Acknowledgement

First and for most we would like to thanks our beloved family who help us

throughout our life.

Secondly, we would like to express our gratitude to our advisor, instructor

Yohannes Tafere, for his constructive guidance and patience.

Thirdly, we would like to say thanks Amhara Pipe factory administrative staffs and

employees for their cooperation.

Finally we would like to say thanks for all logistics and supply chain management

2005 Graduated class for their encouragement.

List of tablesTable page noTable 3.1 Sample profile Table 4.1 Gender profile of the respondentTable 4.2 Educational level of the respondentTable 4.3 Experience of the respondentTable 4.4 Respondent’s field of specializationTable 4.5 plane performanceTable 4.6 Source PerformanceTable 4.7 makes PerformanceTable 4.8 delivery PerformanceTable 4.9 return performance Table 4.10 Supply chain performance of APF

Evaluation of supply chain management performance

in case of Amhara pipe factory

Abstract

This study entitled, evaluation of supply chain management performance in the

case of Amhara pipe factory. The overall objective of the study was to evaluate

the factory supply chain management performance. as a result of this study the

researchers were able to evaluate the supply chain status of the factory. Through

stratified sampling method, questionnaires were distributed, collected and

analyzed as well interpreted quantitatively using table, percentage and mean.

Based on the analysis, interpretation and conclusions was made. Finally, the

researchers provide easily applicable but, determinant recommendation regarding

gaps that were observed in amhara pipe factory supply chain management

practice. Moreover the factory supply chain management performance was good.

However, the finding shows some weakness specifically in source and training

provision. This makes the factory not to experience better performance than the

current one. The researchers recommended that the pipe factory shall give short

term training for the existing employees and hires new skillful employees who

stand for renaissance.

CHAPTER ONE

1. INTRODUCTION

1.1. BACKGROUND OF THE STUDY

The most recent stage in the evaluation of the integrated logistics began when

firms realized the need for a seamless pipeline to control the flow of goods and

services to the final customer. This integrated system of suppliers, manufactures

and intermediaries constitute a supply chain. Thus, the term “supply chain

management” was born (Allawadia and Singh R, 2010).

There is a difference between the concept of supply chain management and the

traditional concepts of logistics (Michael H, 2003). Simply stating, logistics is a

logical extension of transportation and its related areas to achieve an efficient and

effective goods distribution system (Bhatnagar A, 2009).Also the council of supply

chain management professionals (CSCMP) cited in Murpy P. and wood D. (2008)

argues that supply chain management encompasses the planning and

management of all activities involved in sourcing and procurement, conversion

and all logistics management activities.

Measuring the performance of supply chain and their member firms is a critical for

underlying supply chain problems and in keeping end customers satisfied in

today’s highly competitive rapidly changing market place (Metters k. et al, 2006).

In Ethiopia the history of supply chain management is short. The country economy

rest on three sectors namely, agriculture, service and industrial. The contribution

of industrial sector has been small compared to the agriculture and service sector.

According to Birhanu et al. (2003) The sector dominated by three sub-sectors:-

Manufacturing (38%), construction (25%) , electric and water supply (18%).

The remaining sub- sectors, mining and quarrying etc- constitute the remaining

(19%).There are about 130 state owned and 7000 private manufacturing

industries of all sizes, mainly produce textiles, food stuffs, beverages, cement,

leather and leather product, metallic and non metallic product, paper, plastic etc.

Among the plastic factory Amhara pipe factory is one of the newest and this study

also mainly focus on the factory supply chain practice performance.

1.2. STATEMENT OF THE PROB

LEM

Supply chain is a complex interactive system consisting of all parties involved

directly or indirectly, in fulfilling customer’s request.

Bhatnagar, (2009) point out that there is a basic pattern to the practice of supply

chain management. Each supply chain has it is own unique set of market

demands and operating challenges and yet the issues remain essentially the

same in every case. Bhathagar added that supply chain exist in both service and

manufacturing organizations, although the complicity of the chain may vary

greatly from industry to industry and firm to firm.

Evaluating the performance of supply chain is very important because, to day,

competition is not between companies, rather between its supply chains, and the

most effective and efficient on will win. Superior performance of the supply chain

serves as a competitive advantage for the companies. So, performance evaluation

of a supply chain is used as a planning and management decision tool for

effective supply chain operation.

Evaluation of Amhara pipe factory’s supply chain practice is critical aspect for the

factory. In this study we evaluate the factory’s supply chain effectiveness based

on plan, source, make, and delivery and return functions.

The researchers have been addressed the following basic questions:-

• To what extent the factory is effective in supply chain? • What hinder the factory’s supply chain performance? • What are the strength and weakness of the factory’s supply chain practice?

1.3. OBJECTIVE OF THE STUDY

The study has the following general and specific objectives;-

1.3.1. GENERAL OBJECTIVE

The overall objective of the study is to evaluate the Amhara pipe factory’s supply

chain management performance and to recommend on the possible mechanism

to bring better performance.

1.3.2. SPECIFIC OBJECTIVES

• To measure the factory’s supply chain management system • To identify hindrance of supply chain performance in the factory. • To evaluate the factory’s interaction with it is suppliers and customers. • To analysis the factory strength and weakness in the supply chain practice.

1.4. SIGNIFICANCE OF THE STUDY

The study has the following significance to:-

Policy makers: - it is hoped that the study will enable Amhara pipe factory policy

maker to create new or to improve the existing policy regarding the practice.

Society: - through this survey the society may get better and qualified provision of

goods and services.

Private sectors: - this study will initiate other similar organization to see there own

status of supply chain management practice.

Other researchers: - also the study may serve as a ground for further investigation

in similar situation.

1.5. DELIMITATION OF THE STUDY

Supply chain management is incredibly complex under taking involving different

participants. As a result, assessing information from suppliers, producers,

wholesalers, distributers, retailers, consumers, government and company itself is

essential to make the study sound, reliable and acceptable. However, due to

financial and time limitation of the researchers all the information was generated

only from the factory.

But, if other researchers want to improve this study it is better to gather full

information from other participants.

1.6. DEFINITION OF KEY TERMS

• Supply chain: - a series of activities and organizations that materials move

through on their Journey from initial suppliers to the final customers. • Supply chain management: - the coordination of production, inventory,

location, and transportation among the participant in a supply chain to achieve

the best mix for the market being served. • Logistics: - the function responsible for the flow of materials from suppliers

into an organization, through operations within the organization and then out

to customers. • Key performance indicators: - key functional parameters spanning source,

plan, make and delivery operations.

1.7. ORGANIZATION OF THE STUDY

This research consist of five chapters. Introductory part is presented in chapter

one. Chapter two provide a possible summery of various related literatures.

Chapter three has contained the research methodologies. Chapter four presents

the analysis of data and gathered information. Which is the core of the paper.

Finally, fifth chapter has contained summery, conclusion and recommendation.

0

CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

This chapter deals about concepts that link with supply chain management.

Under this different scholars and writers view were presented. Mainly, the

discussion focus on determinant functions such as plan, source, delivery, return,

and related ideas was raised

2.1. CONCEPTS OF SUPPLY CHAIN MANAGEMENT

According to the institute for supply management (cited in metters et al., 2006)

described supply chain management as “the design and management of

seamless, value added processes across organizational boundaries to meet the

real needs of the end customer. The development and integration of people and

technological resources are critical to successful supply chain integration.’’ In

other case Sunil Chopra and Peter Meindi (2006) Supply chain management

involves the management of flows, all flows of information product or funds

generate costs within the supply chain.

Supply chain management defined as the process of planning, organizing, and

controlling the flow of materials and services from suppliers to end users. This

integrated approach incorporate suppliers, supply management, integrated

logistics, and operations (Lemay, Bloomberg and closs, 2003). Similarly, the

council of supply chain management professionals (CSCMP) cited in Murphy and

Wood (2008) asserts that the term encompasses the planning and management

of all activities involved in sourcing and procurement, conversion and all logistics

management activities.

Supply chain management is the integration of key business process from initial

raw material extraction to the final or end customer, including intermediate

processing, transportation and storage activities and final sale to the end

customer (Metters et al., 2006).

Van Weele (2005) defines supply chain management as the way in which

materials processes are managed within the company. However, the term relates

also to the way in which the external materials flow and the incoming materials

flow.

Upon all concepts stated above the researchers describe supply chain

management as a fundamental integration of interdependent actors that involve

in fulfilling customers order starting from raw material extraction till finished

product distribution for ultimate users.

2.2. OBJECTIVE OF SUPPLY CHAIN MANAGEMENT

The primary objective of supply chain management is to reduce or eliminate the

buffers of inventory that exists between organization in a chain through the

sharing of information on demand and current stocks level (Allawadi S. and Singh

R., 2010). Also Michael Hugos (2003) suggested that the goal of supply chain

management is to increase sales of goods and services to the final, and use

customer while at the same time reducing both inventory and operating

expenses.

Similarly, Metters et al. (2006) states that the ultimate goal in supply chain

management is to increase value for the end customers as well as the firms in the

supply chain network. By supporting the above point van weele (2005) elaborate

the aim of logistics and supply chain management as bringing counter balance

the short coming of functional thinking, by focusing on those processes through

which customers can be better served.

Based on Sunil chopra and Peter meindi (2006) suggestion the objective of any

supply chain is to maximize the overall value generated. The value supply chain

generates is the difference between what the final product is worth to the

customer and the effort the supply chain expends in filling the customer request.

Generally, benefits of effective supply chain includes lower inventories, lower

costs, higher productivity, greater ability, shorter lead times, higher profits, and

greater customer loyalty (Stevenson, 2005).

2.3. ELEMENTS OF SUPPLY CHAIN

Supply chain management is not easy task rather, it incorporates wide range of

operation that involve in each and every steps of this chain. From those basic

activities the following are some among the many.

2.3.1. PLAN

Michael Hugos (2003) define plan as;-

“all the operation need to plan and organize the operations in the other

categories.’’

Also Bhatnagar (2009) state plan as:-

“the strategic part of supply chain management to monitor the supply chain

so that it is efficient, costless and deliveries high quality and value to

customers in the most cost effective manner.’’

The overall purpose of planning is to identify required operational information and

to facilitate supply chain integration via strategic objectives, capacity constraints,

logistics requirements, inventory deployment, manufacturing requirements,

procurement requirements and forecasting. (Cooper, Bowersox and closse, 2002).

According to Jana, Narag and Knox (2007) planning drives the supply chain. It

orchestrates the flow of materials and resources, getting them to the right

location, at the right time, in the right sequence.

a. Joint Plan

Firms participating in a supply chain have specific roles and share strategic goals.

Sharing information and joint planning can reduce risk related to inventory

positions and increase movement velocity. (cooper, BowerSox and closse, 2002).

Metters et al. (2006) argues that when a firm, its customers and its suppliers all

know each others future plans, the planning process is easier and more accurate.

On the basis of American production and inventory control society (APICS) cited in

Metters et al. (2006) define collaborative planning , forecasting and

replenishment (CPFI) as A collaboration process where a key supply chain trading

partners can jointly plan Key supply chain activities from production and delivery

of raw material to production and delivery of final products.

b. Forecasting in Plan

Whenever supply chain involves any aspect of make to plan or make to stoke a

forecast is required to drive the process. It is a specific definition of what will sold

when and where the forecast defines the requirements that the supply chain must

schedule the inventory and resources to fulfill (http//www.plan.org.com).

Companies start the planning phase with a forecast for the coming year or

comparable time frame of demand in different markets (Sunil Chopra and Peter

Meindi, 2006). Michael Hugos (2003) Asserts that supply chain management

decisions are based on forecasts that define which products will be required, what

amount of the products will be called for and when they will be needed. The

demand forecast becomes the basis for the companies to plan their internal

operations and to cooperate among each other.

c. Plan Adherence to Production Target

The requirement trigged by the customer’s sales order will be combined with

other orders. The planning department will create a production plan to produce

the products to fulfill the customer’s orders. To manufacture the products the

company will then have to purchase the raw material needed

(http//www.books.google.com).

Jana, Narag and Knox (2007), many times the planed targets are not meet the

production due to non availability of raw materials (as raw materials did not arrive

on time) or due to decision pending ( like if approval delays, material quality

approval delays).

There are different planning systems that keep production target. Production

planning essentially represents the core of the process of manufacturing. The

purpose of production planning is to organize resource in order to efficiently

manage production costs, time and other resources such as staffing, in the

business operation. Any manufacturing process may reach its full potential when

it has the most effective production planning operation at its disposal

(http//www.smoll business. Chron.com).

d. Material Utilization

Material is required at the right time, right quantity and at the right price. Material

requirement planning is done by merchandising or planning department and

raises a bill of material. After the material is arrived and consumed its utilization

record need to be complied to determine accuracy of planning (Jana, Narag and

Knox, 2007).

The first reason for planning system development is the need for visibility

regarding location and status of supply chain inventory and resources. Visibility

implies not only being able to track supply chain inventory and resources but also

that information regarding available resources can be effectively evaluated and

managed. Logistics and supply chain management decisions influence many

enterprise resources, including production, distribution facilities and equipment,

inventories. Functional management must focus on resource utilization within its

scope of responsibility (http//www. Answers. Mheducation.com) .

e. Integration

The firm’s supply strategy must be integrated with the organization marketing,

conversion, and finance strategies and that of corporation or strategic business

unit (Gattorna, 2010). Similarly, Alliances are a core building block of winning

supply chain teams. The fundamental principle driving supply chain integration is

that closer, more collaborative alliances can yield mutually beneficial competitive

advantage to the chain participant (Ellram, Fawcett and Ogden, 2008).

Successful supply chain integration occurs when the participant realize that

supply chain management must become part of all of the firms strategic planning

and process in which objectives and policies are jointly determined based on the

final customer’s need and that the supply chain as a whole does well (Metters et

al., 2006). Similarly, Van Weele, (2005) look the integration as forming strategic

partnerships with trading partners along the supply chain, which one partner

playing a key role in coordinating and overseeing the whole supply chain. Van

Weele added that in order to be able to manage cost throughout the supply chain,

effective and cooperative, supplier relationships are required.

The integrated supply chain perspective shifts traditional channel arrangements

from loosely linked groups of independent businesses that buy and sell inventory

to each other toward a managerial coordinate initiative to increase Market impact,

overall Efficiency, continuous improvement, and competitiveness (Cooper,

Bowersox, and Closse, 2002).

2.3.2. SOURCE

Lemay, Bloomberg and Hanna,(2003) sourcing is “buying product or service from

outside the organization, rather than producing or providing it within the

organization.

Sourcing is the entire set of business processes required to purchase

good/services. Sourcing process include the selection of suppliers, design of

supplier contracts, product design collaboration, procurement of material and

evaluation of supplier performance. Effective sourcing processes within a firm can

improve profits for the firm and total supply chain surplus in a variety of ways.

(Sunil Chopra and Peter Meindi, 2006). Dobler (1996), the most interesting and

challenging aspect of supply management is the development and management

of the organization’s supply chain. This chain is the up stream portion of the

organization’s value chain and is responsible for ensuring that the right materials,

services, and technology are purchased from the right source, at the right time, in

the right quality.

Operations in source category include the activities necessary to acquire the

inputs to create product or services (Michael Hugos, 2003). According to Gattorna

(2010), selecting the best array of suppliers to source from and indeed to

outsource to, is a vital consideration, and one that may well determine if we can

honor our portfolio of value propositions to customers.

a. Inward material quality

Also the material quantity accepted may be equal to the ordered quantity or less.

If a lesser quantity is supplied then the penalty will be applied in a vender lead

times. But if the material received is of required quantity but of inferior quality

then good quality material is accepted after screening (Jana, Narag, and Knox,

2007).

Michael Hugos (2003) argues the most profitable companies and supply chains

are those that deliver the performance called for by their markets.

b. Purchasing Cost

According to Metters et al. (2006) the primary goals of purchasing are insure

uninterrupted flows of raw material at the lowest total cost, to improve quality of

the finished goods produced, and to optimize customer satisfaction.

Monczka et al. (cited in Grmay Tesfay, 2004) the purchasing function is managed

as a fundamental unit of the integrated supply chain management philosophy,

known as strategic sourcing. Strategic sourcing is a cross functional process used

to manage, develop and integrate supplier capabilities to achieve a competitive

advantage, involving members from all functions of the organization. Also Michael

Hugos (2003) states that the main activities of a purchasing were to beat up

potential suppliers on price and then buy products from the lowest cost suppliers

that could be found.

Obtaining the right price is one of a buyer’s important responsibilities. When

focusing on price, the buyer is concerned with the total cost of the item or service

being served (John Gattorna, 2010). Based on Cooper, Bowersox and Closse

(2002) assumption Procurement professionals recognize that although the

purchase price of a material or item remains very important, it is only one part of

the total cost equation in their organization services costs and life cycle costs

must be considered.

C. Inventory in Supply Chain

Inventory consists of raw materials, component parts, supplies or finished

assemblies, which are purchased from all outside source (Sharma, 1999). Any

uncertainty in the supply chain encourages organization to hold higher stocks to

give themselves a margin of safety. These stocks increase costs and make the

chain slow to react to changing condition (Waters, 2003).

Sunil Chopra and Peter Meindi (2006), with a large inventory, the likelihood is high

that the retailer can immediately satisfy customer demand with cloths from its

floor. A large inventory, however, will increase the retailer cost, their by making it

less efficient meaning reducing inventory will make the retailer more efficient.

Similarly, Jana, Narag and Knox (2007) Asserts that higher inventory level

increases the capital investment and also acquires more physical space. Lower

inventory level indicates better sourcing efficiency.

d. Vendor Development

When developing the supplier base, it is essential that those responsible for the

development and implementation of the supply base plan insure that the plan

meets existing and future needs (John Gattorna, 2010). According to Cooper,

Bowersox, and Closse, (2002) successful procurement depends on locating or

developing suppliers, analyzing their capabilities, and selecting and working with

those suppliers to achieve continuous improvement. Developing good supply

relationships with firms that are committed to the buying organizations success is

critical in supplier development and next working with them through sharing of

information and resources, to achieve better result.

If the requirement is sufficiently important, the buying firm will select the most

attractive supplier and then develop the supplier into one capable of meeting its

present and future needs. Training in project management, team work, quality,

and production processes are necessary (Dobler, 1996). Metters et al. (2006)

suggest that source is an extremely important element in supply chain

management, since incoming materials quality, delivery, timing, and purchase

price are dependent on the buyer supplier relationship and the capabilities of the

supplier. Cooper, Bowersox, and Closs (2002) conclude that the evolving focus on

procurement as a key capability in organizations has stimulated a new

perspective regarding its role in supply chain management. In particular

considerable focus is placed on ensuring supply, inventory minimization, quality

improvement, supplier development, and lowest total cost of ownerships.

2.3.3. MAKE

Make involves making schedule for the activities necessary for production,

testing, packaging and preparation for delivery (Bhatagar, 2009). Make involves

operations activities associated with transforming inputs, into the final product

such as matching, packaging, assembly, equipment maintenance, testing, printing

and facility operations (Van Weele, 2005). Waters (2003) commented that at the

heart of an organization are the operations that create and deliver the products.

This operation takes a variety of inputs and converts them into desired outputs.

a. Production Flexibility

A firms operational performance can be viewed in terms of its flexibility to

accommodate unusual and unexpected customer request (Cooper, Bowersox, and

Closse, 2002). Metters et al. (2006) Asserts that as competitive situations,

products, technology and customers change, the priorities for the supply chain

also must change, requiring supply chain to be ever more flexible to respond

quickly to those changes. With the tremendous level of competition in almost all

avenues of business, firms and their supply chains are looking today at ways to

become more responsive and flexible to their customers.

According to John Gottorna (2010) in any supply chain, the production side of the

business must be in complete synch with the demand and supply element of the

enterprise, upstream and downstream. Similarly, cooper, Bowersox and Closse

(2002) argues that operational activities are typically well integrated, but it is

necessary to continuously review systems to remove bottleneck and enhance

flexibility.

b. Operator Training

Jana, Nara, and Knox (2007), operators are trained in the training cell to take care

of operator turnover. The training cell should train a higher number of trainees as

practical because there is fallout of trainees. Besides, metters et al.(2006) For all

organization, successful supply chain management requires a regimen of ongoing

training. When education and training are curtailed, innovation cannot occur, and

innovation fuels supply chain competitiveness.

c. Production Cost

The objective of production planning and control function is to coordinate the use

of a firm’s resources and to synchronize the work of all individuals concerned with

production in order to meet required completion dates, at the lowest total cost,

consistent with desired quality (Dobler, 1996). Jana, Narag, and Knox (2007)

states production cost as “cost being incurred to run the production, which

includes area cost, machine cost, labor cost and overhead cost.’’

d. Quality of Production

Sunil Chopra and Peter Meindi (2006) comments that the goal of supply chain

operations is to handle incoming customer orders in the best possible manner and

to exploit the reduction of uncertainty and optimize performance.

Once materials, components and other purchased products are delivered to the

buying organization, a number of internal operation elements become important

in assembling or processing the items into finished goods ensuring that the right

amount of product is produced and that finished product meet specific quality,

cost and customer service requirements (Metters et al., 2006).

e. Capacity Utilization

The performance of a supply chain is measured in terms of profit average product

fill rate, response time and capacity utilization. Capacity utilization should be high

enough to reduce overhead sufficiently, but not so high that there is no room to

grow or to handle fluctuations in demand. Lower capacity utilization in effect buys

an option for increased output in the future. Higher capacity utilization reduce

downside risk since costs are reduced, but also limits the upside gain if future

demand should outstrip supply (http//www.books. google.com).

2.3.4. DISTRIBUTION

According to Michael Hugos (2003) this operation encompasses the activities that

are part of receiving customer orders and delivering products to customers.

Metters et al. (2006) argues that delivering products to customers at the right

time, quality and volume requires a high level of planning and cooperation

between the firm, it’s customers and the various distribution elements or services

employed.

a. Order Fulfillment

For a company, the quantity to be shipped by the manufacture as per the

purchase order is the order quantity. If the manufacturer ships the exact quantity,

then we call it as an order fulfilled. But, in case any variation, whether positive or

negative is termed as excess or a short shipment respectively. Both short and

excess quantity calls for penalty (Jana, Narag and knox, 2007). The physical

delivery of products and services is what fulfillment is about. It can be designed

on agreed bases with the customers So as to drive shared costs down or to meet

unpredictable situation (John Gattorona, 2010).

b. On time Shipment

For supply chain, transportation is what creates the efficient flow of goods

between supply chain partners, allowing profits and competitive advantage to be

maximized. Thus, transportation in a supply chain setting is extremely important

in that products must be routinely delivered to each supply chain partner on time

(Metters et al., 2006).Besides, Michael Hugos (2003), in growth markets, supply

chains that do the best are the ones that have the highest levels of customer

service as measured by order filrate and on time delivery.

c. Quality at Delivery

Merely transportation of the product does not ensure that the customer order is

delivered (the customer has received the order) in time in good condition (Michael

Hugos 2003). According to John Gattorna (2010), if you manage your supply chain

successfully, you will be able to deliver your products and services to your

customers in a smart, cost effective way. Joe B. Hanna (2003) says that delivery

place a key role in economic success by allowing for the safe and efficient

distribution of goods and services throughout the supply chain.

d. Transit Time

Transit is the time taken to export the goods from the source to the warehouse at

the destination point. The less the transit time, the better the supply chain

efficiency (Jana, Narag and Knox, 2007). Michael Hugos, (2003), transit time is the

time from shipment of the order at the place of origin to the point of receipt of

goods at the destination. It is a significant part of the order cycle. Usually shippers

prefer shorter transit time which improves customer service and reduce in transit

inventory.

e. Claims and Discounts

A claim or discount can be defined as a penalty put on by the buyer on the

manufacturer due no commitmental shipment. This may be due to quality related

problem, late delivery, or order fulfillment (Jana, Narag, and knox ,2007). Related

with Claim Matters et al. (2006) underline that when the receiver experiences

poor service, the shipper has dissatisfied customer and the carrier pays a claim.

2.3.5. RETURN

Even when products have been delivered to customers, the work of supply chain

may not be finished. Sometimes there are associated materials such as pallets,

delivery boxes cable reels and containers which are returned for suppliers for

reuse. Some materials are not reused but are brought back for recycling, such as

metals, glasses, paper, plastics and oils. Finally, there are some materials that

cannot be used again, but are brought back for sack disposal, such as dangerous

chemicals (waters, 2003).

Lemay, Bloomberg and Hanna (2003) return deals with “products that flow in

opposite direction from standard logistics channels.” Instead of products and

services flowing out to the customer, the products and services flow back to the

customer, the products and services flow back to the manufacturer. According to

matters et al (2006) return management while, given little importance in some

organizations can be extremely beneficial for supply chain management in terms

of maintaining acceptable level of customer service and identifying product

improvement opportunities.

Return is becoming more and more common as manufacturers and retailers

accept that they have responsibilities to take back products , either because it is

faulty or at the end of its useful life for subsequent disposal ( John Gattorna,

2010). Purchasing professionals at large firms may be instrumental in developing

supplier who will use recycled materials in their production process (Dobler, 1996)

a Surplus Stock Disposal

According to Dobler (1996), recycling reduces energy requirements, reduces

gases, solid pollutants and conserves raw material. For surplus stock in the chain

disposal is made by one of seven methods:

use within the firm return to the supplier direct sell to the another firm sale to the employees donation to educational institution

b. Hazardous Waste Disposal

According to Dobler (1996) two approaches can be used in disposing of hazardous

materials, along with the packaging or container in which come to the materials

were originally shipped.

1. Purchasing may outsource the entire operation to a specialization contractor

or consulting firm in this business.2. Purchasing may work directly with in a transport licensed by the department

of transportation or federal level to hall hazards materials and handle the

other functions itself.

2.4. SUPPLY CHAIN EVALUATION AND TOOLS

Supply chain and logistics management requires effective evaluation and decision

making involving tradeoff between procurement, manufacturing, logistics and

customer accommodation (Cooper, Bowersox, and Closse, 2010). Measuring the

performance of supply chain and their member firms is critical for identifying

underlying supply chain problems and in keeping and customers satisfied in

today’s highly competitive, rapidly changing market place. Performance measures

need to drive a consistent emphasis on the overall supply chain strategy and

corresponding process objectives (Metters et al., 2006).

However, only what is measured can be managed consequently it is necessary

assess the effectiveness and efficiency of how partners work together in joint

processes of a common goal. In other word, the collaboration performance has to

be measured but traditional performance measurement (PM) methodologies and

indicators are designed to assess the performance of single companies or static

cooperation like in supply chains evaluation and management of collaboration

performance as a particular performance perspective in cooperation is not

covered by existing approaches so far (http//www.link. springer.com).

a. The Balanced Scorecard (BSC)

According to Metters et al. (2006) the balanced scorecard is designed to provide

managers with a formal framework for achieving a balance between non financial

and financial results across both short term and long term planning horizon. The

balanced scorecard framework consists of four perspective, financial, internal

business process, customer, and learning and growth. These perspectives are all

linked together through performance measures within each of the four areas.

While the balanced scorecard (BSC) has been used effectively by many companies

that are vocal advocates for its use as a strategic planning tool, they are also

quick to admit that it can be complex, a costly and time- consuming tool

(http//www.smallbusiness.chron.com).

b. Activity Based Costing (ABC)

Activity based costing is an accounting methodology that assigns cost to activities

rather than products or services. This was developed to overcome traditional

accounting methods in tying financial measures to operational performance. The

method involves breaking down activities into individual tasks or cost drivers,

while estimating time and cost. Costs are then allocated based on there cost

drivers. This approach allows one to better assess the true productivity and costs

of a supply chain process (http//www. Faculty .txwes.edu.com).

It has been asserted that activity based costing also assists managers in

evaluating how resources are used across a firm’s value chain in delivering

strategic outcomes (http//www.eprint.usg.educau).

c. Key Performance Indicators Framework (KPI)

Jana, Narag and knox (2007) argues that supply chain efficiency measurement

framework is developed in terms of efficiency shown by the chain with respect to

key functional parameters spanning four different operation domains namely

source, plan, make and deliver. There are about five primary key performance

indicators (KPI) identified in each operation domain and some primary KPI have

multiple secondary KPIs to measure. Each KPI is expressed in percentage. While a

100 percent supply chain efficiency index would mean perfect organization, there

is a possibility of any organization having KPI value more than 100 percent. KPI

would indicate the overall supply chain efficiency of the organization.

CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1. RESEARCH APPROACH

The research is descriptive and the approach was quantitative. The reason behind

is to describe the overall outcomes of the evaluation.

3.2. SOURCE OF DATA

In this paper, primary data source has been used by distributing questionnaires

to the employees which are involved in the different functional units, such as,

production, marketing, finance and procurement, human resource and general

service, quality and safety and finally repair and maintenance.

3.3. DATA COLLECTION INSTRUMENT

Data collection instruments are a means to collect information from the

respondents of the research. There are different instruments but, in this study, the

modified key performance indicator (KPI) questionnaires has been used and

structured by through Likert scale.

KPI (Key Performance Indicator) is a supply chain performance measurement

frame work developed by Jana, Narag and Knox. This frame work has four

dimensions namely, source, plan, make and delivery. However, this operation may

not show the factories supply chain performance fully. To fill some gap the

researchers have added return as a fifth dimension. The developer has designed

different questionnaires for each dimension except return. The questionnaires

were close ended and contain three sections. Which are; -

a) Section one:- respondent background b) Section two: - source, plan, make delivery and return statement. c) Section three: - contain general questions about supply chain performance

of the factory.

3.4. POPULATION AND SAMPLING

Amhara pipe factory (APF) has a total of 126 employees and the researchers were

took them as a population study.

For this study stratified sampling has been used. The reason is to collect full

information in each stratum. For this purpose the employees were categorized

based on their function. The respondents has been selected from each function

randomly. Thus from the total population of the study (126 employees) 35% (44)

have been taken as a sample.

Based on the number of employees within each stratum the total sample size

proportion is as follows.

Departments

Number of

population

Sample size

(percentag

e)

Number

of sample

size Finance and procurement 17 13 6

Marketing 12 10 4

Human resource and general

service

20 16 7

Production 50 40 18

Repair and maintenance 13 10 4

Quality and safety 14 11 5

Total 126 100 44

CHAPTER FOUR

4. Data Analysis and Interpretation

Under this section the collected data are analyzed and the discussions are done

based on the information obtained from the respondents. The questionnaires were

distributed to a total of 44 respondents from current employees of Amhara pipe

factory among which 41(93%) where returned. Generally the collected data are

analyzed and presented below by using simple statistical tools such as table,

percentage, and mean.

4.1. General profiles of the respondents

Table 4.1.Gender

Valid Gender Frequency Percent Female 11 26.82Male 30 73.18Total 41 100.00

Missed 0 0 Total 41 100.00

Source: Questionnaire (2013)

Out of 41 respondents 30 (73.17%) are males, only 11 (26.82%) are females. this

finding indicates that majority of the employees are male dominated.

Table 4.2.educational level

Valid Educational level Frequency Percent Certificate or less 0 00.00Diploma 17 46.46First degree 19 46.34Total 37 90.24

Missed

4 9.75

Total 41 100.00 Source: questionnaire (2013)

As table 4.2 reveals the educational level of the respondents, none of them holds

certificate, 17 (41.46%) holds diploma, 19 (46.34%) are first degree holders, only

1 holds master or more and the remaining 4 (9.75%) are not willing to fill their

education level. This Implies that majority of the factory employees are first

degree holders.

Table 4.3 experience

Years Frequency Percent

Valid <1 2 4.88

b/n 1and 5 20 48.78

b/n 6 and 10 10 24.39 >=11 3 7.32 Total 35 85.47

Missed 6 14.53

Total 41 100.00 Source: Questionnaire (2013)

As table 4.3 explain from 41 respondents, 2 (4.88) of them have been working indifferent organization less than 1 year, while 20 (48.78%) worked between 1-5years, 10 (24.39%) have been working between 6-10 years, 3 (7.32%) worked formore than 11 year and the rest 6 (14.53%) are not willing to respond on theirworking experience. The figure shows most of the employees have been workingbetween 1 and 5 years. Table 4.4 field of specialization

Field Frequency Percentage

Valid

Engineering 15 36.58Accounting 6 14.63Chemistry 8 19.51

Human resource 4 9.75Total 33 80.48

Missed 8 19.51Total 41 100.00

Source: Questionnaire (2013)

Out of 41 respondents 15(36.58) are specialized in engineering and related fields,

6 (14.63 specialized in accounting and finance, while 8 (19.51%) were specialized

in chemistry,4(9.75%) specialized in human resource and remaining are not

willing to fill their field of specialization. This indicates that majority of the

employees are specialized in engineering.

4.2. Supply chain performance of Amhara pipe factory

Here the present performance of Amhara pipe factory regarding supply chain

practice was evaluated on the basis of the five functions called plan source, make

delivery and return. For better discussion the analysis start began from overall

performance to specific performance.

4.2.1. Supply chain performance

The overall performance is obtained from the collected data by sum up total mean

of the five functions.

Table 4.5 supply chain performance of Amhara pipe factory

No. Operations Weighted Mean 1 Plan 3.59 2 Source 3.14 3 Make 3.69 4 Delivery 3.51 5 Return 3.72

Source: Questionnaire (2013)

Based on above figure plan performance experience 3.59 mean, source

experience a mean of 3.14, make performance held 3.69, delivery account 3.51

mean and the last function, return has got a mean of 3.72. This implies that

relatively the factory has higher performance in return activity and lower

performance in sourcing.

Standing on figure listed in table 4.5 the researchers conclude that the factory

supply chain practice performance is somewhat higher. However, there is a

possibility to have more than this if things done well.

4.2.2. Plan performance

In supply chain plan is the building block of affective performance and represent

future aspiration of different activates that make up supply chain.

Table 4.6 plan performance

N

o

Statement Weighted Mean

P1 Joint plan with suppliers and customers 3.27

P2 Plan adherence to the actual production 4.05

P3 Planed cost adherence to the actual cost 3.44

P4 Plan adherence to the material utilization 3.59

Source: Questionnaire (2013)

In table 4.6, mean 3.27 represent joint plan performance, and mean 4.05 indicate

performance of plan adherence to the actual production. In plan aspect this shows

that the highest performance were held in plan adherence to meet actual

production and Joint plan held the lowest performance. However, by itself the

performance of join plan is moderate. Upon the above data the researchers

conclude that the factory plan performance is good.

4.2.3. Source performance

Source is a function of acquiring necessary ingredients to make product or

service. Successful sourcing play its own role to improves supply chain

profitability.

Table 4.7 source performance

No Statements Mean S5 Incoming materials quality 4.61S6 Timely delivery from suppliers 2.03S7 Purchasing unit cost lowness of incoming

material

3.29

S8 Amount of stock balance with demand 2.70S9 Capability to assist its suppliers 3.09 Source: Questionnaire (2013)

The above table contains figure that show the factory source performance.

Incoming martial’s quality has a mean of 61 and timely delivery from suppliers

has 2.03 mean. These figures are the two extreme not only in source but also

from others functions this indicates the factory top supply chain practice

performance were experienced on timely shipment from suppliers. Based on the

above information the researchers conclude that the materials purchased by

Amhara pipe factory are good in quality. However, the materials do not reach on

time when they required.

4.2.4. Make performance

Make represent a process of transforming raw materials in to finished product.

This operation is the starting point in which the customer requirements start to

build.

Table 4.8. Make performance

No Statements WeightedMean

M10 Material utilization 3.56M11 Production flexibility to meet un expected

need 3.66

M12 Produced material quality 4.54M13 Productions cost bitterness relative

with similar manufactures4.13

M14 Performance to train employees 2.34M15 Operation capacity utilization 3.90

Source: Questionnaire (2013)

As table 4.8. Explain mean 4.45 represent produced material quality. Relatively

this is the second highest performance among all functions. But the first from

make operations. Whereas, mean 2.34 represent the factory performance in

training provision which is the second lowest performance experienced among all

function and the least from make categories. Standing On the value listed above

the researchers concludes that the materials produced in the factory are qualified.

Inversely, the factory is low performer in short term training provision to its

employee in order to build their capacity.

4.2.5. Delivery performance

Delivery encompasses essential activities starting from request receiving till

shipment of products to ultimate customers also it includes any physical link

which connect a firm’s customer, raw material supplier, manufacturing plant and

other channel members.

Table 4.9. Delivery performance

No Statements Weighted Mean

D16 Exact quality shipment for customers 3.51

D17 On time shipment for customers 3.37

D18 Quality shipment for customers 3.46

D19 Claims and discounts for customers 3.54

D20 Transit time 3.68

Source: Questionnaire (2013)

The above figure indicates delivery performance. Under this the highest

performance experienced on transit time at a mean of 3.68 and the lowest

performance held on time shipment provision for customers at a mean of 3.37. On

the basis of this value we generalize that the factory performance to deliver the

required item for customers is moderate.

4.2.6. Return

In supply chain return represent applying the efficient, cost effective flow of raw

material, in process inventory, finished goods and related information from point

of consumption to the point of origin for recapturing or proper disposal.

Table 4.10. Return performance

No Statements Weighted

Mean R21 Performance to re-correct the improper

shipment

4.24

R22 Performance to re-use the returned materials 4.17R23 Performance to re cycle returned materials 3.12R24 Hazardous waste disposal 3.34

Source: Questionnaire (2013)

Table 4.10 elaborates the Amhara pipe factory return performance. Mean 4.24

represent performance to correct improper shipment and mean 3.12 shows

returned material recycling. Here, we can understand that in return function the

factory has good experience on adjusting wrong product shipment for customers.

While, the performance to use returned materials as production in put is low.

Generally in return operation the factory has higher performance more than the

rest four functions called plan, source make and delivery.

Chapter five

5. Summary, conclusion and recommendation

This chapter deals about summary, conclusion and recommendation of the major

findings. The results of the finding were expressed in short and precise manner.

Finally the researchers have recommended basic issues which help the factory to

build better supply chain performance.

5.1 Summery

Among the plan dimension plan adherence to meet the actual production

shows high performance is mean (4.05). On the other hand the factory has a

low performance on plan balance aggregate demand and supply mean of

(2.28). This is the lowest performance than other plan functions. Regarding source operation, the factory has a performance of 4.61 held on

incoming materials quality, which is highest even more than any of the

practice the factory’s performance to get timely delivery from its suppliers has

the lowest mean (2.33). AAMI performance to train its employees has 2.33 mean values which is the

second lowest performance among all other functions and the least under

make category. Inversely the highest performance in this operation

experienced on produced material quality at mean of 4.54 The lowest performance of supply chain management in the delivery

dimension was providing loading and unloading service for customer’s mean of

(3.32). The second lowest performance was packing good mean of (3.28). Based on this finding return the factory’s performance to adjust wrong product

shipment for customer has gat a mean of 4.25. Inversely the factory has low

performance (3.12) on the reuse of returned materials as an input.

5.2 Conclusions The factory’s plan adherence has high performance due to this

production plan and the actual production plan and the actual production

are highly related. However, the joint plan with suppliers and customers

indicate some planning gap. Standing from this the researchers conclude

that their collaboration to design mutual plans lower The row materials purchased by the AAMI have high quality as well as

better standard. Even though, the incoming materials do not reach on time

for production. This leads for the shortage of input and production

interruption. Even if the factory is producing high quality products by using qualified

row materials in short term training arrangement for employees the factory

is such successful. The factory’s performance in finished goods delivery for customer is

medium. But there is a probability to do more. Similarly product arrival

when required by customers is the aim of any supply chain. In this regard

the distribution experienced by the factory indicates some delay. According to the finding the factory’s performance in return aspect is

better. Specifically, in resurrecting fault shipment for customer. Differently,

recycling is not much applied. Based on the collected data researchers

understood that the factory is not benefited from the usage of returned

materials as in input.

5.3. Recommendation To be benefited from collaborative planning the factory, customers and

suppliers should work hard to undertake plan jointly in any aspect. In such

circumstances each and every supply chain participants can get the intended

value. To get production input at the right time while sourcing, the factory should have

to connect with different suppliers would have many alternatives. But the

researchers hardly recommend that the factory shall intensively involve

producing otherwise to get the materials locally. To have an experienced employee and to make new workers familiar with their

job it is better to train all members of the organization on the basis of their

specialization. In such away sense of ownership can held in the minds of

employees. To enlarge customer satisfaction, AAMI shall deliver the required materials in

the required way. If it is necessary building distribution center for users located

in different area can benefit both the factory and customers.

ባህር ዳር ዩኒቨርስቲቢዝነስና ኢኮኖሚክስ ኮሌጅ

የሎጂስቲክስና ስፕላይ ቼይን ማኔጅመንት ፕሮግራምዉድ መላሻችን በመጀመሪያ ይህን የፅሁፍ መጠይቅ ለመሙላት ፍቃደኛ በመሆንዎ ከልብ የመነጨ ምስጋናችንን እናቀርባለን፡፡ የዚህ መጠይቅ ዓላማ የድርጅታችሁ ማለትም የአማራ ቱቦ ማምረቻንና የምርት ግብዓት አቅራቢዎቹንእንዲሁም የምርቱን ተጠቃሚዎች ግንኙነት ለመገምገም ሲሆን ለዚህ ዓላማ ስኬት የርስዎ ተሳትፎ ጉልህ ሚናይኖረዋል፡፤ በመሆኑም ምላሽዎ ለዚህ ጥናት ብቻ የሚያገለግል እና በሚስጢር የሚያዝ ስለሆነ ትክክለኛ መረጃእንዲሰጡን እንጠይቃለን፡፡ መመሪያ፡- በዚህ መጠይቅ ላይ ስምዎን መፃፍ አይጠበቅብዎትም ምላሽዎን በእያንዳንዱ ትዕዛዝ መሰረት ይመልሱልንክፍል አንድ፡- ለመልስዎ " " ምልክት ይጠቀሙ፡፡

1. ፆታ ወንድ ሴት 2. የትምህርት ደረጃ

ሰርተፊኬትና ከዚያ በታች የመጀመሪያ ዲግሪ ዲፕሎማ ማስተርስና ከዚያ በላይ

3. የስራ ልምድ ከአንድ ዓመት በታች ከስድስት እስከ አስር ዓመት ከአንድ እስከ አምስት ዓመት አስራ አንድና ከዛ በላይ

4. የሰለጠኑበት የሙያ መስክ––––––––––––––––––––––––––––––––

ክፍል ሁለት

በዚህ ክፍል ላይ ልንጠይቅ የፈለግነዉ ጉዳይ የድርጅታችሁን እቅድ ፣ ግዥ፣ ምርት፣ ስርጭት እንዲሁም ከደንበኞችበተለያየ ምክንያት ስለሚመለሱ ምርቶች ነዉ፡፡ለመልስዎ አምስት የተለያዩ ደረጃዎችን የሚይዙ አማራጮች በሚከተለዉ መልኩ ተቀምጠዋል፡፡ ስለሆነም በርስዎእምነት ድርጅቱ ይገባዋል የሚሉትን ነጥብ የያዘዉን አማራጭ " " ምልክት ያድርጉበት፡፤ በጣም ጥሩ 5 ዝቅተኛ 2 ጥሩ 4 በጣም ዝቅተኛ 1

ገለልተኛ 3

ቁ. የመገምገሚያ ነጥቦች 5 4 3 2 1

P1 ከደንበኞችና ከአቅራቢዎች ጋራ ያለዉ የጋራ እቅድ P2 የእቅድና የተመረተዉ ምርት ግንኙነትP3 የታቀደዉ ወጭና የወጣዉ ወጪ ግንኙነት P4 ለእቃ አጠቃቀም የወጣዉ እቅድና ትግበራ ግንኙነት S5 ድርጅታችሁ የሚገዛቸዉ የምርት ግብዓቶች ጥራት S6 የሚገዙት ግብዓቶች በተፈለገዉ ግዜ ወደ ድርጅቱ መግባት/መድረስ/S7 የሚገዙት ግብዓቶች ዋጋ በነጠላS8 የግብዓቶች ክምችት ተመጣጣኝነት S9 ድርጅቱ ግብዓት አቅራቢዎቹን የማገዝ አቅምM10 የድርጅቱ ንብረት አጠቃቀም M11 ድርጅቱ ያልተጠበቁ የደንበኞች ፍላጎት መጨመርን የማርካት አቅምM12 የሚመረቱ እቃዎች ጥራት M13 ከሌሎች ተመሳሳይ አምራቾች ጋር ሲወዳደር የድርጅታችሁ

የማምረቻ ዋጋ የተሻለ መሆንM14 ድርጅቱ ሠራተኞቹን የማሰልጠን ልምድ M15 የማምረት አቅምን የመጠቀም ብቃት D16 የተፈለገዉን የምርት መጠን የማሰራጨት አቅም D17 የተፈለገዉን ምርት በተፈለገዉ ጊዜ የማሰራጨት አቅምD18 የድርጅቱ የምርት ስርጭት ጥራትD19 ድርጅቱ ለደንበኞች የሚያደርገዉ ቅናሽና አስተያየት D20 ምርታችሁን ለደንበኞች በፍጥነት የማድረስ ብቃታችሁ R21 ከደንበኞች ቅሬታ ለተመለሱ ምርቶች ማስተካከያ የመስጠት ልምድ

R22 የምርት አቅርቦት ሂደቱን የሚያግዙ እቃዎችን እንደገና የመጠቀምአቅም

R23 ተመላሽ እቃዎችን ለምርት ግብዓትነት የመጠቀም አቅምR24 ለጤናና ለአየር ንብረት ጠንቅ የሆኑ ተረፈ ምርቶችን የማስወገድ

አቅም

ክፍል ሶስት ማጠቃለያ ጥያቄዎች

1. በአጠቃላይ የአማራ ቱቦ ማምረቻና የግብዓት አቅራቢዎቹን እንዱሁም የምርቱን ተጠቃሚዎች ግንኙነትእንዴት ይገመግሙታል? ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

2. እንደ አጠቃላይ የሚያነሷቸዉ ችግሮች ካሉ?––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

3. ለችግሮቹ እንደ መፍትሄ የሚጠቋሟቸዉ ነጥቦች ቢገልፁልን?––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

ስለትብብርዎ እናመሰግናለን !!

BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICSLOGISTICS AND SUPPLY CHAINS MANAGEMENT PROGRAMME

DEAR RESPONDENTSThe purpose of this questionnaire is to gather information inorder to evaluate thesupply chain management performance of Amhara pipe factory. Your participationwill have it’s own role for the success of this BA degree senior essay. Yourresponses will be kept strictly confidential and will only be used for academicpurpose. Your honest opinion on each and every statement of the questions isappreciated.

Thank you for your cooperation !DIRECTIONS • No need of writing your name • Please try to answer all questions in accordance with the instructions provided.

Part one: Background Information Please tick “ ” the box

1. Gender Male Female 2. Educational level

Certificate or less First degree Diploma Master or more

3. Work experience

Less than one year 6-10 years 1-5 years 11 or more

4. Field of specialization . . . . . . . . . . . . . .

PART TWO: PLAN SOURCE, MAKE, DELIVERY AND RETURN STATEMENTS Instructions: For each statement, please show the extent to which you believe your factory hasthe future described. Do this by using the scale presented below. Excellent = 5 Poor = 2 Good = 4 Very poor =1 Neutral = 3No. Statements Alternatives

5 4 3 2

P1 Joint plan with suppliers and customers

P2 Plan adherence to the actual production

P3 Planed cost adherence

P4 Plan adherence to material utilization

S5 Incoming material quality

S6 Timely delivery

S7 Purchasing unit cost of incoming material

S8 Amount of stock balance

S9 Capability to assist it’s supplier

M10 Material utilization

M11 Production flexibility to meet unexpected need

M12 Produced material quality

M13 Production cost betterness relative with similarmanufacturer

M14 Performance to train employee

M15 Operation capacity utilization

D16 Exact quantity shipment for customers

D17 On time shipment for customers

D18 Shipment quality for customers

D19 Claims and discounts for customers

D20 Transit time

R21 Performance to re-correct the improper shipment

R22 Performance to reuse the returned material

R23 Return material recycling

R24 Hazardous waste disposal

GENERAL QUESTION1. How do you evaluate the over all performance of Amhara pipe factory supply chain

management practice ?---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2. What problems you observe?-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3. What solution you recommend for the problems?-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------