BAHIR DAR UNIVERSITY

BAHIR DAR INSTITUTE OF TECHNOLOGY

FACULITY OF MECHANICAL AND INDUSTRIAL ENGINEERING

INDUSTRIAL ENGINEERING DEPARTMENT

THESIS TITLE: SUPPLY CHAIN PERFORMANCE

MEASURE AND IMPROVEMENT
(Case company: Amhara pipe factory)

(For fulfillment of BSc. in industrial engineering)

By:
1. Semahgn Melkamu……………………10 11 542
2. Alemnew Damtie……………………...10 11 489
3. Besufkad Hailu………………………..10 11 432

Advisor:
Mrs. Eden A.
 Declaration
We declare that the work which is being presented in this thesis entitled “supply chain
performance measure and improvement for Amhara pipe factory” is our original work. All
the resource of materials used for this thesis has been duly acknowledged.
Students Name signature date
Semahegn melkamu _____________________ __________
Alemnew Damtie _____________________ __________
Besufekad Hailu _____________________ __________

This is to certify that the above declaration made by the candidate is correct to the best of our
knowledge.

Mrs. Eden A. ____________________ __________

(Advisor) Signature date
Acknowledgement
Above all we would like to give great thanks for GOD for helping as prepare and finish this
project proposal work. The completion of this proposal would also not been possible without the
steadfast support of several people.
First of these peoples, we would like to express our deep appreciation and sincere gratitude to
Mrs. Eden A. our advisor of the proposal work, for her wisdom, invaluable guidance and
insightful comment and who reviewed our work .our gratitude also goes to the production
worker, the production manager, and the marketing and finance department of APF who will
support us by giving all data’s required for accomplishment of the project work.

.
 CHAPTER ONE
1. Introduction
Supply chain management encompasses the planning and management of all activities involved
in sourcing, procurement conversion and logistics management activities that include
coordination and collaboration with channel partners. Through an efficient and effective supply
chain management, a business organization could get the right goods and services to the place
needed at the right time, in proper quantity and at acceptable cost. Recently, SCM has become
one of the most important strategic aspect of any business entity and increasingly important in a
global economy [3]. The supply chain process is complex, composite business process
comprising a hierarchy of different levels of value delivering business processes. Designing a
high performance supply chain is a very challenging task due to the complex structure of the
supply chains and ever changing business. Some of the important reasons for the complexity of
the decision making process are large scale nature of the supply chain networks, hierarchical
structure of decision, randomness of various inputs and operations and dynamic nature of
interactions among supply chain elements. To improve the performance of supply chain, it is
essential to identify the parameters (criteria’s) and sub-parameters (sub- criteria’s) affecting the
performance; appropriate measures for parameters and sub-parameters. Researchers have
developed different supply chain evaluation models. The objectives of this paper are to identify
imperatives of supply chain performance measurement, and present review of available models
and their limitations.
1.1. Background of the company
Amhara Pipe Factory (APF) was founded in 2009, as a Joint- Venture Company, between
Golden Trade Company, an Egyptian Company and Amhara Water Works Construction
Enterprise a local Ethiopian company. The annual production capacity is 12, 425.204 ton and the
joint initial investment is expected to cost 100million birr. Of this, Golden Trade will contribute
30% in the form of machinery, installation and training of staff while the remaining 70% will be
covered by the enterprise. The company promotes itself as a “Technology Transfer Company”
specializing in the development and establishment of joint venture companies to manufacture
Geo-synthetic, with an emphasis on pipes, geo-membranes and related products. So far the
company has been set up to manufacture U-PVC [un-plasticized polyvinyl chloride] pipe, High-
density polyethylene [HDPE] pipe and Geo-membrane.
Geo-membrane is used mostly as canal and pond liners with a size of 0.5mm to 2.5mm. RPVC
[rigid polyvinyl chloride], used for pressure and drain pipe, is produced with specifications that
range from 16mm to 630mm and up to PN 16 pressure [can withstand 160MPa at 200C].
HDPE is a polyethylene thermoplastic made from petroleum and mostly used for agricultural
activity. Coiled HDPE pipe is used for irrigation and general soil stabilization.
The factory will manufacture products which they previously imported from China, Italy, India,
France and the Middle East or domestically procured from Oromia Pipe Factory and the
factory’s output will be enough to meet the demands of the region.
Supply chain Performance measure has a positive impact on the development and improvement
of current supply chain performance of a company. This can create new opportunities and
improve the competitiveness of the manufacturing operations and productivity of the company.
Still now Amhara pipe factory have no a great concern about measuring their current
performance, they worry only about meeting their customer orders and expected profits.
This research proposal will important the following conditions:
 The Amhara pipe factory produces its products in scheduled manner.
 The company comparing its supplier and deduce the best supplier.
 The company knows the end user of the product perfectly.
 1.2. Statement of the problem
The company distribution channels are not such sufficient to more profitability, so it is difficult
to address final products for all customers within timely. Average down times of total working
hours per year and average of 5hrs per day down time due to the lack of proper supply chain
from procurement to end users. It is difficult to get raw materials on time because all suppliers
are from foreign countries and shortage of foreign currency.
The company lacks the specific number of loyal customers that awareness about the end users of
measuring their supply chain performance and produces based on determined orders i.e. they do
not treat customers who want direct purchase but when the company have products in stock the
customer can directly purchase the products. Make to order system of product is not appreciated
in such production system.
The company gets raw materials from foreign country basically from Korea and takes long time
to receive (more than two months) and pays money through bank after receiving raw materials.
And sell the product to the customer’s takes time relative to the suppliers also. Due to this
shortage of raw material and foreign currency fluctuation happens. As a result, due to those
problems the company losses its supply chain performance.
1.3. Objective
1.3.1. General objective
The main objective of this study is to measure and analyze the existing supply chain
performance of Amhara pipe factory and improve it.
1.3.2. Specific objectives
 To measure the existing supply chain performance of the factory
 To identify weakness and strength of the company related to supply chain performance
 To identify the root cause that affect supply chain performance of the company
 Improving this analyzed obstacle to the supply chain performance.

1.4. Scope and limitation of the thesis

This study is on supply chain performance measurement for Amhara pipe factory. It shows how
supply chain performances of measured. And know the existing supply chain performance. The
scope of this study is limited or gives more focus in assessment on supply chain performance
related problems, reviewing and analyzing supply chain performance to Amhara pipe factory in
Bahir Dar city. After analyzed the pervious supply chain, improving it. There are some limitation
faces such as; the political situation is our treat to stop the production. The covid protocol is
another reason that shortage of data.
1.5. Benefits and beneficiaries of the thesis
The benefits of this project are measuring the supply chain performance of Amhara Pipe Factory
by analyzing the current supply chain performance, identifying the drawbacks affecting the
supply chain performance and give recommendations helps to minimize causes that affect supply
chain performance of the company.
The primary beneficiary of this project is APF, which will know its current supply chain
performance and minimize the identified problems and improve its supply chain performance.
We will also be benefited from this project in a way that we will get recognition. The end user
problem tackles by this project. The skill of our problem solving technique is enhanced.
 Chapter two
2. Literature review
2.1. Definition of supply chain
A supply chain consists of all parties involved, directly or indirectly in fulfilling a customer
request. The supply chain not only includes the manufacturer and suppliers, but also
transporters, warehouses, retailers, and customers themselves. Within each organization, such
as manufacturer, the supply chain includes all functions involved in receiving and filling a
customer request. These functions include, but are not limited to, new product development,
marketing, operations, distribution, finance, and customer service.
The Web site provides the customer with information regarding pricing, product variety, and
product availability. Having made a product choice, the customer enters the site to check the
status of the order. Stages further up the supply chain use customer order information to fill
the order. That process involves an additional flow of information, product, and funds
between various stages of the supply chain. These examples illustrate that the customer is an
integral part of the supply chain.
The primary purpose from the existence of any supply chain is to satisfy customer needs, in
the process generating profits for itself. Supply chain activities begin with a customer order
and end when a satisfied customer has paid for his or her purchase. The term supply chain
conjures up images of product or supply moving from suppliers to manufacturers to
distributors to retailers to customers along a chain. It is important to visualize information,
funds, and product flows along both directions of this chain. The term supply chain may also
imply that only one player is involved at each stage. In reality, a manufacturer may receive
material from several suppliers and then supply several distributors. Thus, most supply
chains are actually networks. It may be more accurate to use the term supply network or
supply web to describe the structure of most supply chains.
A typical supply chain may involve a variety of stages. These supply chain stages include:
• Customers
• Retailers
• Wholesalers/Distributors
• Manufacturers
 • Component/Raw material suppliers.

All the above various business entities (i.e., suppliers, manufacturers,

wholesalers/distributors, and retailers) work together in an effort to:
 Acquire raw materials,
 Convert these raw materials into specified final products, and
 Deliver these final products to retailers.
This chain is traditionally characterized by a forward flow of materials and a backward flow of
information. A supply chain is an integrated manufacturing process wherein raw materials are
converted into final products, then delivered to customers. At its highest level, a supply chain is
comprised of two basic, integrated processes:
1. The Production Planning and Inventory Control Process, and
2. The Distribution and Logistics Process.
These Processes illustrated below, provide the basic framework for the conversion and
movement of raw materials into final products.

Distribution
Supplier center

Manufacturing Storage facility Transport Retailer

facility facility
-

Production planning & distribution & logistics

Inventory control

The Production Planning and Inventory Control Process encompass the manufacturing and
storage sub-processes, and their interface(s). More specifically, production planning describes
the design and management of the entire manufacturing process (including raw material
scheduling and acquisition, manufacturing process design and scheduling, and material handling
design and control). Inventory control describes the design and management of the storage
policies and procedures for raw materials, work-in-process inventories, and usually, final
products.
The Distribution and Logistics Process determines how products are retrieved and transported
from the warehouse to retailers. These products may be transported to retailers directly, or may
first be moved to distribution facilities, which, in turn, transport products to retailers. This
process includes the management of inventory retrieval, transportation, and final product
delivery. These processes interact with one another to produce an integrated supply chain. The
design and management of these processes determine the extent to which the supply chain works
as a unit to meet required performance objectives.
2.2. Supply chain performance: achieving strategic fit and scope
A competitive strategy will specify, either explicitly or implicitly, one or more customer
segments that a company hopes to satisfy. To achieve strategic fit a company must ensure that its
supply chain capabilities support its ability to satisfy the targeted customer segment.
There are three basic steps to achieve strategic fit:
1. Understand the customer and supply chain uncertainty
2. Understanding the supply chain capabilities
3. Achieving strategic fit
 CHAPTER THREE
3. Methodology
3.1. Data collection
In order to conduct measuring supply chain performance we used different methods of data
collection techniques, primary and secondary data collection. to collect available data and
identify their drawbacks.
i. Primary data collection
 Physical observation: we will assess the existing supply chain performance of the
company, APF
 Interview: we will conduct with concerned bodies like middle manager, resource and
raw material department, marketing department, and agents. In order to get detailed
information about the existing supply chain performance.
ii. Secondary data collection
 Recorded company data: we will assess previously recorded data about the supply chain
performance.
 Literature Survey: we have been conducted on the existing literatures to get empirical
knowledge about concepts of supply chain performance measurement. This is conducted
by using the following data sources: articles, published journals, unpublished journals,
graduate reports on various aspects of supply chain performance measurement, and
websites.
3.2. Data analysis
To analyze the collected primary and secondary data, tools used are: Gantt chart, SPC tools like
cause and effect (fish bone diagram) to identify the causes and its effect and Pareto analysis
(80/20 rule) used to identify the vital few problems selecting from trivial many that have the
greatest impact. After analyzing the current supply chain performance measure the major supply
chain performance measurement factor. Based on the result of the study, measure the current
supply chain performance of the case company (i.e. reliability and cost performance), order
receiving time, order completion time, delivery time. Finally conclusion has been drawn; and
important recommendation for APF has been forwarded.
3.3. Tools used to analysis of supply chain performance
 CHAPTER FOUR
4. WORK PLAN OF THE PROJECT
The work plan of this project comprises the activity performing starting from the proposal
writing to the final presentation of the project thesis. There is a time three months and the
activity classified weekly in each month. The activity also grouped to eight major duties.

Time table work plan schedule

N Tasks June July August Remark

o
Week Week Week
1 2 3 4 1 2 3 4 1 2 3 4
1. Proposal presentation
2. Data collection

3. Measure and analysis the

current supply chain
performance
4. Identify the root cause of
supply chain performance
affecting factor
5. calculating cost of the
improved supply chain
6. Giving conclusion and
recommendation
7. Organizing document

8. Presentation
Reference
1. Chopra, Sunil and Peter Mendel, Supply Chain Management. 2 ed. Upper
Saddle River: Pearson Prentice Hall, 2004.
2. Supply chain performance measurement framework: case studies on the
Thai manufacturers Pasutham, A. (Author). 1 Jun 2012
3. Performance evaluation of supply chain using SCOR model : The case of
Pt. Yuasa, Indonesia”, Sudaryanto and Rudiana Bahri, International
seminar on Industrial Engineering and Management; Menara Peninsula;
Jakarta, August 29-30 2007, ISSN:1978-774x, pp C49-C55.