Beruflich Dokumente
Kultur Dokumente
RESEARCH METHOD
LECTURER : PROF ROMLI
THESIS PROPOSAL :
STRATEGY FOR GREEN PRODUCTIVITY PERFORMANCE IMPROVEMENT
OF INDONESIAN LEATHER INDUSTRY
(CASE STUDY : LEATHER SMEs IN GARUT, WEST JAVA)
GRADUATE PROGRAM
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LIST OF TABLES
Table 1. Green Productivity Benefits
Table 2. List of Small and Medium Industry in Garut, West Java 2011
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LIST OF FIGURES
Figure 1. Green Productivity Concept
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Figure 2. GP Portfolio
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CHAPTER I
INTRODUCTION
I.1. BACKGROUND
Leather tanning industry is one of the important export sector in Indonesian
industry that contributes 2.1% to Indonesian GDP. In 2012, export of leather reached 3.5
billion US Dollars and most of them were exported to USA, Germany, England,
Belgium, and Italy. On other hand, leather industry has been categorized as one of the
highly polluting industries. Therefore, one of the big problem which is caused by leather
tanning industry in Indonesia is its impact to the environment. Leather tanning industry
produce hazardous waste due to its chemical used and many water resources needed in
the process. Leather products are manufactured using various processes and chemicals
which may show variations depending on the desired the leather characteristics
(Ozgunay et al., 2007). Leather industry pollutes through generation of huge amount of
liquid and solid wastes, also emits obnoxious smell because of degradation of proteinous
material of skin and generation of gases such as NH 3, H2S, and CO2. Furthermore, the
tannery effluents are characterized by high contents of dissolved, suspended organic, and
inorganic solids rising oxygen demand and potentially toxic metal salts and chromium
metal ion.
Based on Presidential Decree No. 28 Year 2008 on National Industrial Policy,
industrial policy is directed to develop the industry become green manufacturing. Green
manufacturing is developed to address environmental pollution as well as green barrier to
trade from the customers especially in the European Union countries require
environmentally friendly leather products. According to the Asian Productivity
Organization (APO), with the development of global green trade, many business have
adopted green procurement practices that are gradually becoming non-tariff trade
barriers. Dandira (2013) stated that the company faces the green pressures of having to
use new methods of manufacturing which environmental friendly for the company to
remain competitive on the market and also to be a world class manufacturing
organization. Furthermore, Iaconi et al. (2002) described that companies considering
environment factor into the design stage of the product will be well placed to benefit from
the marketing advantages of any future eco-labelling schemes. Green manufacturing is
generically defined as elimination of waste by re-defining the existing production process
or system (Kumar, 2013).
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Nowadays, many companies manage their waste based on end of pipe treatment.
But, environmental protection through pollution prevention and the meeting of
environmental standards by waste treatment of the effluents in the various industries have
not worked in many countries (Kwong, 2002). In developing countries, including
Indonesia, environmental regulation is not strictly enforced. Environment protection is
seen by industries as only an added cost, which reduces competitiveness and profits of the
enterprises that strictly follow such environmental regulations. Therefore, Green
Productivity (GP) is introduced to be the key elements of sustainable development which
consider about environmental protection without sacrifice economic development.
Green productivity is still relatively new concept in Indonesian leather industry,
especially to the SMEs. Findiastuti (2012) described that green productivity is more
applicable in micro level performance measurements for its simple application and
adjustable. It means that it can be applicable in leather small medium enterprises (SMEs)
in Indonesia. APO stated that SMEs are important to the Asian economies, as more than
90 percent of all enterprises in Asia fall into this category. SMEs employ over half of the
workforce, contribute nearly half of the Gross Domestic Product (GDP) and produce
approximately 35 percent of the exports in many countries. According to Indonesia
Tanner Association (APKI), 70-75% of Indonesian leather industries are in the form of
SMEs which are located in several areas throughout Java including Jakarta, West Java
(Garut), East Java (Magetan), Central Java, and Yogyakarta. In contrast with big industry
which provide with good equipment and appropriate technology, SMEs have several main
problems namely lack of access to new technology, lack of skills, lack of capital to invest,
low profit margins, small and variable scales of operation and low productivity.
Therefore, to manage their pollution problem effectively SMEs will only consider using
an approach that carries a win-win formula. The strategy to address the problem should
be a two-pronged approach that not only enhances productivity, but also leads to better
environmeantal performance through green productivity appproach.
Kim (2003) stated that GP is a strategy and need an indicator that can be measured
quantitatively to be able to see the success of the strategy using GP index. This index can
be used to estimate GP performance of a product system or process. Besides GP index,
there are GP portfolio that can clearly describe current position of ratio between
environmental impacts and productivities. Furthermore, it make easier to see the strengths
and weaknesses of a particular product or process. GP portfolio can be applied to look for
a way to improve the GP performance of existing condition.
Subsequently, there is very limited empirical research that focuses on the green
productivity practices in leather industry especially in Indonesia. Therefore, this study is
conducted in order to examine what kind of practices that are applied in Indonesian
leather industry, especially for SMEs to control its environmental effect and also
formulate strategy to improve GP performance of Indonesian leather SMEs. For the initial
step to address pollution problem in the leather SMEs in Indonesia, it is necessary to
analyze to what extent the existing condition of the Indonesian leather industry and
measure green productivity performance through GP index and GP portfolio. The next
CHAPTER II
LITERATURE REVIEW
II.1.
GREEN PRODUCTIVITY
Green productivity was introduced by The Asian Productivity Organization
(APO) in 1996. Green productivity (GP) is a strategy for enhancing productivity and
environmental performance for overall socio-economic development. It is the
application of appropriate productivity and environmental management tools,
techniques and technologies to reduce the environmental impact of an organizations
activities, goods and services. Green productivity is a concept that not only considers
about environmental protection but also economic performance of the industry. It
focuses on three aspects namely productivity improvement, environmental protection
and sustainability.
According to APO, productivity is how efficient and effective we use
resources as input to produce products or services needed by society. Being green in
our productivity means to be productive with minimizing the environmental impact.
The central element of the GP is the examination and re-evaluation of production
processes to highlight ways to improve productivity, while reducing their
environmental impact. Furthermore green productivity is at the heart of the concept of
sustainable development (Miyai, 1997). Based on Hwa (2001), the concept of GP
shows that for any development strategy to be sustainable, it needs to have a focus on
environment, quality and profitability, which form the triple focus of GP. Logamuthu
(2010) emphasized that GP is driven by forces both external and internal to the
organization. External forces namely pressure from regulations, national and
international, demands from various stakeholders such as consumers and suppliers.
Logaa (2013) stressed that GP can increase product quality, reduce scrap and rework
costs, reduce waste and pollution as well as reduce risk.
Green productivity concept is more acceptable for the industries because it can
enhancing productivity and performance simultaneously. Therefore, companies can
involved in environmental protection without sacrificing their economic performance
through efficiently resource utilization and pollution prevention.
Stakeholders
Enterprises
Benefits
Reduction of waste through efficient resource utilization
Lower operational and environmental compliance costs
Reduction or elimination of long-term liabilities and
clean-up costs
Increase in productivity
Compliance with government regulations
Better public image
Increase in competitive advantage
Increase in market share and profitability
Greater workers participation
Potential increase in employees share of value-added
Improvement in health and safety in the workplace
Better quality of work life
Employees
Consumers
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From previous research on green productivity, many industry get the benefits
from the green productivity implementation. For instance Singgih ML et al., 2010
find that by applying green productivity approach can increase around 3% and
generate cost savings phenol purchases. While, Gandhi NMD et al., 2006 find that
green productivity implementation in foundry manufacturing can improve GPI index
up to 0.019 for the end collar castings. In addition, he stated that GPI can be used as
an actinable feedback for leadership to make effective decisions.
In 2012, Sittichinnawing A and Peerapattana P that studied cayenne pepper
production in Thailand find that GPI results can be used for the baseline indicator of
process improvement to gain higher yield without compromising the environment.
While Logaa SMJ and Zailani S, 2013 find that most of their respondents agree that
GP can increase product quality, reduce scrap and rework costs, reduce waste and
pollution and reduce risk. But on the other hand the respondents do not agree that GP
can reduce manufacturing cycle time, reduce unit manufacturing cost, reduce
absenteeism, and increase worker participation and increase healthier environments.
Subsequently, in the rubber industry in Indonesia study using green
productivity approach have been conducted in 2012 by Darmawan MA et al., and he
find that by the implementation of alternative strategies based on GP approach can
increased green productivity to 0.690. On the other hand study about green
productivity approach never been done before, especially in the field of leather
industry in Indonesia. Therefore this study is conducted to gain new insight as well as
fulfill the gap of knowledge in the field of green productivity in leather industry
especially for SMEs in Indonesia.
II.3.
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II.4.
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Business
unit
290
Employee
(persons)
1.285
Investment value
(Rp. 000)
13.391.040
40
210
1.847.040
330
1.495
15.238.080
Production capacity
Amount Dimension
114.463 Sq. Feet
Sq. Feet
122.708
Production
value
44.216.300
237.171
50.315.100
6.098.800
CHAPTER III
RESEARCH METHODOLOGY
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Start
Literature study
Interview
Observation on:
a. Good Housekeeping
b. Design Planning
c. Process modification
d. Waste Management
GPI portfolio
Expert
Judgement
Identification of factors
caused the problem
Identification of existing
practices applied
Data
collection
GPI measurement
Generation of GP
performance
improvement option
SWOT analysis
Strategy Formulation
Finish
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Observation in industry and indepth interview with the stakeholders and experts
in the field of leather industry, waste management as well as green productivity.
2. Secondary Data
Literature study about the main concept of green productivity, green productivity
index, previous research of GP and its aplication in industry through journals,
report and other sources which related to this topic.
III.3. DATA COLLECTION
1. Literature review
Literature review is conducted to collect data from journals, books, reports and
other related source about green productivity concept, green productivity
measurement, previous research of GP and its apllication in industry through
journals, report and other resources which related to this topic.
2. Observation, interview and related data collection in the leathers SMEs
Observation and interview is conducted in SMEs in Garut, West Java to analyze
about existing condition as well as identify their problem and causes of the
problem. Observation as well as of the SMEs will be conducted in 3 SMEs in
Garut, West Java for 2 month from May - June 2014. Other related data collection
needed for GPI measurement also will gained in this time. Three SMEs selected as
observation location can be seen in the table 3 as follows :
Table 3. List of observation location
No
Name
Location
Jalan Gagaklumayung No.127 Kecamatan
1 PT. ELCO Indonesia
Sukaregang, Kota Garut.
2 PT. Karya Lestari Mandiri Jendral Sudirman Km.1 No. 21 Garut.
3 PD. Putra Setra
jalan Jendral Sudirman No.26 kota Garut.
3. In-depth interview with the experts
Indepth interview is conducted with expert on leather tanning processing, waste
management as well as green productivity. The type of the interview will be
followed semi-structure interview with open ended questions. The experts of this
in-depth interview can be seen in the table 4.
No
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Waste management
Green productivity
Yogyakarta
Akademi Teknologi Kulit (ATK), Yogyakarta
Balai Besar Kulit, Karet dan Plastik (BBKKP)
Yogyakarta
Institut Pertanian Bogor (IPB) Bogor
GP index =
(Eq.1)
(Eq.2)
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According to Ik Kim et al., 2003 after measure green productivity ratio, the
value then plotted in the GP portfolio to know in which position companys green
productivity. Although there are statement that If GP ratio more than one it means that
a new system is better than the existing one from the perspective of GP, but by plotted
the value in GP portfolio we can clearly see in which stage the companys GP as well
as to look for in which part that have to be improved whether the productivity or the
environmental performance by seeing the current position of new system applied. GP
portfolio can be seen in the figure 4 below :
Figure 4. GP Portfolio
Furthermore, GP Portfolio makes it easy to see the effect of alternatives from
both environmental and economic perspectives.
III.4.3. SWOT Analysis and Strategy Formulation
After measure green productivity inside organization, as well as conducted
indepth interview with several experts in the field of green productivity, leather
tanning process and waste treatment, SWOT analysis is conducted to analyze on
strength, weaknesses, opportunity as well as threath of leathers SME. And based on
SWOT analysis, we formulate strategies to improve green productivity of Indonesian
leather industry, especially for SMEs.
REFERENCES
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16. Ramasami T, Approach towards a unified theory for tanning : Wilsons dream, J Am
Leather Chem Assoc, 96 (2001) 290-304
17. Ramasami T, From ore to brick : Travel of chromium through the cross roads of Indian
leather sector, workshop on building ceramic from industrial waste (International Centre
for Science and Technology & UNIDO, Trivandum), 1999, 132-149
18. T. Hur, I. Kim, and R. Yamamoto, "Measurement of green productivity and its
improvement," Journal of Cleaner Production, vol. 12, 2004, pp. 673683
19. Ministry of Industry. 2012. Industry Facts and Figures. Public Communication Center
Ministry of Industry Republic of Indonesia
20. Sittichinnawing A and Peerapattana P. 2012. Green Productivity Index of Cayenne
Pepper Production (Case Study in Nongkhai Province. 1st Mae Fah Luang University
International Conference 2012
21. Gandhi NMD et al., 2006. Green Productivity Indexing : A Practical Step Towards
Integrating Environmental Protection into Corporate Performance. International Journal
of Productivity and Performance Management Vol. 55 No. 7, 2006 pp. 594-606. Emerald
Group Publishing Limited 1741-0401
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