Bridge Fight Board by Daniel Johnson dtjohnsonart.com
Tehakelew
1. 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 tables
Table page no
Table 3.1 Sample profile
Table 4.1 Gender profile of the respondent
Table 4.2 Educational level of the respondent
Table 4.3 Experience of the respondent
Table 4.4 Respondent’s field of specialization
Table 4.5 plane performance
Table 4.6 Source Performance
Table 4.7 makes Performance
Table 4.8 delivery Performance
Table 4.9 return performance
Table 4.10 Supply chain performance of APF
2. 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.
3. 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,
4. 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
5. 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
6. 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.
7. 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,
8. 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
9. 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
10. 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.
11. 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) .
12. 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
13. 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
14. 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,
15. 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.
16. 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
17. 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
18. 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).
19. 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.
20. 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
21. (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
22. 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
23. 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 26.82
Male 30 73.18
Total 41 100.00
Missed 0 0
Total 41 100.00
24. 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 00.00
Diploma 17 46.46
First degree 19 46.34
Total 37 90.24
Misse
d
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 in
different organization less than 1 year, while 20 (48.78%) worked between 1-5
years, 10 (24.39%) have been working between 6-10 years, 3 (7.32%) worked for
more than 11 year and the rest 6 (14.53%) are not willing to respond on their
working experience. The figure shows most of the employees have been working
between 1 and 5 years.
Table 4.4 field of specialization
Field Frequency Percentage
Valid
Engineering 15 36.58
Accounting 6 14.63
Chemistry 8 19.51
25. Human resource 4 9.75
Total 33 80.48
Missed 8 19.51
Total 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.
26. 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 4.61
S6 Timely delivery from suppliers 2.03
S7 Purchasing unit cost lowness of incoming
material
3.29
27. S8 Amount of stock balance with demand 2.70
S9 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 Weighted
Mean
M10 Material utilization 3.56
M11 Production flexibility to meet un expected
need
3.66
M12 Produced material quality 4.54
M13 Productions cost bitterness relative
with similar manufactures
4.13
M14 Performance to train employees 2.34
M15 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.
28. 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
29. No Statements Weighted
Mean
R21 Performance to re-correct the improper
shipment
4.24
R22 Performance to re-use the returned materials 4.17
R23 Performance to re cycle returned materials 3.12
R24 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
30. 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
31. 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.
35. BAHIR DAR UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
LOGISTICS AND SUPPLY CHAINS MANAGEMENT PROGRAMME
DEAR RESPONDENTS
The purpose of this questionnaire is to gather information inorder to evaluate the
supply chain management performance of Amhara pipe factory. Your participation
will have it’s own role for the success of this BA degree senior essay. Your
responses will be kept strictly confidential and will only be used for academic
purpose. Your honest opinion on each and every statement of the questions is
appreciated.
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 has
the future described. Do this by using the scale presented below.
Excellent = 5 Poor = 2
Good = 4 Very poor =1
Neutral = 3
No. Statements Alternatives
5 4 3 2
36. 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 similar
manufacturer
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 QUESTION
1. How do you evaluate the over all performance of Amhara pipe factory supply chain
management practice ?
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2. What problems you observe?
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3. What solution you recommend for the problems?
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