BAHIR-DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

RESEARCH PROPOSAL ON SUPPLIER RELATIONSHIP MANAGEMENT INCASE

OF AMHARA PIPE PLC
(SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THEDEGREE BACHELOR OF ARTS (BA) IN LOGISTICS AND SUPPLY CHAIN
MANAGEMENT).

Name ID
1. AlelignBirku 0801915
2. DagnewNurie 0802399
3. YeneneshAlamnie 0802452
4. Mihretmisgie 0802283
5. TamiralechZerihun 0802373

SUBMITTED TO: NURZIMAN J.

JANUARY, 2018

BAHIR DAR

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Table of Contents
Contents page

ABSTRACT .................................................................................................................................... i
CHAPTER ONE ......................................................................................................................... 1
1 Introduction .............................................................................................................................. 1
1.2 Statement of Problem ............................................................................................................ 2
1.3 Objectives of the Study ......................................................................................................... 4
1.4 Basic Research Question ......................................................Error! Bookmark not defined.
1.5 Significance of the Study ...................................................................................................... 4
1.6 Scope and delimitation of the Study ..................................................................................... 5
CHAPTER 2................................................................................................................................ 5
REVIEW OF RELATED LITERATURE .................................................................................. 5
2.1. Introduction .......................................................................................................................... 5
2.2. Definition of supplier relationship management .................................................................. 5
2.3. Dimension of supplier relationship management ................................................................. 7
2.4. Category of SRM ................................................................................................................. 9
2.5. Requirments of supplier relationship management (SRM) ................................................ 12
CHAPTER THREE ................................................................................................................... 16
RESEARCH DESIGN AND METHEDOLOGY ..................................................................... 16
3. Research Design .................................................................................................................... 16
Time And Cost Schedules ......................................................................................................... 19
Budget schedule ........................................................................................................................ 20
REFERENCES .......................................................................................................................... 21

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 ABSTRACT

This research is designed to assess supplier relationship management practice in case of

AmharapipelinePLC. The objective of this study is assessing supplier relationship management
practice. In the study both primary and secondary data will use. And also the researcher use
cross sectional research design with descriptive research type. To analysis the collected data
descriptive analyses techniques where use. The study explain different concept like dimension of
supplier relationship management, supplier quality improvement, supplier lead time reduction,
supplier collaboration in a new product development, supplier partnership development,
category of SRM.

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 CHAPTER ONE
1 Introduction

This chapter outlines and discusses the introduction part of the study, which includes background
of the study, statement of the problem, research questions, objectives of the study, significance of
the study, and scope of the study.

1.1Back ground of the study

The production, based on Supply Chain Management (SCM) thinking was appeared in 1960s by
movement frommass production to lean production. (Huang and Keskar, 2006)

Many factors, such as competitive market place for products and variety of customer’s demands,
need for fastdelivery of product to the market and development of information technology
resulted in movement oforganizations towards Supply Chain and forced them to outsource their
organizational activities to appropriate andcertain suppliers for sustaining market’s profit margin
(Kwai-Sang et al., 2004). In fact, SCM lets companies to usetheir capabilities in an effective
way. New concepts of SCM that defined as “Integration of relevant activities thatchanges raw
material to semi-final product to final product and delivering these outcomes to customers” were
presented about 20 years ago (Heizer and Render, 2001).

Supply chain management as a management philosophy control the material flow from supplier,
through distribution of inventory, information, enterprise integration, and development of close
ties with channel partners. In any case what is clear from definition is that supply chain
management as a management philosophy seeks to bring together all networks of partners in
closely linked partnership in order to facilitate the flow of materials in the system with the end
result of satisfying customers (Sox, 2004).
Satisfied customers are source of profit and competitive advantage for firms. Now a day we are
living in a world where everything is complex change from time to time and when it is
impossible for firms to sustain their competitive advantage over their rivalries. But in this
condition firms which have good performance regarding to five flows in supply chain that is
(materials information, finance people and knowledge) can create value for customer service.
(Edwards, 2005)

Supply chain management as a management philosophy control the material flow from supplier,
through distribution of inventory, information, enterprise integration, and development of close
ties with channel partners. In any case what is clear from definition is that supply chain

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management as a management philosophy seeks to bring together all networks of partners in
closely linked partnership in order to facilitate the flow of materials in the system with the end
result of satisfying customers (Sox, 2004)

This study focused on analyzing the extent of supplier relationship management practice and
their impact on competitive positioning of AMHARA pipeline plc and the main purpose of this
research was to examined collaborative of company with supplier, effective negotiation with
supplier and participant of supplier during product design and to investigate how the
organization realized relationship with their supplier through negotiated means.(chapr, kalra,
meindl, 2006).

1.2 Statement of Problem

Due to the reason of increasing dynamic Change of technology, firms faced different competitive
and strategic problems in the business world. To overcome challenges and adapting with
technological business environment, different researches conducted in different country by
different authors. Although the published research has pointed to the crucial role of Supplier
Relation Management and assistance of suppliers for achieving superior performance, the
practices that encompass such relationship still need more clarification. This the finding show
that about the important of supplier relationship, to supplier quality supplier improvement,
supplier production process improvement, increase competitive advantages and supply on time
delivery. Akhondi (2012)

Even if the researchers conducted on developed country, the applicability of findings was not
enough especially in developing countries like Ethiopia faced so many problems related with
supplier relation management like:-

 organization focus on short term relationship rather long term relationship and
collaboration strategy because lack of trust based partnership and ineffective
negotiation process with its supplier result in supplier unable togive additional service
to organization as resultthe organization receiving low quality of row material because
of have short term & price dependent relationship with its supplier, on theother hand
get late delivery due to late transshipment of the good& the organization weak in

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 transportation in addition to this the organization more focus on competitive bragging
strategy and price these result in poor supplier relation management. Consequently,in
effective supplier collaboration design and other many problems becomes.
 The relationship between effective supplier relationship management and its impacts on
Organizationalperformance is an increasingly important area of interest in the academic
and business in today world .Most of the established and successful companies focus
strongly on the development of closer ties with other organizations in search of
competitive advantage and improved market positioning. This has triggered the need to
develop better relationships with suppliers to enhance supply chain performance rather
than longterm trust based supplier partnership. So far, little information is known or
less available on promoting effective supplier relationship management between the
seller and buyer together with its impacts on the performance in organizations,
(Lambert, Cooper, & Pagh, 1998
 Previous research by Bart (2009), only investigated the buyer supplier relationship.
Another study was conducted by Cousins, Lamming, Lawson & Squire, (2006) on
performance measurement in strategic buyer-supplier relationships. The studies
mentioned here in failed to link strong supplier relationship management with that
oflongterm trust based supplier partnership.Therefore, this study sought to bridge this
gap by providing more knowledge on how to foster effective linkage of supplier
relationship management &longterm trust based supplier partnership with that of
effectivecommitment&collaboration design in the company.

1.2.1 Basic Research Question

Is there effective supplier relationship management practice in Amharapipeline private limited

company?

1.2.2 SUB RESEARCH QUESTION

 Is there effective design collaboration between Amhara pipeline and its suppliers’?
 Is there fair negotiation between selected supplier and organization which used to bring
to the common agreement?
 Is there efficient supply collaboration with selected supplier to improved supply quality ,
product and continuous relationship with suppliers?
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  To what extent Amhara pipeline implement supplier relation management?
 What are the stagesof buyer and seller relationship?
 What type of value archived through supplier relationship management.
 Why strategic supplier relationship more important now than ever?

1.3 Objectives of the Study

1.3.1 General Objective

The general objective of this study will to assess supplier relationship management process in the
case of Amhara pipeline.

1.3.2 Specific Objective

 To examining design collaboration between the company and supplier of components and
raw materials that will have positive characteristics across the several end products in the
organization.
 To ensure that supply collaboration which once an agreement for supply will establish
between the suppliers and the organization.
 To investigate how will the organization realize relationship with their supplier through
negotiated means?
 To ensure that supplier relation management implement in Amhara pipeline.
 To identify stage of buyer and seller relationship
 Investigate the value achieved through supplier relationship management.
 To ensure strategic supplier relationship more important now than ever.

1.4 Significance of the Study

This study helps for the organization point out the problem based on the finding about supplier
relation management and give implementable recommendation. For us this study will be uses to
add the value for detail understanding for the researcher on the issue of supplier relation
management. In addition to this the research will take of the base for further study in the same
field for the next generation in similar issue and it solves problem of society relating with
supplier relation management.
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1.5 Scope of the Study

This study was limited to the topic of assessment of supplier relationship management
practice in Amhara pipeline private limited company. Therefore, this research does not
represent other company because of the researcher experience and the geographical
location to include other supplier relation management practice related company. In this
study the researcher will try to focus on the area of dimension of supplier relationship
management, category of supplier relation management, requirement of supplier
relationship management, stage of buyer and seller relationship, type of value achieved
through supplier relationship management, strategic supplier relationship management.
Like supplier dispute resolution and other is not include for our studying area.

CHAPTER 2

REVIEW OF RELATED LITERATURE

2.1. Introduction

Since literature review used as reference for the same or related issue about on study in this study
the researcher will be uses different theories, empirical researches and the study will be
supported by conceptual frame works which these are developed by different scholars.
Therefore, in this study as match as possible different literatures will be tire to include. In this
study literatures include empirical analysis about SRM which written by different scholars such
as definition of supplier relationship management, category and conceptual frame works with
their respective requirements. In addition to this the practical observation and reasonable opinion
of the researcher will be include based on the literatures which written and published by scholars
and public media. Finally, the researcher will be used the literature as conceptual frame works to
the study to asses them in the context of Amharapipline.

2.2. Definition of supplier relationship management

As the trend toward use of technology to drive competitive advantage has taken root, visionary
Manufacturers are starting to take advantage of a new competitive opportunity called Supplier
Relationship Management (SRM). Herrmann and Hodgson (2001) defined SRM as a process
involved in managing preferred suppliers and finding new ones while reducing costs, making

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procurement predictable and repeatable, pooling buyer experience and extracting the benefits of
supplier partnerships. It is focused on maximizing the value of a manufacturer’s supply base by
providing an integrated and holistic set of management tools focused on the interaction of the
manufacturer with its suppliers (Berkowitz, 2004).
Supplier relationship management entails determining how company buyers interact with
suppliers. It is a mirror image of customer relationship management. Just as a company needs to
develop relationships with its customers, it needs to foster relationships with its suppliers to
ensure quality goods and services, timely and assured deliveries and information flow to assist
both organizations in planning. At the strategic level, the output of the process is an
understanding of the levels of relationships the firm will maintain, and the process for
segmenting the suppliers and working with them to develop appropriate relationships. Once the
process team determines the criteria for categorization of suppliers and the levels of
customization, the operational supplier relationship management process develops and manages
the relationship.
Relationships can take the form of supplier captive or buyer captive. Supplier applies when the
supplier has less chances of changing the buyer either because of the supplier having invested a
lot of resources to produce a particular product to a given firm and hence moving will be a loss, a
case where a supplier has only one or a few clients to deliver to. Buyer captive arises when the
buyer has one source to buy from such as when there is only one supplier or manufacturer of
product. In both cases, relationships should be a win-win to both for both firms to reduce
costsSupplier relationship management (SRM) is a set principles, processes, templates and tools
that help companies overhead over the entire supplier relationship lifecycle, SCM enables
organizations too effectively: (www.ensuring wiki.com)a

good supplier relationship management is an effective practice that will allow an organization
to.

 Satisfying supplier based on importance and defined relationship expectations.

 Establishes the governance structure and process for internal and supplier interactions
across the lifecycle of the supplier relationship.
 Defined formal processes for management involvement in the relationship
 Clearly internal roles and responsibilities, and required skills.
 Put in place processes to effectively manage performance and develop supplier
capabilities to continuously improve value.

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2.3. Dimension of supplier relationship management

Supply chain management has long-term objectives and short-term objectives. The long-term
objectives would include: creating value to customers, increase profits, improve efficiency of
production operations, and increase market share. On the other hand, short-term objectives
would generally include: improve productivity, reduce cycle time, and reduce inventory Firms
willing to receive frequent deliveries have the incentive to assist and develop their suppliers and
to establish close relationships with them major factor for the Japanese industrial
competitiveness. It indicated that suppliers in lean production setting are expected to have the
ability of meeting quality, delivery, and responsiveness requirements. They further pointed out
the difficulty for customers to meet these requirements unless suppliers themselves have adopted
lean practices. This pointed to one key problem in just-in-time (JIT) environment associated with
moving the inventories from the buyer’s firm to its suppliers. Such a situation will reduce
inventory and related costs in the buying firm while increase inventories and costs in the supplier
firm Handfield et al. (1999)

2.3.1. Supplier Quality Improvement

De Toni and Nassimbeni (2000) indicated that the elimination of inspections of incoming
materials can be only achieved by considerably improving the quality of suppliers. Improving
supplier quality includes activities such as certifying suppliers on quality and providing technical
assistance to them. Supplier quality improvement www.ccsenet.org/ijbm International Journal of
Business and Management would result in improved quality and productivity, enhanced design
of the parts, and reduced costs De Toni and Nassimbeni (2000).

2.3.2. Trust-Based Relationship with Suppliers

MacDuffie and Helper (1997) discussed three main types of trust; Competence trust: where
supplier believes that the buying firm is able to perform what promised to perform. Contractual
trust: a belief that the buying firm will continue its contracts. And Goodwill trust: a belief that
the buying firm will avoid taking unfair advantage, and will always act on mutual benefit basis.
Moreover, there are pointed to two types of trust that are very close to the above; Trust in
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partner’s reliability: the trust that the other firm is reliable to do what it said. And Trust in the
partner’s benevolence: a belief that the other firm is interested in the partner’s firm benefit and
will not take actions that may unfavorably influence it. Trust between the buying firm and its
suppliers would improve cooperation, enhance satisfaction, reduce conflicts, facilitate
information exchange, and lead to long-term relationships. Trust was considered one major
factor for the superior performance of Japanese firms compared to British firms. Trust building
should not be the concern of the buying firm only, from this we can concluded that trust is also
essential and advantageous to the supplier firm, which has to make efforts to establish, extend,
and retain the buying firm trust, especially when such trust can lead to more benefits for the
supplier Heikkila (2002).

2.3.3 Supplier Lead Time Reduction

Burton (1988) indicated that suppliers account for approximately 80% of lead-time problems. In
lean production environment, JIT purchasing requires the supplier firms to deliver frequent
supplies in small lots. This would require perfect synchronization between the supplier and the
buyer, which can be achieved by integrating their production planning and control systems to
reducing lead time as an essential approach to create responsive supply chain and avoid
uncertainty. The crucial role of reducing lead time on the ability of the supplier to become lean
and responsive. He further indicated that supplier lead time reduction minimizes the potential
problem of shifting inventories to the supplier firm and eliminates quality problems associated
with holding buffer inventories lead time performance was affected by information quality and
close relationships between the buying firm and the supplier firm. The importance of the logistic
link between the buyer and supplier, particularly under JIT system, where suppliers have to
completely respond to the requirements of the buyer in terms of quality and quantity. They
argued that such link would be enhanced by small lot size and schedules coordinated between the
two parties Burton (1988).

2.3.4. Supplier Collaboration in New Product Development

Hand field et al. (1999) indicated that understanding design knowledge and competencies of
suppliers are among the most essential aspects in new product development (NPD). Suppliers
have to be incorporated in NPD, especially when advanced technologies are involved and the

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firm has little or no expertise in. Additionally, including suppliers in NPD and sharing technical
information with them is valuable when advanced and complex technologies are applied.
Handfield et al. (1999) further indicated that when suppliers have familiarity with the customer
firm’s processes and goals, they can prepare in advance the necessary requirements for future
product development efforts. Ragatz et al. (1997) found that supplier involvement positively
affected the success of NPD when the following factors were met: top management commitment,
learning and training sharing, agreed upon performance measures, belief in supplier’s
qualifications, risk/reward sharing, and development of trust aspects firms who involved
suppliers in their product development teams achieved considerable improvements compared to
those who didn’t Handfield et al. (1999).

2.3.5. Supplier Partnership/Development

Lang Field-Smith and Greenwood (1998) traced the origins of supplier partnership to Japanese
automotive industry, and indicated that it was adopted by Western companies in the 1990s. They
pointed to information exchange and cooperation as pillars of supplier partnership. Supplier
partnership and development involves cooperative efforts to improve supplier capabilities with
respect to technology, quality, delivery, and cost. It also encourages continuous improvements.
The main dimensions that characterize successful supplier development would include, but not
limited to: integrating and improving activities and processes, continuous cooperation and long-
term relationships, mutual benefits as a result of any improvement efforts, and apparent structure
for both companies with regard to cost, price, and profit (Handfield, 1993).

2.4. Category of SRM

With regard literature on the matter of supplier relationship management, there are different
theories which deal supplier relationship management based on different regarding base such as
based on time duration, based on operation and based on processes. However up on similarity in
concept they categorized in some classes. Therefore, in sense of procurement and supply chain,
Fear son (2002) supply chain relationship classified in to two. The first is team approach long
term relationship and the second is partnership and strategic alliances. In sense of team
approaching term relationship refers to discussion on satisfaction stability frame work and
alliances the need for extensive communication and communication skill for the party in buying
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selling relationship. Under this class internal cooperation and strategic approaches are the key to
supplier relationship management. The other classes is partnership and strategic alliance to refers
to special arrangement with key suppliers that make strategic different to both buyers and sellers.
On the other hand, that supplier relationship management classified into five processes such as
design collaboration, sourcing, negotiation, buying, and supply collaboration Fearson (2002.

2.4.1. Design collaboration

The goal of this process is to improve the design of product through such idea as the joint
selection component that have positive supply chain characteristics such as easy of
manufacturability across several end products. On the other hand, design collaboration activity
includes sharing of engineering change order between manufacturer and its suppliers. Good
collaboration at this stage can create huge value; due to the On the other hand, design
collaboration activity includes sharing of engineering change order between manufacturer and its
suppliers. Reason of 80% of product cost is determined at the design stage. Collaboration
(supplier involvement) is achieved via a collaboration strategy and is that allow purchasing
managers to collaborate with other department members and suppliers. In addition, the
collaboration strategy can be divided into two stages: thefirst is the product development stage
which means the product first designed and developed in this stage. The second, is the
production stage, the product is already produced and finalized in this stage.

For a win-win situation between the supplier and manufacturer, they must share roles and profits
through modularization and introduce an advanced method that connects the supplier and
manufacturer via shared information. Fearson, (2002).

2.4.2. Negotiation: -

Negotiation is process we undertake in everyday to manage our relation such as employers and
employees, buyers and sellers and business associations. In some of negotiation, the stacks are
not that high to preplan the process and the outcome, but in some case business relationship
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stacks are high and we have to prepare planed negotiation carefully. In business relation parties
negotiate because they think they can influence the process in such way that they can get better
deal than simply accepting or rejecting what the other party is offering. Business negation
voluntary process of give and take where both parties modify their offer and expectation in order
to came closer to each other. Sometimes negation and barraging used inter changeable. But they
mean different things. Barraging is more like haggling in so called competitive barraging.. Hire
the objective of parties is to maximize their own benefit quite often at the expense of the other
part. Therefore parties are more competitive. They normally do not like to share information with
the other parties unless they have to, and they want to gate the maximize information on and
from the other parties. Also this view on negation is out dated. It is still practiced and studied in
some situation such as labor management negation (wallon and mckrrisia 1965)..

2.4.3. Supply collaboration

Supply chain performance can be improved by collaboration, on forecasting, production plan and
inventory levels. In this stage the goal of collaboration is to ensure a common plan across the
supply chain. Studies on the collaboration between the supplier and the buyer can be reviewed in
two ways: by focusing on the collaboration strategy or by using an SRM system to carry out the
collaboration strategy. The collaboration strategy can be explored according to the participation
phase of new product development and production. In many industries, companies encourage
suppliers to be involved in seeking ways to shorten the development time, improve quality,
reduce cost, and release new products smoothly. Previous studies have examined the
participation time, the responsibility level in cooperative development (Petersen et al., 2005), and
the type and strength of a contractual relationship. The most well-known collaboration
techniques are JIT purchasing (JITP), which makes the customer’s JIT operation possible vendor
managed inventory (VMI), where suppliers take responsibility for arrange of contracts and
manage the buyer’s inventory and collaborative planning, forecasting, and replenishment
(CPFR), which involves integrating the supply chain. Finally, studies that have investigated
SRM systems for collaboration include system-oriented concepts, such as using an integrative
case-based supplier selection method a web-based enterprise collaboration platform and a
collaboration framework from the viewpoint of business strategy. Significant improvement in
supply chain performance can achieved by supplier relationship management processes are well

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integrated with appropriate internal supply chain management (ISCM) and customer relationship
management (CRM) processes (Medl, 2002).

2.5. Requirements of supplier relationship management (SRM)

2.5.1. Supplier selection

A good supplier selection process is very important for efficient purchasing and manufacturing.
The decision-making process of evaluating and selecting a supplier is complicated for two
reasons. First, suppliers can be evaluated by more than one criterion. Second, each supplier has a
different specialty and thus a different criterion. Additionally, there are two problems
encountered in supplier selection. One is a single sourcing problem: the goal is to satisfy the
buyer’s needs with one supplier. In this case, the manager must decide which supplier is the best.
The other problem is a multiple sourcing problem in which it is not possible to satisfy the
buyer’s needs with one supplier. In this case, the manager has to choose multiple suppliers and,
in turn, allocate supplies to them (Wangetal, 2004).

2.5.3. Information sharing/communication

As it has already been discussed, the new patterns of buyer- supplier interaction found in supply
chain management represent a general trend toward closer and more cooperative relationships. In
this kind of relationships, communication effort between supplier and buyer involves many inter-
firm contacts and exchange of information takes place frequently and informally and not only
according to a pre-specified. Many authors discuss, among others, how the sharing of
information and assets and the disclosure of proprietary information are essential for the success
of a strategic alliance. Part of the open communication between buyers and their supplies is that
buyers should provide suppliers with feedback about the results of their evaluation and the
mistakes they may have done (Monczka et al.,1995).

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2.5.4. Transportation

Freight transportation plays a key role in today’s economies as it allows production and
consumption to take place at locations that are several hundreds or thousands of kilometers away
from each other. As a result, markets are wider, thus stimulating direct competition among
manufacturers from different countries and encouraging companies to exploit economies of
scale. Moreover, companies in developed countries can take advantage of lower manufacturing
wages in developing countries. Finally, perishable goods can be made available in the worldwide
market. .Freight transportation often accounts for even two-thirds of the total logistics cost and
has a major impact on the level of customer service. It is there- fore not surprising that
transportation planning plays a key role in logistics system management.

A manufacturer or a distributor can choose among three alternatives to transport its materials. First, the
company may operate a private fleet of owned or rented vehicles (private transportation). Second, a
carrier may be in charge of transporting materials through direct shipments regulated by a contract
(contract transportation). Third, the company can resort to a carrier that uses common resources
(vehicles, crews, terminals) to fulfill several client transportation needs (common transportation). In this
section, illustrate the main features of freight transportation from a logician's perspective.
Transportation services come in a large number of variants. There are five basic modes (ship, rail, truck,
air and pipeline), which can be combined in several ways in order to obtain door-to-door services such
as those provided, for example, by inter modal carriers and small shipment carriers (Wangetal, 2004).

2.6. FIVE STAGES OF BUYER AND SELLER RELATIONSHIP EVOLUTION

Ford (1980) presents five stages in buyer seller relationship evolution .they are pre relationship, early
development,longterm& the final stage.
.in Early stage, lack of commitments&uncertainty in the relationshipprevails. In early stage of
relationship uncertainty is high ,distance between supplier and buyer usually highperceived and actual
commitment is also found to be lowthe time investment of management at this stage remains high cost
saving and negotiation is found to be low and sample based.
In the development stage, uncertainty slowly reduces, distance between buyer and seller also reduce
commitment level from both the parties started increasing. Contract signing large scale ordering formal
adaptation become a apart of relationship
In the longterm relationship stages, uncertainty becomes minimum institutionalization development
takes place, perceived commitment reduced and actual commitments become maximum.Major
purchasing and large scale delivery takes place along with cost saving measuring.

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IN the final stage of relationship extensive institutionalization takes place. Business practice
becomesbased on code of practice and ethics. It indicates long established s table market.
.2.7, TYEPES OF VALUE ACHIVED THROUGH SUPPLIER RELATIONSHIP MANAGMENT
The value derived from a comprehensive supplier relationship management program comes in many
forms. Organizations focused on enhancing supplier relationships can expect the following results.
Increased Efficiency
Through improved communications, suppliers come to better understand their client`s business to meet
needmore effectively. When issues or problems do arise, systems and controls in the SRM programs
enable both parties to identify and address them. Suppliers anticipate and adapt to needs more quickly,
eliminating redundancy while streamlining processes.
Cost Saving

Over time, SRM processes and practices can help reduce availability problems, quality issues,
and delays. In addition, vendors are more inclined to share cost efficiencies gained through the
adoption of new technologies or methodologies with business in which they have close working
relationships. Rather than benchmarking their suppliers` different industries, buyers can depend
on their preferred vendors to share new trends in their markets-proving for mutually beneficial
costs advantages from both an operational and unit cost perspective.

Revenue Growth

Through greater operational efficiencies from an SRM program, both the supplier and buyer can
increase revenue growth.

Working in close collaboration or through a joint venture, both parties in an SRM program can
go after new market opportunities such as these, sharing risks and potential growth.

Risk Management

While lack of compliance to laws and regulations can have financial penalties, security breaches
of company and customer information can have detrimental effects on a company`s reputation,
damaging a brand name and resulting in lost sales. Working within a solid risk and control
framework established as part of an SRM program, company personnel assigned to manage a

14
supplier who handles proprietary information or interfaces with customers now have a formal
risk and control process to follow. This allows supplier managers to better understand supplier
and internal controls for managing risk, test suppliers` controls to ensure activities met relevant
regulations, maintain security of proprietary information and create disaster recovery scenarios
and backup plans.

Preferred Buyer Status

Constantly changing vendor is an expensive and time consuming activity as it takes internal
resource to identify supplier and negotiate contract.even if a new supplier promise lower cost, the
long term relationship built with strategic partner generates more value over potential short term
gain. By sustaining supplier relationship, buyer can become a ‘customer of choice ‘to minimize
fluctuation in commodity price establish a clear cost base and provide total price visibility.

Innovation

As expert in their field, supplier can share knowledge to help their customer enter new market &
geographic, gain access to new technology, & improve cross functional collaboration between
organization. Open communication at a leadership level can spark new idea &elevate
organizational discussion that can lead to an aligned strategic focus between company, which can
potentially resultin competitative advantage for both side.

STRATAGIC SUPPLIER RELATIONSHIP

Strategic supplier relationship management is systematic enterprise wide assessment of supplier

asset & capability in view of the organization over all business strategy a determination of what
activity to engage in with different supplier ,and planning and execution of all interaction with
supplier in a coordinated fashion across the relationship life cycle to maximize the value
achieved through those interaction .strategic supplier relationship more important now than ever
by the following manner,

VOLATILE MARKET

Price focused sourcing strategy don’t work in period of increasing commodity price
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More sophescatetedrelationshipbased approaches are required to meet utility cost reduction
targets based on recent increases in raw material,espesacliyfuel ,traditional unit based saving will
not generatesubstantialsaving, supplier must be willing to provide creative solution to remove
cost from how they service or re engineered the procured materials

MERGER& AQUASTION TRAIND

Larger, national or global presences of utility require more strategic supplier relationship to
support growth and cost synergy target

EXPANSION OF SUPPLIER VALUE- ADDED SERVICES

Suppliers continue to expand their value – added serviceoffering, increasing the value of
strategic supplier relationships.

CHAPTER THREE

RESEARCH DESIGN AND METHEDOLOGY

3. Research Design

In conducting this study, we used quantitative research design with the descriptive type of
research. It is an appropriate method to assessing the supplier relationship management
practice in Amhara pipeline plc because study was intended to investigate SRM practices
based on fundamental theories, principles and management philosophies that are supposed to be
effective parameters just to evaluate the actual performance of the case company’s key business
activities. Accordingly, the case company’s existing SRM practices will evaluate. That means
the purpose of this research was to find out the underlying facts and /or actual circumstances
existing within the case company with regard to SRM practices and describing the facts.

3.2. Population and Sampling Technique

Since the research aim was assessing SRM practice in the case of AmharapipelinePLC,
the target population will be the employees of the company including daily labor,
manager, permanent company employees and contract employees. Currently the

16
company has 228 employees, the researcher’s focus of the study more relates with the
department of purchasing & market &sale, maintenance repair & production department.
Thus total target population of these four departments is 228. For selecting the
respondents from this total population proportional stratified random sampling
technique will use. On the basis of functional units, the sampling population was
categorized in to strata as maintenance & repair department, purchasing and market sale
department and production department.
Justification for using proportionate stratified random sampling
It will enable to represent not only the overall population, but also key sub groups of the
population, especially small minority group. Stratified random sampling has more statistical
perception than simple random sampling if the strata or the group are heterogonous. If they are,
the researchers expected the variability within groups to be lower than variability for the
population as a whole. Therefore, to determine the sample size the researcher preferred to use a
method developed by Carvalho (1984), as cited in (Malhorta, 2007)
Table Error! No text of specified style in document.-1: Sample Size Determination.
Population Size Sample size
Low Medium High
51-90 5 13 20
91-150 8 20 32
151-280 13 32 50
281-500 20 50 80
501-1200 32 80 125
1201-3200 50 125 200
3021-10,000 80 200 315
10,001-35000 125 315 500
35001-150000 200 500 800

(Source: MalhortaNaresh, Marketing Research: an applied approach,(Malhorta, 2007)

The total target population (N) 228 was classified in to four strata such as, production department
110 employees, purchasing department 19 employees, maintenance repair department 41
employees, market and sale department 45 employees. according to Malhorta(2007) the Sample
17
size (n) is 32 as shown in the above table the researchers was select the second stage consisting
of 151-280 with a medium sample size and the researchers are try to prove based on statistical
equation as follow; Therefore, from the total population each department population in
percent is.

Department’s% age of employees samplesize (n) is 32

Production department (110*100/228) =48%32*48%=16

Purchasing department (19*100/228) =8%32*8% =3

Maintenance &repair department (41*100/228) =18%32*18% = 6

Market andsale department (45*100/228) =20%32*20% = 7

Total N = 228 100% n (no of respondent) =32

3.1. Sources of Data and Method of Data Collection

For this research researchers used both primary and secondary source of data. The primary data
will collect from the company’s employee and mangers of production, sale marketing&
purchasing that have close relationship with supplier relationship management by using un
structured questioner method via distribution. The secondary data would collected from the
international website, written material and related documents Such as; books, articles, journals,
magazines, and broachers were reviewed. Finally the researcher are total emphasis on both open
ended and close ended questionnaire it is time efficient for both the respondents and researcher.
The questionnaire un structured in such a way that it was included all relevant parts of
information to clearly acquaint the respondents

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Data Analysis and Interpretation Methods

Descriptive analyses method has been used in order to analyze the collected data. The data
gathered through closed ended questionnaire were analyzed, organize, arranged and
interpreted using descriptive statics by using table and percentages and the data collected
through open ended questionnaires are also analyzed, and interpreted quantitatively through
tables and percentage

Time and Cost Schedules

Time Schedules

N o Particulars Responsible Body D a t e

1 Submission research title The Researcher December,2017
2 Submission of the final research proposal The Researcher Feburary,2018

3 Preparing research questionnair e The Researcher Feburary,2018

4 Administrating the questionnaire to the respondent The Researcher March,2018
5 Collecting interview for manager, employees and customer The Researcher March,2018
6 Data an al ysi s an d in terp reta ti o n The Researcher A p r i l , 2 0 1 8
7 Submission of the first draft research The Researcher M a y , 2 0 1 8
8 S u b mi s si on of th e f i n al r es ea r c h The Researcher J u n e , 2 0 1 8
9 A d v i s o r c o n t a c t The Researcher Nov,2014-June,2015

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Budget schedule
The expected total budget cost is presented as follow

N o D e s c r i p t i o n / B u d g e t t i t l e Unit of measurement I t e m Unit cost Total cost(Birr)

1 Transportation cos t K m 6times 3 0 1 8 0
2 stationery materials such as :
P a p e r P a c k a g e 1 1 2 5 1 2 5
P e n 5 5 2 5
F l a s h G B 1 1 8 0 1 8 0
3 For printing service P a g e 4 6 2 9 2
4 Miscellanies Expense - 2 0 0 - 2 0 0
5 T e l e p h o n e - 5 6 3 0
6 P h o t o c o p y i n g P a g e 4 5 1 4 5
7 N o t e b o o k P a d 1 1 5 1 5
8 T o t a l c o s t - - - 8 9 2

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REFERENCES
Abraham k. (2009). Managing Human Resources, Fourth Edition, Prentice Hall
Ansari s. (2009). Purchasing and Supply Management, 6th edition, McGraw-Hill
Athur, P. (2007). Supply chain management", Journal of the Academy of Marketing
Science, Vol. 38

Armstrong.(2010).Human resource management. Third edition.Kogan

Page.USA.Washington,
Abraham k. (2009). Managing Human Resources, Fourth Edition, Prentice Hall

Cooper, J. (2004). Supply Chain Management Practices. Second Edition. Pearson

Publishe
Caines, C. (2005). Implementation of supply chain management and its impact on the
Value of
Dempsey,B. (2003).Research Methods, Fourth E2007). Supplier Management. Third
Edition; Pearson Publishe
Sherry G.(2005). Seven Steps to Measure Supplier Performance", Quality Progress.
Journal of
Tan, L. (2001). Purchasing and Supply Management, 6th Edition.McGraw-Hill.
Wisner, J.D. (2002), "Supply chain manageme
Ansari s. (2009). Purchasing and Supply Management, 6th edition, McGraw-Hill
Athur, P. (2007). Supply chain management", Journal of the Academy of Marketing
Science, Vol. 38
Armstrong.(2010).Human resource management. Third
edition.KoganPage.USA.Washington,
Baden, L.(2004). Supply chain management", Journal of the Academy of Marketing
Science, Vol. 28
Bill, L. (2009). Supplier Management. Third Edition; Pearson Publisher
Boyer, S.(2010).Research opportunities in supply chain management", Journal of the
Academy of

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Bowersok, P.( 2000). Purchasing and Supply Management, 6th edition, McGraw-Hill.
Braxton, P. (2008). Supply chain Management, 4th edition, McGraw- Hill.Uk.London101
Clerk, S. (2003). Supply chain management", Journal of the Academy of
Marketing Science, Vol. 38
firms", Supply Chain Management: An International Journal, Vol.
International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 6,
No.arketing Science, Vol. 38Purchasing Volume 22.
Logistic and supply chain management department

Title: Assessment of Supplier relationship Management Practice

(A study on AMHARA PIPELINE PRIVATE LIMITED COMPANY

Dear respondents, we are attending our 1st degree study in logistics and supply chain
management program at school of business and economics COLLAGE OF IN
BAHIRDAR University. Currently we are conducting a research title as: “Assessment of
supplier relationship Management practice”. So your genuine, frank and timely
response is very important for successful accomplishment of this study. We kindly request
you to give response to each item of question very carefully. The information you provide
will be used for academic purpose and thus not affect you in any case since everything
will be kept confidentially.

Thank you for your cooperation in advance!

Instruction: Please tick a “√” marks in the box provided for each question

Part I. Back ground information

1. Sex Female Male

2. Age 18-25 26-34 35-50 50 and above

3. Year of work experience

Below 3 years 3 years 3-5 years above 5 years

4. Department_________________________

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Part II. Supply chain management practice related questionnaire assessment

1. Does the company have effective communication with the supplier?

Yes No

2. Do the company functional departments effectively coordinate their operation and

production process? Yes No

3. Does the company share information with its supplier to know their trust and to satisfy
them? Yes No

4. Does the company have transparent information share with the supplier?

Yes No

5. Is your company having trust based relationship with supplier?

Yes No

6. Does the company use strategic supplier relatio for their competitive advantage?

Yes No

7. Do the company’s functional departments have close information sharing?

Yes No

8. Does your company use advanced information technology in order to integrate and
collaborate their operation? Yes No

9. Does the company have supplier partnership?

Yes No

10. The company’s store and ware house to their inventory is:

Sufficient not sufficient excess

11. Does the company have efficient supply collaboration with its selected supplier?
Yes No

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12. What kind of alternative transportation used in your company to transport its
material?

Private common contract

13. Does your supplier develop new product to satisfy their company and customer

Yes No

14. What kind of transportation modes are used in your company?

Truck Airplane Rail Ship

15. Does the company have effective collabration with the supplies?

Yes No

17. Does the company use another transportation stream by other means to achieve
effective flow of the required material?

Yes No

18. Does the company have information sharing with other companies (competitors)?

Yes No

19. Do you say there is good supplier relationship practice in the company?

Yes No

20. Does the company have close relationship with its suppliers?

Yes No

21. Does the company supplier achieve on time delivery to the company required
material?

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 Yes No

22. Does the company have a value achive through supplier relationship?

Yes No

ifyou say yes ,what are they?

23. Does the company have ability to negotiate with its selected supplier?

Yes No

23. Does the company have the right quality material delivered from the supplier?

Yes No

24. What are the main challenges in your company supplier relation management
performance?

a) Lack of professional experience

b) Difficulties in the information flow

c) Raising logistic cost

d) Lack of cooperation with functional department

e) Difficult supplier relationship with the company

25 . How much your company takes time to deliver products for

customers
26. Did the company used most well known collaboration
technique jitp?

Yes No

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27. In your company mainly what type of value achived through supplier relationship?

Cost saving increased efficiency revenue growth risk management innovation

Part III Open ended questions

1. In your company what are the main barriers to the information sharing between
functional departments?

______________________________________________________________________________
______________________________________________________________________________
____________________________________________________________

2.Did the company supplier achieve on time delivery for the

company reqrequired material?

Yes No

If you say no, what are the reasons?

3 What are the main barriers between the company and the supplier to cooperate and
coordinate their activity? Give your solution
2.Did the company face problems at the time of supplier selection
process?

Yes No

If you say yes, what are the reasons?

4. Did the company have more strategic supplier relation importance now than ever?

Yes No

If you say yes. What are the reasons?

__________________________________________________________________
5. Does your company design a product collaborate with its supplier?
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 Yes No

If you say yes. What are the advantages?

6 ,Is there an advantage reducing lead time the ability of supplier

Yes No

If you say yes. What are the advantages?

______________________________________________________________________________
____________________________________________________________

7 .Does accompany have considerable activity improving quality supplier?

Yes No

If you say yes. What are they?

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