

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INVENTORY MANAGEMENT AT ICI Management at ICI carries out the basic functions of inventory management in a sophisticated way. Basically, ICI gives close focus to the inventory functions like purchasing and distribution. ICIS RAW MATERIAL INVENTORY INCLUDES: Pigment Resin Solvents Additives INVENTORY CONTROL & RECORDS AT STORES IN ICI ICI is very concerned with inventory records and controls, which is one of the factors contributing towards their success. Store is headed by store supervisor or store officer. They told me that they keep record of every type of material with their weight and quality. They have to maintain record of ledgers manually and computerized as well. When some departments require certain part then they issue with the permission of manager (Dept) & record in their books. Relationship with suppliers ICI maintains a very cooperative relationship with their local and foreign suppliers. They also invite their suppliers to their organization PROCUREMENT DEPARTMENT This department arranges for purchase of an item and when that item is to
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be purchased. Then store records it and keeps it in a specified location & issues it to the desired department. PROCUREMENT PROCEDURE Production demand & monthly forecasting is considered keeping in view lead-time & minimum stock level. ICI purchase its raw material from local as well as from other countries. They import some items like Titanium dioxide, which is used in paints and purchased some, items locally Account department issues checks for payment Lead time for imported items is 30 to 70 days. When purchased items enter the factory gate then they are checked by gatekeepers & send to store. DISTRIBUTION SYSTEM The distribution system of ICI Dulux is dealer oriented. It has a wide network of distribution throughout Pakistan but all the distribution is done through dealers. ICI Dulux has its own warehouses and from there the products are directly transported to the dealers who ultimately sell them to the customers. Therefore the Distribution Channel of all sort of paints is ProducerDealerConsumer Dealers ICI has certain requirements, after these requirements are fulfilled a dealer is registered and is legally allowed to start the distribution.
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 Special accounts with Dealers Code (DC) are opened in the computer. A Promissory Note is signed. Dealers have to sign a blank cheque for security. Dealers have to submit a copy of their Identity Card (ID card) and a few more documents. Lahore and Karachi are advance payment markets where as Multan and a few other small cities have a credit market. MODE OF TRANSPORTATION For delivery purposes, ICI uses Mazda trucks, pickups and small vans. INVENTORY INSPECTION At ICI, inspection of inventory is made. Actually, the purpose of inspection is to see that whether the inventory level has reached to the level that has been designated as reorder point. If this reorder point is reached then the order is placed. MATERIAL REQUIREMENT PLANNING The basic ingredients of Material Requirement Planning are: Master Production Schedule Bills of Material On Hand Inventory MRP AT ICI
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As ICI is dealing with the production of standard products so it has full knowledge about the ingredients and the quantity of ingredients required making one container. At ICI, MRP is not done with great zeal because the company gets the forecasted demand for the whole year and the whole years demand is segregated into monthly demand by marketing department of ICI. So, the company gets the real information about the raw material and component requirement so as to satisfy forecasted demand. Hence, the forecasted demand plays a vital role in MRP at ICI.

TOTAL QUALITY MANAGEMENT AT ICI

At ICI, quality is employed in each and every step of production process and it starts from the purchase of raw material and ends at the final product. RAW MATERIAL CHECKING All raw materials and their quality are checked so as to ensure that no material with bad quality could harm the quality of finished product. QUALITY TESTING ICI Paints has a proper and standardized Quality Control Laboratory, which test the quality of paints. They check opacity, density, smoothness, drying, glass, color, life, viscosity and weight. Employees involvement in TQM
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It is very necessary every employee should take interest in maintaining the quality of product. ICI are taking various steps to involve their employees in TQM by giving them training, continuous feedback, incentives and awards & by encouraging teamwork. They give annual rewards to those employees who give more suggestions to improve quality.

ISO Certification The ISO 9000 Standards

ISO 9000 is a set of standards governing documentation of quality program. ICI become certified in 1999 by complying the requirements of ISO 9001. ISO 9000 actually consists of five documents: ISO 9000-9004. ISO 9000 is an overview document, which provides guidelines for selection and use of the other standards.

ICI & ISO 9001

ICI has got ISO 9001 in 1999 by meeting all the requirements, which are included in this standard. ISO 9001 is a standard that focuses on 20 aspects of a quality program for companies that design, produce, install and service products. These aspects include: Management responsibility Quality system documentation Purchasing Product design Inspection Training Corrective action
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 Produce Installation Service

ICI & ISO 14001

The ISO 14001 standards require participating companies to keep track of their raw materials use and generation, treatment, and disposal of hazardous wastes. ICI has got ISO 14001 in 1999, covering the areas of : Environment management system Environmental performance evaluation Environment labeling Life cycle assessment

ICI & MRP 2 Class A

MRP stands for Manufacturing Resource Planning. It is a very complicated and tough to get, only there 23 companies have got this certificate all over the world in which ICI is one.

Benefits of ISO 9000 & MRP 2

Enhance the firms quality image Competitive edge Management System improvements
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 Good relations with government agencies Enhance Customer satisfaction Cost reduction Improved productivity and efficiency Increase market share Improve personal job satisfaction and morale Won more agreements/contracts

SWOT ANALYSIS Strengths

Having a professional management Friendly and cooperative working environment Technical know how & well qualified staff Back selling team, focused directly at consumers, give a way to communicate directly with consumers. Brand loyal customers. Excellent financial resources. Well established research and development

Weaknesses
Decision-making on collective basis leads to late decisions. A bureaucratic way of goal setting

Opportunities
Entering into a new market or segment. New governmental and industrial projects. Innovations.
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Threats
Invisible trade barriers. Mushroom industries Strict government policies

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