Designing a Green Supply Chain Management Monitoring

System Based on ISO 14001 and SCOR

M R Aliyasyah and A Y Ridwan

Faculty of Industrial Engineering, Telkom University, Bandung, Indonesia

*Corresponding email: mrafifaliyasyah@student.telkomuniversity.ac.id

Abstract. A leather tanning industry produces leathers from sheep, goat and cow skins
and hides to make garments, gloves, and various leather handicrafts. Leather product is an
important export commodity in Garut area. Because of that, achieving international
standards in the form of environmentally friendly certification such as ISO 14001 is
needed, so the companies could compete with the foreign company. For that, a system
that can monitor the activities carried out in the leather tanning industry is needed.
Currently the company's supply chain still monitored manually, so the data is not real
time and are not properly monitored. The objectives of this study are: designing
monitoring systems to monitor the environmentally friendly aspects of activities in the
production process. The analysis method is done through SCOR model that integrate ISO
14001 to measure and improve the company's ‘make’ supply chain performance. Based
on the analysis, the company’s still has a few incomplete documents to be categorized as
a company that has implemented ISO 14001 certification standards. Based on this, the
proposed design of monitoring system has implement the incomplete documents to the
systems feature and able to monitor the entire production process in the company based
on ISO 14001 standards.

Keywords: GSCM, ISO, 14001, Dashboard, SCOR, KPI, SCM

1. Introduction
Leather tanning industry is an industry that produces leathers from sheep, goat and cow skins and
hides. Leather tanning industry carries out a production process to meet the needs of garments,
gloves, and various leather handicrafts. There are quite a number of companies involved in the
leather tanning industry, especially in Garut area which is an important export commodity.
The leather tanning industry is one of the industries that has been developing in Indonesia for
several years. Based on data from KEMENPERIN (Ministry of Trade of the Republic of
Indonesia) in 2020, since 2017, the sales of leather materials have been significantly stable,
reaching profits of up to $ 84 million US dollars in 2019.
The awareness of the leather tanning community towards the environment and the existence of
international standardization in the form of green or environmentally friendly certification such as
ISO 14001 for an industry is a reason for companies in the leather tanning industry that do not
have such certification to pay more attention to the impact of activities carried out in the leather
tanning industry on environmental aspects to meet the international standards so the industry
could compete with the foreign company. And more importantly, the activities carried out in the
leather industry is harmful for the environment because it’s relation to chemicals and waste from
the production process. For the company to achieve the international standardization, an
environmentally friendly system to monitor the company's business processes is needed[1].
In this case, leather tanning industry companies need to pay attention to several laws and
regulations in the management of industrial waste. Among these regulations are Law number 3 of
2014 which supports the green industry and obliges companies to cultivate and build systems to
protect the environment. As well as PP No. 101 of 2014, namely Government Regulation (PP)
concerning Hazardous waste management. With the existence of these regulations, leather
tanning industry companies are required to comply with applicable laws so that companies are
obliged to protect the environment in every process that is carried out within the company. And
one of the ways that the companies can do is to create a monitoring system on the existing supply
chain in the company that is oriented to the concept of green supply chain management.
In this case, although there are many types of monitoring systems currently in use, this system
is still not getting enough attention by the industry in the medium business sector. This is very
unfortunate because the monitoring system is available in various forms and applications, so it
can be used easily anytime and anywhere at an affordable price. The use of technology has
become a need that we cannot avoid, especially in an organization or a company [2]. Moreover, a
system that can monitored all the activities carried out in the supply chain (monitoring system) is
also one of the requirement in fulfilling the ISO 14001 certification.
Supply chain is a system that transfers the production of goods and services to customer
companies [3]. SCM is a collection of coordinated techniques to plan and manage raw materials
obtained from suppliers, then process them into finished materials, and send finished products and
services to consumers [4]. A number of entities in the supply chain will affect the structure and
determine the complexity of a supply chain [5]. Meanwhile, Green Supply Chain Management
(GSCM) combines supply chain management with efforts to save the environment consisting of
product design and development processes, supplier selection and procurement or procurement
processes, production processes with clean technology, delivery of final products to consumers
until recycling or recycling in end of product life cycle[6].
In this case, the SCOR model is used to measure and improve the company's total supply
chain performance [7]. SCOR is a reference model in supply chain operations. There are 3
management processes integrated in SCOR, namely BPR (business process reengineering),
benchmarking and process measurement. In this model, it will be divided into five core processes,
namely: make, deliver, plan, source, and return in the supply chain going inward [8].
In this case, due to the lack of a web-based monitoring system in the supply chain in the
context of green supply chain management, the monitoring system design will be very useful in
facilitating the leather tanning industry companies in monitoring the supply chain based on the
rules and regulations related to the green industry such as ISO 14001 and Law number 3 of 2014
so that the leather tanning industry companies can apply green certification in order to compete
with the foreign companies and also complying the environment regulation.

2. Methodology

2.1. Supply Chain Management

Supply Chain Management is a collection of corporate networks that work together so that it is
mutually beneficial in controlling, regulating and improving the flow of material and information
from suppliers to users. Supply chain management is a vision, culture, process and strategy in
optimizing production, the value of raw materials and components from trusted and innovative
suppliers. Another definition of supply chain management is given by [8]. Supply chain
management is a concept that sees all activities within the company as an integrated part.
2.2. Green Supply Chain Management
Green supply chain management is a concept that integrates an environmental perspective into
supply chain management including product design, selection of the sources of raw materials
needed, the process of manufacturing, the process of delivering finished products to consumers,
and management of products that have expired [9] in [10]. Meanwhile, the concept of green
supply chain management is a concept that improves the balance of marketing performance
related to environmental issues that are not only oriented towards long-term survival but also
have an impact on long-term profitability, which affects the image of the company to get a
competitive advantage in the future which will be improved [11]. In this case, Green Supply
Chain Management (Green Supply Chain Management) carries out traditional practices in supply
chain management, this combines criteria from the environment with decision issues on the
purchase of goods and services and the company's long-term relationship with suppliers.

2.3. SCOR (Supply Chain Operations Reference)

One method of measuring the quality of the supply chain is the Supply Chain Operations
Reference (SCOR) Model, which was developed by a professional institution, namely the Supply
Chain Council (SCC). In this case, the Process Reference model is used which is a process that
can produce a framework for an integrated measurement [12]. Then used Supply Chain Operation
References (SCOR), which is a model that was approved by the Supply Chain Council (SCC) in
1996. Using the diagnostic methods and benchmarking tools owned by the SCC, can help many
companies to make improvements to the supply chain process.
There are several coverage areas included in SCOR, namely: (1) interaction of all suppliers
with consumers, from receiving orders to paying bills, (2) physical material transactions,
suppliers to consumers, (3) market transactions, starting from from understanding aggregate
demand to fulfillment of all orders, (4) the return process.
In this case, SCOR does not cover several things, namely: the administrative process of sales,
the process for developing technology, the process of designing and developing products, and
several processes that can support post-delivery technicalities. As is well known, there are a lot of
supply chain activities in a company. In the SCOR method, these activities are grouped into three
categories. namely the process level 1 to level 3. In this case each level has a different coding
system. In this case, the level 1 coding system is used with a capital letter preceded by the letter s
(lowercase). In the level 2 process, letter encoding is used by adding one number to the entire
process at level 2.In the level 3 process, letter coding is carried out to add a point (.) which will be
followed by a unique number.

2.4. Montoring System

The monitoring system is an activity that is used to see the actual situation with the existing target
conditions [13]. The monitoring system can make it easier for users to make decisions because
each report or each displayed result is reflected in the system. The monitoring system will have a
significant impact on decision making if it is designed effectively.

2.5. ISO 14001

According to “environment-indonesia.com”, the ISO 14001 standard contains the components
and processes of the management system on environmental aspects of products or services, as
well as the activities of an organization. The main driving factor in implementing the ISO 14001
standard worldwide is the increasing awareness of various parties to the importance of efforts to
preserve environmental functions. On the one hand, the organization can proactively apply the
ISO 14001 standard to improve the image of the organization and increase its competitiveness,
while on the other hand many other organizations feel the need to apply the ISO 14000 standard
to anticipate the demands of consumers and business partners. Organizations implementing an
environmental management system following the ISO 14001 standard can apply for ISO 14001
certification to an accredited Certification Body. The Certification Body will then evaluate the
conformity of the organization's EMS to the ISO 14001 standard and also the effectiveness of the
EMS.

3. Results and Discussions

3.1. Identification of Stakeholders

Company stakeholders are all parties involved in the company's supply chain system, either
directly or indirectly. The job descriptions of stakeholders in the company can be seen in table 1.
Table 1. The Stakeholder Job Description.

Num. Stakeholder Job Description

1 Production Department In charge of running the production process of the product

3.2. Identify Green Requirements

Green requirements are requirements to create an industrial system that is environmentally
friendly and sustainable. Green requirements are obtained based on the identification of the needs
of each stakeholder. The following are the green requirements of each stakeholder which can be
seen in table 2.
Table 2. Green Requirements.

Stakeholder Requirements
Environmentally friendly and green materials and production activities with attention
to aspects of waste, pollution and resources
There is an SOP for every work performed by workers
Production
Department Technology and processes that support production that consider cost aspects and
environmentally friendly needs
Production costs in accordance with the company budget

3.3. Designing Green Objectives

Green objectives are the objectives of the Production Department of the leather tanning company
is determined based on the identification of the company's needs to create green production
according to green requirements. The following are the sustainability objectives of the production
which can be seen in table 3.
Table 3. Green Objectives.

Num. Green Objective Stakeholder

1. Production process on time
2. Maximization of reuse and recycling of resources
3. Minimizing production process waste Production
4. Minimize the use of hazardous materials Department
5. Minimizing the use of resources, energy, fuel, and other type of energy
6. Minimize the cost to fit the budget

3.4. Identification of SCOR Level 1 Business Processes

Identification of the SCOR business process is carried out by identifying all SCOR business
processes related to the GSCM system, then selecting a business process that has relevance to
green production, namely the make ETO level 1 SCOR business process [14]. The make ETO
business process based on the SCOR model is defined as the activity of requesting and receiving
materials; manufacture and test products; package, hold and unload the product. The make ETO
business process was chosen because it has relevance to the company's manufacturing activities,
especially the production process.

3.5. Identify the Details of SCOR Level 2 Business Processes

Identification of the details of the SCOR business process is carried out by identifying all the
details of the level 2 business process in the make ETO business process related to the GSCM
system, then selecting the details of the business processes that are relevant to green production
which can be seen in table 4.

Table 4. Details of the SCOR Business Process Model.

Activity Level 1 Level 2

sP3.1. Identify, prioritize, and aggregate production requirements.
Planning Make – Planning
Make – Value at
Agility Risk sE9.1 Establish Context
sM3.1. Finalize production engineering.
Make – Engineer
sM3.2. Schedule production activities.
to Order

Execution sM3.3. Issue sourced / in-process product.

sM3.5. Package.
Make – Engineer sM3.6. Stage finished product.
to Order sM3.7. Release product to deliver.
sM3.8. Waste disposal.

3.6. SCOR and ISO 14001 Model Design

Based on figure 1, it can be seen that this study discusses business processes in the “make”
section of the company. The make section focuses on the production planning process, production
process design, production process scheduling, production raw material management, production
process and production test, production product packaging, production product arrangement and
inspection, production product release arrangement, waste management, and Green
environmental management performance measurement in the production process. The first step
that is done in the SCOR matrix is to identify, prioritize, and aggregate the requirements of each
process based on the ISO 14001 Business Process Model.

(a) (b)

Figure 1. SCOR and ISO 14001 Model Design: (a) Base Model, (b) Continuation of
The Model.
3.7. To Be Business Process Planning In Green SCM Based Make Process
After identifying and analyzing the company's existing business processes, the proposed business
process design will be carried out for the leather tanning company.

Figure 2. ISO 14001 Model To Be Business Process : Production

Work Flow.

Figure 2 shows the proposed business process in the production workflow process. In this
proposed business process, there are additional activities, namely: reporting of material receipts
(production), calculating the total hazardous raw materials used, reporting the calculation of
hazardous raw materials used, reports and waste products, environmental impact evaluation
processes, calculating the results of total yield and total production waste, and non-hazardous
waste treatment and hazardous waste disposal.

Table 5. Document Criteria for Data of The Production Waste and Document Calculation
of The Results of The Total Yield.

Data of The Production Waste document and Calculation of The Results of The
Definition Total Yield document is use to collect data related to waste and calculation of the
total yield in the production process.
Stakeholders Logistic and Production Division
Date_and_
Information on the date and time of production process
Time

Types_of_ Classification of the types of waste generated in the production

Waste process

Total_Waste The total waste generated in the production process

Attribute Total_Recyclable Total recyclable waste generated in the production process

_Waste
Total_Hazardous Total non-recyclable hazardous waste (B3) generated in the
_Waste(B3) production process
Total_Harmless_
Total non-recyclable non-hazardous waste generated in the
Waste production process
Yield Usable output ratio of a process to input
3.8. Identification of SCOR Performance Attributes
The SCOR performance attributes are obtained based on the needs of each stakeholder and the
SCOR model matrix associated with the GSCM system and used to determine strategic direction.
After identifying and adjusting the company's actual business processes regarding the SCOR
attributes that lead to the SSCM system, there are five SCOR performance attributes that are used,
that is : Realibility (RL), Responsiveness (RS), Costs (CO), Assets Management Efficiency
(AM), Agility (AG) [14].

3.9. Identification of SCOR Level 3 Key Performance Indicators

Identification of SCOR key performance indicators (KPIs) is carried out by identifying indicators
related to the GSCM system based on the level 3 matrix of the SCOR model, then select the
relevant KPIs to the green production.

3.10. KPI Verification Integrated with ISO 14001

KPI verification is carried out to see whether the selected KPIs are in accordance with business
processes and company goals. The verified KPIs can be seen in table 6.

Table 6. KPI Verification Integrated with ISO 14001.

Num. Code KPI Definition Characteristic

RL.3.5 Usable output ratio of a process to
1. Yield Larger the Better
8 input
The average time accuracy
Production process cycle
2. RS.3.33 associated with the production Larger the Better
time accuracy
process
Accuracy of production
The time it takes to properly
3. RS.3.141 waste treatment Larger the Better
collect and store production waste
accumulation time
The total costs associated with the
4. CO.2.004 Production cost Smaller the Better
entire production process
Percentage of recycled waste from
5. AM.3.5 Total recycled waste Larger the Better
total waste
Production capacity A measure of how intensively a
6. AM.3.9 Larger the Better
utilization resource is used to produce goods
The total of hazardous Percentage of hazardous raw
7. AM.3.14 raw materials in the materials used in the production Smaller the Better
production process process of the total raw materials
The total of the Percentage of hazardous waste
8. AM.3.22 Smaller the Better
hazardous waste from total waste
Percentage of waste criteria
Total waste that meets
9. AG.2.12 according to standards that are met Larger the Better
standards
from the total waste
Percentage of environmental
Total environmental targets according to standards that
10. AG.2.12 Larger the Better
targets achieved are met of all environmental
targets.

3.11. Designing Monitoring System Dashboard Application

Dashboard is the first interface page a user encounters when opening a monitoring system
application for Green for the tannery industry based on the SCOR-Make model and ISO 14001.
On the dashboard, there are the measurement results of each KPI that lead to the Green Supply
Chain Management (GSCM) system. The dashboard also displays the results of the overall KPI
calculation which will be the overall performance of the company's GSCM system. Figure 3
shows the dashboard page visualization.

(a) (b)

(c) (d)
Figure 3. Dashboard Pages Design Based on SCOR and ISO 14001: (a) Make – Overview
page, (b) Make – Traffic Light page, (c) Make – Data Input page, (d) Make Dashboard page.

Traffic Light is a page that shows the performance of each KPI every month. While Data Input
is a page that provides a data entry display for each form on the dashboard database of this
monitoring system application. In the input data, there is an upload feature. Upload aims to enter
data into the monitoring application.
Figure 3 (d) show the performance of each level 3 SCOR KPI for each of its attributes. It is
obtained from the calculation of the 9 KPI values at level 3 SCOR KPI. The higher the
performance value, the better the company's performance. The graphic visualization shows the
comparison between the averaged based on actual (current) conditions. The targets applied to the
KPI performance measurement are Excellent with dark green for a percentage between 95%-
100%, Good with light green for a percentage between 80%-95%, Average with yellow for a
percentage between 50%-80% , Marginal in orange for percentages between 40%-50%, and Poor
with red for percentages below 40%.

4. Conclusion

In this case, it was found that several documents that must be owned by the company in
implementing ISO 14001 application to obtain green certification have not been owned by the
leather tanning company in the make process, these documents include environmental aspect
evaluation documents, environmental impact assessment aspects documents, internal audit results
records, management review records, process non-conformity records and corrective actions, and
emergency procedure documents. These documents and records are one of the main requirements
in meeting the green certification qualifications according to ISO 14001. In this case, a proposed
business process has been made based on the existing business process at the leather tanning
company which has been adjusted to the ISO 14001 application criteria using the SCOR method.
In this case, the results obtained that the application of ISO 14001 can be done more optimally at
the leather tanning company using a monitoring system that can monitor the make process in the
supply chain.
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