Industrial Systems and Environment

21Information and Technology in Cleaner Production


(Student Name)


Table of Contents

Introduction 3

Background Information 3

Selection of the organization 3


5Pre-existing processes

6Characterization of VHSP Pty Limited



7Corporate structure

7Strategic Analysis


9Porter’s Forces Analysis

10Bargaining power of the suppliers

10Bargaining power of customers

10Competitive rivalry

11Threats of new entrants

11Threat of substitute

11SWOT analysis





12Challenge Identification

12Information Technology

Environmental Management 14

16Action plan

16Short term

17Long term




Background Information

With the rising sensitivity and advocating for environmental protection continues to increase, companies globally are shifting to cleaner production mechanisms through integration of institutional processes with the current technology. VHSP Pty Limited owns a tanning plant it constructed in 1987 that uses Sirolime process that deliver important enhancements in the protection and performance of the environment over certain conventional processes. The company undertakes chrome tanning of the cattle hides. Additionally, about 85 percent of the produced hides are considered green by the abattoirs while 15 percent remaining to be salt preserved. Currently, the company leads in the Wet blue technology that majorly focuses on establishment of quality product (Pullman, Sauter, & Business Expert Press, 2012, 188). VHSP majorly supplies hides that have Victorian, Tasmanian, and Feedlot origin for making the wet blue and drum salted calfskin. The company uses the most advanced tanning technology within its wet blue facilities that ensure selection of the best hides and quality control mechanisms in various aspects of processing. Additionally, the company is based in the Laverton North within the Australian state of Victoria with major business areas including the hides and skins. VHSP has more than 140 staff members.

Selection of the organization

Globally, tanning industries are the major pollutants especially the water resources that call for adequate methods of control the activities they undertake. The company bases its international competitive advantage on its Green Supply Chain Management (GSCM), which is determined by the green purchasing, green manufacturing processes, and green distribution of the company. Consequently, such strategies define institutional marketing and reverse logistic strategies. The company’s supply chain includes reusing, remanufacturing, and recycling of the materials into new product with market value. Such strategies aim to eliminate or minimize the impacts associated wastes generated such as solid wastes, energy, emissions, and hazardous and chemical materials (Abou-Elela et al., 2007, 1855). Focusing on the company’s supply chain, there are several environmentally conscious practices that range from the company’s green design associated with marketing and engineering models and the green procurement practices that involves purchasing of the hides and skins from the certified and environmentally sound suppliers. The company has a total quality environmental management that ensures proper performance of the internal processes and prevents pollution, investment in environmentally friendly transportation and packaging and different end-of-life practices for the products, which are defined by company’s R’s: recycling, remanufacturing, reuse, and reduction. These factors formed the basis of industrial selection as the company focused on environmental conservation in every aspect of the supply chain.


The major factor motivating the company to invest in cleaner production process is to maintain the global competitive advantage with regard to hides and skin production. Globally, countries are acting laws and regulations that control the level of pollution from industrial processes. Besides, most importers dealing within tanning industry are becoming environmentally sensitive and aligning their green supply chain practices with the required environmental regulations. The company developed its industrial ecosystem that supports most of the activities undertaken the GSCM practices. Several studies on the material and energy flow undertaken on the tanning industry suggest comparability to the economic and industrial systems. Within the last two decades, there has been emergence of product-based system perspectives incorporated with geographically defined industrial ecosystems, which put much pressure for the companies to innovate from environmental perspective (Al-Nazer, 2010, 141). Moreover, the major factors contributing to such alignment is the mounting pressure from the regulatory bodies with firms responding through creation and establishing dynamic methods to environmental regulations through introduction of innovations through guarantee improvement of environmental outcomes. Other studies undertaken concluded that environmental innovation within the tanning industries are due the market pressures that force companies to ensure efficiency in their processes. Moreover, VHSP Pty Limited responded to the competitive conditions and pressures from the regulations through development of environmental strategies for maximization of resources productivity that enable the company to improve simultaneously its industrial and environmental performances (Rothenberg, 2007, 107). To ensure improvement in organizational processes, VHSP seriously evaluates its suppliers as the major source of improved competency as they guarantee radical environmental innovation concerning the integration of the technological system and demand capacities going beyond which are likely to exist within the company. Besides, added competency associated with the supply chain of the partners is critical.

Pre-existing processes

VHS Pty Limited undertakes a series of activities to ensure production of quality hides and skin products through ensuring maintenance of environmental quality across all institutional processes. The production process involves fleshing the hides to remove the sticking fat and flesh with the ability of compromising the tanning process. The machines used then send the fleshing to the rendering plant for the production of tallow soap manufacture with the rotating drums tanning the hides, the wet blue hides, tanned hides, are passed through the sammyer machine which are rollers and remove the excess tanning liquor before packaging for exportation. The main aim of the tanning process often involves stabilization of the protein skin, which in turn assist in prevention of skin degradation. However, from the traditional to modern tanning processes, there is always production of effluents, which have high total dissolved solids (TDS), the suspended solids (SS), and biochemical oxygen demand (BOD). Other wastes with the ability of affecting environmental quality include the plus salt, nitrogen, sulfur compounds, nitrogen, and ammonia (Pullman, Sauter, & Business Expert Press, 2012, 188). Most tanning companies do not have mechanisms of treating the wastewater from the processes; as a result, they channel the waste effluent in to the water bodies, which in turn cause pollutions and ecological imbalances. With the current technology and advancement in the processes, the company has been able to improve its environmental conservation practices. Most importantly, the process used within the company involves addition of chrome salt in production of the wet blue hide.

Characterization of VHSP Pty Limited


  • To remain the leading manufacturer of wet blue hides of high quality for the Australians and international markets


  • To build long-term and sustainable relationships with customers through listening to their specific needs and integrating into the manufacturing processes


  • To ensure production of quality hides and skin products within the Australian market

  • To maintain its international competitive advantage

  • Ensure effective and efficient production through incorporation of environmentally friendly practices

Corporate structure

Industrial Systems and Environment

Strategic Analysis

Competition is increasingly becoming stiff in the tanning industry as most entrepreneurs are beginning to realize the benefits associated with the practices. As a result, companies are setting strategies to assist in maintain competitive edge. Besides, with the current regulations guiding the operations carried by the tanning industries, companies are resorting to development of cleaner production measures to prevent the cost associated with purification of the environment after pollution and costs associated with court files. VHSP Pty Limited leverages such costs through proper alignment of the green designs with organizational objectives that ensure consideration of environmental quality while undertaking the tanning processes. Moreover, the company uses its strategic management with an aim of withstanding fire competitions within the market. The strategic management of the company involves strategic formulation, implementation, and evaluation (Rothenberg, 2007, 105). To ensure proper development and formulation of the strategy, the company undertakes SWOT analysis and enables exploitation of the realized opportunities and avoiding the threads whenever it faces uncontrollable external environments. The company has motivated workers and maintains proper relationship with the suppliers that ensures proper organizational management and focus on the environmental conservation. Environmental conservation is becoming critical and sensitive that every organization has to consider. In the 21st, technology is playing critical role even for the tanning companies through limiting the amount of pollutants generated into the environment.


The major factor driving the company’s cleaner production process is the supply chain and experienced employees. The greening supply chain offers several benefits to the company that range from the reduction of the cost to incorporating the suppliers in a participative decision making process with an aim of promoting environmental innovation. The company adopts the green purchasing strategies in a bid to respond to the increasing concern on environmental sustainability globally (Department of Environment, 2016). Therefore, the green purchasing addresses the reduction in the produced wastes from the tanning process, ensuring substitution of the materials especially from the suppliers who do not comply with the environmental regulations, and minimization of wastes considered hazardous from the production process. Besides, the involvement and support that the company gets from the suppliers are critical and assist in the achievement cleaner production objectives. Moreover, the company is managing the environmental performance of the suppliers to ensure that the hides and skins supplied to the company meet the required environmental standards in nature. The company has experienced employees that ensure the achievement of cleaner production including guiding the suppliers in setting up their environmental programmes, involving the suppliers within the industry in a bid to share the experience and problems, informing the suppliers on the significance of having cleaner production process and technological integration, and pressuring the suppliers of taking various environmental actions. Moreover, the company chooses for the suppliers environmental criteria to ensure compliance in its supply chain. Several factors also define organizational capacity including cleaner production, environmental design, lean production, and remanufacturing (Australian Textile, Clothing, Footwear, Leather Industry Forum, & Workplace English Language and Literacy Program, 2002, 242). As a result, the company’s strategic green management involves the combination of the integrated product development (IPD) and the Supply chain coordination (SCC) that defines its desired outcomes. Integration of cleaner production methods within the company involves innovation of environmental practices, which emerge from real commitment towards the reduction of wastes and pollutions associated with the tanning process.

Porter’s Forces Analysis

Porter five forces


Competitive rivalry

Bargaining power of buyers

Bargaining power of suppliers

Entry barriers

Threat of substitute products

Bargaining power of the suppliers

The company has diverse number of suppliers, which limit their power of bargaining as the company could shift from one supplier to another. Although there are several tanning companies in the Australian market manipulating the prices of prices of processed hides and skins, the company has loyal suppliers, which it has used in creating long-term relationships. Such relationship could be the basis of customers to negotiate the prices of the supplies.

Bargaining power of customers

The company experiences high bargaining power of customers. Within the Australian economy, leather and tanning industries play significant roles in ensuring economic development. However, the company has organized and unorganized players which to some extent influence the purchase behaviours of the potential customers. As a result, the potential customers have plenty of options to choose from. It is critical that the company be on its toe in fulfilling the specific needs of the customers and creating strategies of retaining the existing customers.

Competitive rivalry

With the rising number of institutions coming into the market, the company needs to leverage much on its environmental strategies that ensure sustainable development. Moreover, entries into the market are making the market become increasingly fragmented as every company uses its technique, tactics, and outlines the strategies associated with intensified advertisements campaigns, promotional activities, and price war, which increase the level of rivalry within the market.

Threats of new entrants

The market is becoming highly profitable which attract many entrepreneurs. However, with the rising concern global to ensure protection of the environment within the tanning industry, some companies are opting out of the market. Such regulations and requirements within organizational processes increase the amount of threat to the entrepreneurs wishing to invest within the company. Besides, introduction of a tanning company require a lot of capital especially for establishment of the distribution channels, promotion of the brands, and stiff competition from already established firms within Australian tanning and leather industry.

Threat of substitute

The needs of the potential customers are increasingly changing which make development of competition strategies difficult for company to enjoy the desired competitive advantage. Such needs of the customers are usually complex which makes it difficult for the company to satisfy all sorts of needs at once. Several hides and skins within the market are replaceable especially if the customers think that they do not satisfy their needs (Al-Nazer, 2010, 165). However, from the economic point, availability of various products is important to ensure continuous development within the industry. The processes of trying to acquire the required competitive advantage might be costly for the company.

SWOT analysis


VHSP Pty Limited enjoys the availability of skilled and experienced workers which guarantee its competitive advantage with the Australian and international market. The company is also known for the production of quality products, which helps in the attraction of potential customers. With the rising concern for environmental sustainability, the company has adequate measures that ensure cleaner production processes. Integration of technology is also important as in improves efficiency, effectiveness, and reliability of the manufactured hides and skin products. Growth of the tanning and leather industries also serve as the potential customers making the company increase its production level.


VHSP Pty Limited produces products of high quality; hence, the prices of such products are high. The company majorly targets well-established customers, which limits its market. Marketing the brands associated with hides and skin is difficult within the Australian and international markets. There are inadequate promotional activities, efforts to attract new customers, and high cost of administration.


The company produces an array of products, which makes it enjoy the desired competitive advantage; much emphasis on the quality of the products and environmental protection; trained personnel, and involvement with environmentally conscious suppliers.


The major threat is the increasing number of entrants into the industry; there is also inconsistency in the provision of required raw materials, emergence of potential new brands within the market; the rising costs of the hides and skins; tough state regulations; and insufficient cash flows.

Challenge Identification

Information Technology

Even with the changing and increasing concern for the quality and efficiency in the manufacturing processes, most tanning and leather companies still use the traditional method, which have high negative impacts on environmental quality, especially the air and water. With reference to the nature of the tanning industry, modernization of such institutions requires efficiency, agility, responsiveness, and establishment of the competitive advantages. Such initiatives include improvement in the level of productivity, reduction in the amount of wastage generated, automation of the production process, proper understanding of the needs of customers, extension of the reach through the e-commerce, and introduction of new technologies which play important role in enhancing productivity. In Australia, several tanning and leather companies were at the brink of closure and had to revive their processes through ensuring the incorporation of new technological methods and social interventions. Integration of the information technology within the tanning process not only improve the productivity and product quality, but also assisting in coming up with new methods of reducing the production cost.

However, the VHSP Pty Limited lacks effective information technology especially the information and communication technology that often makes communication easy and reduces the cost of communication and processes. Consequently, VHSP Pty Limited limits its ability to access the various parts of the world in a bid to market its products globally. Information technology enhances productivity, variety of produced products, accessibility to new markets, which contributes to increasing earnings, and revival of the slow tanning processes. Most of the tanning stations within the company use old and inefficient technologies and methods of production. In the Australian, even the large tanneries use low level of technology. The continuous uses of such low technology are the major factor responsible for increasing wasteful of water and chemicals within the company. Moreover, poor technology is also responsible for the high load with the generated pollutant effluents and low productivity within the tanning industry.

There are various specific issues associated with low technological utilization within the tanning industry. VHSP Pty Limited uses raw hides and skins preserved using salt, which causes serious problems associated with excess salts generated by the tannery effluents; yield from the leather associated with wet salted stock, is lower compared to the international norms which is mainly attributed to the high level of wastes from the plants. Besides, the chemical consumption of the VHSP Pty Limited higher than required due to inefficient equipment and processes although through focusing on recycling strategies, the company has been able to reduce such chemical composition. With reference to water consumption within the company, its utilizes more than double of that tanneries of well-established companies as it consumes averagely 40 liters/square feet of the finished leather while established companies consume approximately 12-15 liters/square feet. Most importantly, the company is old and uses a layout that is inefficient and often contributes to bottlenecks within the processes and raw material handling, excess handling of the materials, and multidirectional flow of the materials. Besides, in some cases, the company often has unhygienic conditions due to inadequate ventilation and lighting. With information technology, VHSP Pty Limited could improve such inefficiencies.

Environmental Management

Leather and tanning industries are increasing becoming the major pollutants especially the water and air. However, most employees are clue less on the negative effects associated pollutants on their health. These pollutants affect businesses in several ways, which are evident in the visualization of the outcomes and the cost of managing environmental pollution and needs of the communities. In developing the position regarding the environmental issues, the company needs to set priorities and make decision of the actions to take. Within the company, there is generation of too much waste with a lot of salt contents and chemicals used during the tanning process (Pullman, Sauter, & Business Expert Press, 2012, 106). With poor methods of discarding the wastewater, the company often direct it into the river, which raises question on the aquatic balance and consideration. Through the state laws, the activities of the company are influenced, as it has to ensure effective method of production that guarantee quality and reduced amount of waste generated. Despite of various advantages associated with cleaner production, the adoption of such strategy within the company is very low.

The company uses the efficient desalting technique and replacing the ammonium salts with carbon dioxide as substitute. Other methods include using the enzymes in de-haring and conservation of water through using recirculation methods, which are yet to find their ways into the Australian markets. The major environmental concern within the company include discharging effluent with high load contents within the water bodies and farmlands The company poses serious environmental problems associated with emission of polluted wastewaters and various types of solid wastes and gases. Moreover, the tanning companies always require a lot of energy and dangerous chemicals such as formaldehydes, the coal-tar derivatives, and minerals associated with the cyanide-based materials. The major factor that causes serious environmental problems is the use of chrome processes, which contain numerous pollutants.

Average Pollution Loads in Tannery Wastewater per ton of Hides/Skin Processed-In Australia

Pollution Parameter

Pollution Load in Kg

Biological Oxygen Demand (BOD), 5 days at 20 C

Chemical Oxygen Demand (COD)

Chlorides as (Cl)

Dissolved solids

Suspended Solids

Sulphides (as S)

Total Chromium in terms of BCS

Pollution Parameter

Pollution Load in Kg

Biological Oxygen Demand (BOD), 5 days @20o C

Chemical Oxygen Demand (COD)

Action plan

Short term

To ensure reduction for chemicals generated from the tanning process, the company should consider using the sirolime technology that has several environmental benefits considered to the traditional methods used. The method involves various processes including removal of hair, ammonia replacement, and recycling. The method removes the hair from the hide intact, which differs from the conventional method that involves dissolving the hair in lime or sulphide solutions. Such process al allows separation through filtration of the hair using dehairing liquor which the company to recycle the solution. Such processes assist in removing about 95 per cent of the hair. However, the method allows removal of the remaining hair using traditional lime sulphide method with a pH of 12-12.5.

Moreover, the method involves composting the hair and there is need to undertake further work on using the hair in manufacturing fertilizer since it has high nitrogen content. Through replacement of the ammonia salt and deliming using carbon dioxide, the company participates in environmental conservation through reducing the amount ammonia discharged as effluents. The method also encourages recycling of the chrome tanning liquors. The major benefits associate with the method, siroline technique, over other conventional process is that it reduces the amount of effluents and ensuring improvement in quality. Reductions associated with the method are included in the table below:


Percentage reduction

Long term

The company could as well use the Chrome Liquor Recover method, which involves modification of the current organizational processes to reduce the amount of chrome generated into the environment. The method involves recycling of the chrome liquors that is contaminated with grease, fats, and suspended materials as part of the siroline process and involves discharging the liquors on the floor when empting the drums and liquor. Generally, the method is an improvement of the siroline technology but majorly aim to reduce the amount of chrome generated during the tanning process. The method squeezes the liquors from the hides using the sammyer machine. The produced liquors represents about 55 per cent of the total amount of chrome liquor generated in the process. Most importantly, the method removes the fats and solids from the wastes through the hydrocyclone technology, which increases the rate if recycling the chrome liquors from 40 per cent to 95 per cent. The recovered stock could be used for stock feed additives considering the high energy content. The method has several costs and benefits as outlined in the table below:

Economic benefits

Capital cost

$123, 000

Yearly savings

Reduction in wastes discharged

$171, 540

Reduction in the chrome sludge

Reduction in chrome use

Sales of fat

Total yearly savings


Industrial Systems and Environment 1


The report focused on VHSP Pty Limited which manufacturers hide and skin products and aims to maintain its competitive advantage within the Australian market. Moreover, the report focused on the organizational capabilities, strategic factors, and available technological methods, which are significant in delivering the required cleaner production. To ensure further environmental protection, the company implemented its cleaner production initiatives that relates to recycling of the chrome tanning liquors with an annual achievement of savings worth $314,000 and a payback of 0.4 years. The conventional wet blue tanning process that the company currently uses involves four operations including dissolution of sulphide and lime with a pH of 12-12.5; washing and de-lining of the solutions to a pH of 9 through addition of ammonium salts and carbon dioxide; addition of enzyme and pickling processes through addition of formic and sulfuric acid.


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