Supply chain is the interconnected set of linkages between suppliers of materials andrnservices that spans the transformation of raw materials into products and services andrndelivers them to a firmâ€™s customers.rnSupply chain is highly recognized in developed countries for it is estimated to consumern10% of their Gross National Product (GNP). It is therefore projected to be of a greaterrnproportion in the developing countries like Ethiopia, where a large amount of capital isrntied up in inventories and in transportation systems for moving materials.rnThus, a supply chain must be managed by controlling inventories. Developing a supplyrnchain management system (SCMS) requires the analysis of the flow of materials from therninitial sourcing to the final end customers. SCM has become a universal approach to costrneffectiveness, timely delivery and the creation of growth oriented exchange system inrngoods and services. Accordingly, different researchers have made supply chainrnmanagement studies in different Ethiopian process industries and have developed modelsrncapable of solving supply chain associated problems if implemented properly. And thisrnthesis is done with the purpose of assessing the existing supply chain environment in onernof the Ethiopian discrete manufacturing industries, the Mesfin Industrial EngineeringrnPLC (MIE), and solving the associated problems.rnMesfin Industrial Engineering (MIE), being one of the Endowment Fund for thernRehabilitation of Tigrai (EFFORT) companies, is a privately owned companyrnlocated at the northern part of Ethiopia, in the Tigrai provincial capital, Mekelle.rnMIE, is the leading equipment manufacturing and industrial engineeringrncompany in East Africa. It designs and installs equipments & components for thernenergy, mining, manufacturing, construction, transportation, and agriculturalrnsectors.rnBecause of the inherent complexity of decision making in supply chains, there isrna growing need for modeling supply chain system with different methodologies.rnWith a focus on SCM in which cost, inventory and time are the key challenges, this thesisrndevelops a model to aid the improvement of performance of the supply chain of MIE. Thernmodel is developed based on existing SCM knowledge (Initiated or adopted fromrnliterature review and pervious research works of Vikas Chandra (India-IIT, 1999)[30],rnviiirnAto Abreham Debebe (Ethiopia-AAU, 2004)[8], and others recently done on similar arearnand as result of the circulated questionnaires, interviews made, and the results of anrnassessment or observations of supply chain management in the Mesfin IndustrialrnEngineering PLC.rnWhile the case study was conducted, MIEâ€™s awareness of SCMS, existing measurementrnof costs, all the inputs from the supply side, the production process and the out puts werernassessed. Consequently, a supply chain model is developed with modifications on thernexisting model in such a way that non-value adding activities are avoided to reduce thernsupply chain cost. Thus, based on the new model, supply chain cost analysis is done andrnwhen compared to the traditional accounting system cost analysis there is a reductionrn(saving) of about Birr 1,235,743.80 (1.06%) in the annual production cost whenrnsupply chain cost analysis is used.rnFinally, the researcher has made conclusions of the study and put recommendations tornthe industry, MIE, on how to use the concept of SCMS for creating satisfied customerrnand enhancing its profit margin.rnKeywords: Supply Chain Management System (SCMS), Supply Chain Cost Analysis,rnSupply System (direct and indirect materials), Manufacturing System, DistributionrnSystem (Dealer & Branch Warehouse), Modeling, and Material Flow System.