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INTERNATIONAL
JOURNAL OF SOCIAL SERVICE AND RESEARCH
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Lina Saptaria,
Sudarmiatin, Agus Hermawan
Doctoral Program in
Management, Universitas Negeri Malang, Faculty of Economics, Universitas Negeri
Malang, Faculty of Economics, Universitas Negeri Malang
Email: [email protected],
[email protected], [email protected]
Abstract
The development of the
concept of an environmentally friendly industry enriches the paradigm of
industrial management worldwide. The result of application concept from Green
Supply Chain Management (GSCM) in large-scale industries has been widely
publised, while the result of application concept from GSCM in micro, small,
and medium scale industries is insufficient. This study aims to explore the
application of GSCM in the micro scale food industry, a case study in the black
grass jelly manufacturing industry. In this study, GSCM performance assessment
was carried out to find out how the company�s overall performance improved. The
methods used in this research are Green Supply Chain Operation Reference
(GSCOR) and Analytical Hierarchy Process (AHP). The survey questionnaire was
developed based on literature studies and interviews with three industry
players producing black grass jelly and distributed to 100 respondents. The
findings propose 20 Key Performance Indicators (KPI) to measure GSCM
performance in micro, small and medium scale food industry companies. The value
of GSCM performance measured based on economic, operational, and environmental
aspects can improve the company�s overall performance.
Keywords:�� Green
Supply Chain Management (GSCM); Green Supply Chain Operation Reference (GSCOR);
Analytical Hierarchy Process (AHP); Green Supply Chain Performance Assessment;
Culinary Industry; Micro; Small; Medium Scale Enterprises.
Received 20
Desember 2021, Revised 30 Desember 2021, Accepted 10 Januari 2022
Introduction
The competition for creative
industry players in the culinary sector to achieve profit and a broad market
share both locally and globally requires a business process innovation strategy
(Feby, 2021).
From the perspective of environmental sociology, a large supply chain of food
industry products is also a threat to human life, especially related to the
industrial waste produced. A supply chain is an essential branch of operations
management. The supply chain consists of all parties involved, directly or
indirectly in meeting customer demands. Supply chain management aims to enhance
the efficiency and profitability of a company through managing product,
financial and information networks along the supply chain. Management�s
attention to the environmental impact of industrial activities can be one of
the competitive advantages for the organization.
The analysis of operating
system trends in the food industry in the early 20th century has focused on
implementing industrial operating systems that can minimize environmental
impacts by integrating environmental concerns in supply chain operations (Tseng, Islam, Karia, Fauzi, & Afrin, 2019).
The concern of food industry to adopt environmentally friendly management
principles will have a positive impact on organizational management and can
support the achievement of sustainable development goals. The role of green
industrial management to protect the environment from the dangers of industrial
waste such as emissions, pollution, and public health hazards is a form of
corporate social responsibility. This requires commitment and self-awareness
from industry players. Modern organizational culture and behavior minimize
environmental impact by integrating environmental concerns into their supply
chain operations. The integration of environmental concerns into supply chain
management practices is referred to as green supply chain management (Sarkis, 2012).
Green Supply Chain Management
(GSCM) is a company�s operational management innovation that can be a source of
competitive advantage. GSCM is a combination of enterprise environmental
management and supply chain management. GSCM covers all phases of the product
life cycle, from the design, production, and distribution phases to the end
user�s use of the product and its disposal at the end of the product life cycle
(Borade & Bansod,
2007 in Subagio et al., 2019). GSCM is an innovative industrial
management approach that focuses on production and service activities based on
risk reduction and environmental impact (Van Hock & Erasmus, 2000). A
review of the literature on GSCM from 1998 to 2017 was conducted by (Tseng et al., 2019), which mentioned
that GSCM proposes ways to protect the environment sustainably. Culinary
industry actors are starting to pay attention to the environmental impact of
the business processes to realize the concept of a green industry along the
supply chain. Promoting an environmentally friendly industry requires
collaboration between three actors consisting of the government, scholars, and
business people. The collaboration of the three actors will be the foundation
for developing a sustainable and science-based creative industry. The theory
regarding the collaboration of these three actors, referred to as the Triple
Helix, was initially popularized by Etzkowitz and Leydersdorff, which was used
as a strategy in innovation-based development (Feby, 2021). Today�s reforestation
efforts and targets are performed with a collaborative strategy between
industry internal and external parties.
GSCM practices have been
widely adopted by industrial companies using a reverse logistics perspective.
This perspective in its development becomes irrelevant to the dynamic situation
of green supply chain management. The value-seeking approach is the most
relevant approach in greening the supply chain as a whole (Van Hock & Erasmus, 2000).
Therefore, there is a need a greater understanding on how to support the
evolution in industrial business management practices towards greening along
the supply chain. A preliminary study on GSCM practices in the micro, small and
medium scale industries was conducted in India and found that MSMEs are facing
significant pressure from external stakeholders to adopt GSCM practices. Among
internal pressures, on-the-job training is forcing MSMEs in India to adopt GSCM
practices (Mohanty & Prakash, 2014).
The growing body of
literature has been provided the application of GSCM practices in micro, small,
and medium scale industries. A study has attempted to explore implementing GSCM
in the black grass jelly-producing food industry in Kediri of East Java. This
study focuses on the impact of implementing GSCM on the company�s supply chain
performance in economic, operational, and environmental aspects. Measurement
activities are carried out to determine the effectiveness of GSCM performance
and to set performance targets in the future. Performance analysis of Supply
Chain Management (SCM) is pivotal to achieve or increase organizational
productivity and profitability through strategic, tactical, and operational
planning focus and control (Saleheen, Habib, & Hanafi, 2018).
The strategy to measure the performance of green supply chain management is to
use the Green Supply Chain Operation Reference (GSCOR) and Analytical Hierarchy
Process (AHP) approaches. This study aims to explore the application of GSCM in
the food industry on a micro, small and medium scale, a case study in the food
industry in Kediri. In this study, GSCM performance assessment was provided to
examine how to improve the company�s overall performance using the Green Supply
Chain Operation Reference (GSCOR) and Analytical Hierarchy Process (AHP)
methods. The study develops a survey questionnaire based on interviews with
food industry players and literature studies. The results of this study promote
GSCM practices and GSCM performance measurement methods that produce 20
Key Performance Indicators
(KPI) based on economic, operational, and environmental aspects as a reference
Method
This research adopted a combination of qualitative and
quantitative case study methods (Cresswell, 2017). The types of data
collected in this study are primary data and secondary data. Primary data is
data required in research that is obtained directly from sources. Secondary
data is historical data obtained from the management of the black grass jelly
food industry at UD RSA Kediri. In addition, researchers also obtained
secondary data from various literature such as books and articles in journals.
Data collection techniques using observation, interviews, and literature study.
The data collected were analyzed descriptively to determine the results of the
GSCM performance measurement. The stages of research activities are depicted in
Figure 2.
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Preliminary
observation and interview
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Identifying KPI GSCM
Figure 1
Research framework
In the preliminary observation and
interview phase, the researcher collected information about implementing the
company�s green supply chain. The extent to which the company has applied the
company�s operations following GSCM principles. Researchers involved interview
guidelines in exploring data on the implementation of green supply chains,
including green manufacturing functions, green marketing, and sales functions,
green procurement functions, green logistics functions, Green Human Resources
functions, green finance functions, and green information technology functions.
At the problem identification stage, the researcher determines the focus of the
problem to be studied, and the answer is found. The problem of this research is
related to the practice of GSCM in the black grass jelly food industry. At the
stage of formulating research objectives, researchers communicate with industry
partners about the research objectives to be carried out. The purpose of this
study was to explore the application of GSCM and measure the performance of
GSCM in the micro, small and medium scale food industry. At the identification
stage of the GSCM KPI, the researcher uses the data from the literature study
to complement the data from the field study as the basis for designing the
industrial GSCM KPI. The design of the industrial GSCM KPI was formulated based
on the results of interviews and observations with industry owners, employees
of UD RSA Kediri, and industrial partners (stakeholders). The three parties
also validated the GSCM KPI indicators. At the stage of collecting research
data, the activities carried out are collecting research data through
questionnaires.
Research questionnaires were administered
to industry owners, production, packaging, marketing, distribution, finance,
and supply chain partners of companies involved in the GSCM program. The types
of data collected include the process of applying industrial GSCM,
identification of stakeholders, process management, and industrial waste
management. Researchers weighted GSCM performance using the AHP method. Next,
test the normalization of the data using the Snorm de Boer method. At the
research data analysis stage, the researcher calculates the final value of the
GSCM performance with the GSCOR matrix. Supply chain mapping aims to determine
the relationship between stakeholders and the performance attributes contained
in the GSCOR model. This green SCOR work attribute divides the company�s
business processes into six: plan, source, make, deliver, return, and enable.
At the interpretation stage of the research results, the researcher interprets
the data processing results so that the right information is obtained. At the
recommendation stage, researchers provide input to operations management
regarding the performance and effort to enhance GSCM and improve GSCM
performance in the future.
Results
and Discussion
The
research sample was chosen based on the objective of focusing on the
perceptions and experiences of black grass jelly food industry players in GSCM
practices applied in the industrial supply chain. This study identified 20 KPI
indicators to measure the GSCM performance of the UD RSA Kediri industry as
many as 26 indicators. The details of KPIs that experts have validated are as
follows (see Table 1).
Table 1
GSCM Implementation
KPI Indicators
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Performance Function
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KPI
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Performance Indicator
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1. 1Green
operation or manufacturing function
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1
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Using environmentally friendly operations.
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2
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Producing products that
can reduce environmental damage.
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3
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Budgeting of input
costs in terms of regulation, energy use and
disposal.
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4
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Using materials,
procedures and processes that are environmentally friendly and minimize emissions.
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5
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Utilizing lean
manufacturing to incorporate green goals into productive results.
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6
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Involving production methods, tools and techniques must meet environmental requirements and market
needs.
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7
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Conducting research
and development to explore new sustainable ways.
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2. Green sales or marketing function
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8
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Enhancing consumer awareness of green products.
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9
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Meeting consumer needs for environmentally friendly products in an environmentally friendly manner to ensure business
credibility.
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10
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Creating a balance
between profitability and concern for the
environment.
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11
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Environmental
awareness programs can provide a competitive
advantage.
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12
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Illustrating an environmentally friendly business image through green marketing communications.
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3. Green
procurement function.
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13
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Seeking out for
suppliers with green production processes to
offset environmental risks.
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14
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Choosing a supplier with a good
waste management system.
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15
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Selecting suppliers who are committed to good environmental
performance.
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4. Green
logistics function
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16
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Limiting carbon
emissions associated with the transportation of goods.
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17
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Using more environmentally friendly fuels and technologies
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5. Green
Human Resource
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18
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Communicating green
business strategy to staff for effective goal achievement.
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Management
Function
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19
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Engaging green
workplaces, corporate culture and reward systems to encourage green
activities.
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20
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Hiring experts in
environmental development to implement
eco-friendly systems.
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21
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Designing business
strategies to address environmental issues that meet stakeholder
expectations.
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22
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Fostering a green
organizational culture through employee
training and
development.
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6.
Financial function or green information technology function.
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23
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Preparing of
sustainability reports and GSCM practice audit system.
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24
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Institutionalizing
green accounting policies and use an
integrated
eco-friendly information system.
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25
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Using
state-of-the-art technology to switch to a paperless administrative
environment.
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26
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Obtaining the latest
information about new technologies that
are environmentally
friendly.
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The weighting process to determine the level of importance
of each KPI criteria is carried out by filling out a pairwise comparison
questionnaire given to respondents. The questionnaire data was processed by
giving the GSCM performance weighting using the AHP method. Next, test the normalization
of the data using the Snorm de Boer method. Normalization is used to equalize
the value of each KPI that has different weights, making it easier to calculate
the KPI value. According to Sumiati (2006), the normalization process uses the
Snorm de Boer normalization formula. The normalization process has an essential
role in achieving the final value of performance measurement. The following is
the Snorm de Boer normalization formula for larger is better (See Equation 1).
Snorm = (� �(𝑆i$𝑆𝑚i𝑛)��� �x 100)................................... (1)
(𝑆𝑚𝑎𝑥$𝑆𝑚i𝑛)
Information:
Snorm = the actual
value of the indicator that was successfully a
chieved Si�������� =
the actual indicator value that has been achieved
Smin���� = the value
of the worst performance achievement of the work indicators Smax�� = the value
of achieving the best performance from the performance indicators For lower is
better
Snorm = (� �(𝑆𝑚𝑎𝑥$𝑆i)��� �x 100)��������������� (2)
(𝑆𝑚𝑎𝑥$𝑆𝑚i𝑛)
In this
measurement, each indicator weight is converted into a certain value interval,
namely 0 to 100. A value of 0 means the worst, and 100 means the best. Thus,
the parameters of each indicator are the same, and the results can be analyzed.
The following are the criteria for assessing indicators for the implementation
of GSCM (see Table 2).
Table 2
GSCM Implementation
Indicator Assessment Criteria
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Evaluation Criteria
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GSCM Implementation Indicators
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<40
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Poor
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40 � 50
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Marginal
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50 � 70
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Average
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70 � 90
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Good
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> 90
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Exellent
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The results
of normalization calculations and the value of each KPI indicator are provided
in Table 3.
Table 3
Normalization Results
and KPI Indicator Values for GSCM Implementation
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Performance
Function
|
KPI
|
Performance Indicator
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Score
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1. Green
operation or manufacturing function.
|
1
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Using environmentally friendly operations.
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80
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2
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Producing products
that can reduce environmental damage.
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85
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3
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Budgeting of input
costs in terms of regulation, energy use and disposal.
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84
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4
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Adopting
environmentally friendly materials, procedures and
processes and minimize emissions.
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83
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5
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Using lean
manufacturing to incorporate green goals into productive results.
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81
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6
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Providing production
methods, tools and techniques must meet environmental requirements and market
needs.
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79
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7
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Conducting research
and development to explore new sustainable ways.
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76
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2. Green
sales or marketing function.
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8
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Enhancing consumer awareness of green
products.
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77
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9
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Meeting consumer
needs for environmentally friendly products
in an environmentally friendly manner to ensure business credibility.
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78
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10
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Creating a balance between
profitability and concern
for
the environment.
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79
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11
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Environmental
awareness programs can provide a competitive advantage.
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80
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12
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Illustrating an environmentally friendly business image
through green
marketing communications.
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74
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3. Green
procurement function
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13
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Looking for
suppliers with green production processes
to offset environmental risks.
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73
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14
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Choosing a supplier with
a good waste
management
system.
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80
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15
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Selecting suppliers
who are committed to good environmental performance.
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83
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4. Green
logistics function
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16
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Limiting carbon
emissions associated with the
transportation of goods.
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70
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17
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Using more
environmentally friendly fuels and technologies
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70
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5. Green
Human Resource Management Function
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18
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Communicating green
business strategy to staff for
effective goal
achievement.
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78
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19
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Using a green
workplace, corporate culture and reward system to encourage green
activities.
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74
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20
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Hiring experts in environmental development to
implement eco-friendly systems.
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80
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21
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Designing business
strategies to address environmental issues that meet stakeholder expectations.
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82
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22
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Fostering a green organizational culture through
employee training and development.
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70
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6. Finance
function
and green information technology function.
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23
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Preparing for
sustainability reports and GSCM practice audit system.
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73
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24
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Institutionalizing green
accounting policies and
use an integrated eco-friendly information system.
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74
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25
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Using
state-of-the-art technology to switch to a
paperless administrative environment.
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75
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26
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Obtaining
the latest information about new technologies that are environmentally
friendly.
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71
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GSCOR performance measurement attributes are carried out
at three levels, namely level 1, consisting of six primary business process
attributes: plan, source, make, delivery, return, and enable. Level 2 consists
of five attributes of the company�s basic performance capabilities:
reliability, asset management, responsiveness, flexibility, cost, and assets.
Level 3 consists of 26 KPIs that have been formulated. According to Thomas L.
Saaty, a weighted questionnaire will be considered consistent if the
Consistency Ratio value is less than 0.1 (10%). When the consistency ratio
value of less than 0.1 is accomplished, then the weighting value can be used as
the criterion weight value. The following is a description of the GSCOR
performance measurement attributes (See Figure 2).
Figure 2
GSCOR Performance
Measurement Attributes
The results of performance measurement based on GSCOR
using 26 KPIs can be seen from Table 4. The
results of performance measurement based on GSCOR using 26 KPIs can be seen
from Table 4.
Table 4
GSCM Implementation
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Criteria
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Sub-criteria
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KPI
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Score
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Average
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Notes
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Total
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1. Plan
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Reliability
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1,5,6,21
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80, 81,
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80.5
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Good
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75.7
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79, 82
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(Good)
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Management
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3, 10
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84, 79
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81.5
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Good
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assets
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2. Source
|
Reliability
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4, 14, 15
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83, 80,
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82
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Good
|
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83
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Responsiveness
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13
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73
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73
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Good
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3. Make
|
Reliability
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2, 9, 11, 16,
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85, 78,
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77.8
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Good
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17, 18, 19,
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80, 70,
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|
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20
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74, 80
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Flexybility
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12
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74
|
74
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Good
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4. Deliver
|
Reliability
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22
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70
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70
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Average
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Responsiveness
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26
|
71
|
71
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Good
|
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5. Return
|
Reliability
|
23
|
73
|
73
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Good
|
|
|
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Responsiveness
|
8
|
77
|
77
|
Good
|
|
Based on the results of the final performance measurement
of the application of GSCM in the black grass jelly food industry at UD RSA
Kediri, in general, the performance on the six aspects got good scores. One
criterion has an average value, namely, growing a green organizational culture
through employee training and development. UD RSA has limitations in the number
and ability of employees to treat industrial waste. This is due to the lack of
cooperation with green industry partners or stakeholders experienced in
implementing GSCM. Another function that still needs improvement is the
sustainability aspect of GSCM practices related to green industry research and
development. The preparation of the sustainability report and the GSCM practice
audit system has not been performed. The company has not yet instituted a green
accounting policy and uses an integrated environmentally friendly information
system. The company�s performance has not built an environmentally friendly
business image through green marketing communications. The implementation of
GSCM in the operations function is carried out by planning and designing
business strategies based on environmental concerns. The compan
provides
asset management through budgeting for the cost of industrial waste management,
use of materials, and environmentally friendly production processes with a
score of 81.5 (good). The company produces products from industrial waste
processing in solid and liquid organic fertilizers that can be used for plant
needs. This can reduce the amount of industrial waste and create a clean work environment
from waste. In addition, the company collaborates with experts to handle
industrial waste so that the waste management process runs effectively. The
activity received an assessment result of 77.8 (good). The assessment that is
still lacking lies in finding suppliers with green production processes to
offset environmental risks.
Conclusion
This study provides information about the practice of
green supply chain management in the micro-scale food industry, namely the
black grass jelly manufacturing plant. GSCM practices are manifested in the
central business processes, including plan, source, make, delivery, return, and
enable activities. Based on the measurements made, it is known that the
performance of the implementation of GSCM has a good score (75.7). In the
operational function, the company has been able to process industrial waste,
which is manifested in the processing of black grass jelly industrial waste
into solid and liquid organic fertilizers. The implemented green manufacturing
function has been supported by other functions such as green sales and
marketing, green procurement, green logistics, green human resource management,
finance, and green information technology. Implementing GSCM is still carried
out within one year, so it has not shown optimal performance values. The
recommended recommendation is for companies to develop learning with
experienced green industries and collaborate with local governments, academics,
and green suppliers to optimize current and future GSCM performance. This study
has limited time for data collection and research samples that use one area,
namely Kediri, East Java. The results of research on the practice of applying
GSCM focus on the black grass jelly food industry, which is included in the
category of micro-scale industry, so it does not represent the application of
GSCM practices in small and medium industries. It is recommended for further
research to enlarge the research sample to explore the practice of GSCM on a
small and medium scale industry so that more general research results are
obtained.
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