Impact of Supplier Performance on Supply Chain Efficiency: A Study of Fauji Fertilizer Company’s Procurement Process

Abstract

The effect of suppliers is becoming more important in the capital-intensive and highly regulated industries due to supply chain efficiency where the performance of suppliers plays a major role as opposed to the individual capability of operation. This paper looks at the aspect of supplier performance and supply chain efficiency in the case of Fauji Fertilizer Company Limited (FFC) which is the largest fertilizer producer in Pakistan, even after its strategic merger with Fauji Fertilizer Bin Qasim Limited (FFBL) in July 2024. The study employs a single case study design because the author uses illustrative design to incorporate both secondary and primary, performance based measures in the analysis of post-merger procurement and supply chain issues. An analytical framework is adopted in details and involves PESTEL and SWOT analysis to evaluate the external and internal environment, whereas segmentation of the procurement portfolio of FFC includes ABC analysis of the portfolio and the Kraljic Matrix. The performance of suppliers is assessed systematically using weighted supplier scorecards which emphasize on quality, delivery, cost, service and compliance aspects. The conclusions indicate that there is a quantifiable and direct effect of supplier performance on the essential measures of supply chain efficiency such as the inventory turnover, the order fulfillment cycle time, and the perfect order index. Although the performance of strategic raw material suppliers is good, weaknesses are realized in the logistics, packaging and regular suppliers especially when beset with pressure of post-merger integration. The research concludes that managing supplier performance is the important strategic tool in improving the efficiency of the supply chain, maintaining leadership in the market, and merger synergies in FFC. The study will provide practical and evidence-based suggestions to assist suppliers in segmentation, monitoring, and optimization of the procurement strategy in the Pakistani fertilizer industry.