Design Key Performance Indicator for Sustainable Warehouse: A Case Study in a Leather Manufacturer

This research discussed the design of Key Performance Indicators (KPIs) for sustainable warehouse for leather manufacturing industry. A thirty four indicators are found from literature study and validated by experts using likert scale. A number of 30 KPIs are declared valid then suggested to be KPIs for sustainable warehouse for leather manufacturing industry. The KPIs consisted of 12 economical indicators,10 social indicators and 8 environmental indicators. To find out the priority of each KPIs, then their importance weight are identified using analytical hierarchy process (AHP) by sending AHP questionnaire to experts. The result shows that Economical factor is the most dominant factor (0,4796) followed by social factor (0,4055) and environmental factor (0,1150).The KPIs and its weight can be used as guidance for leather manufactures to increase their sustainable performance.


Introduction
Warehousing is one of the toughest thing in supply chain for its contribution which up to 24% from logistic cost [1]. Copra et al., define warehousing as the space for material storing (packing, finished goods, and raw materials) and also referred to as logistics service centre. Warehouse has a bigger role based on value added operations, customization services and appropriate customer order fulfilment [2]. The interest in performance analysis and measurement in warehousing is growing because it support the development of decision support systems for corporate design, planning and management. Performance measurement system can be defined as a set of metrics that can be used to measure both efficiency and effectiveness of actions [3]. Efficiency and effectiveness are most widely used as performance measurement in warehousing [4], [5].
Sustainability is ability to manage economic, social and environmental performance, and at the same time become more important in warehousing management. Since sustainability aspect in warehousing got less attention, therefore this become a challenge. Measuring sustainability is very important in modern supply chain management and now days it is integrated in Performance Measurement and Management Systems (PMMS) for Supply Chain Management [6].
Warehousing management becomes very important in logistics system [7]. Good warehouse management contributes to costs and quality both in terms of customer service and output products [8]. Sustainability raises new opportunity to seeing and examining the value in each process [9]. It is very necessary to look at the environment, social and economic factors in warehousing to get sustainable results [10]. Therefore this research focus on sustainability performance measurement in warehousing. This performance measurement can be used to increase warehouses effectiveness and efficiency. Performance measurement is useful for managers to take some corrective actions based on periodic reviews [11].
Based on literature reviews in warehouse performance measurement, there are a lot of models and indicators to measure existing warehousing performance, which differ in terms of time, cost, quality, and productivity dimensions [12]. Warehouse measurement which consider social, economic and environment aspect is still limited and becomes something new in sustainable warehousing performance [13]. Sustainability can help companies to maintain their environment and also protect human rights and also providing social responsibility [14]. Sustainability performance measurement can influence decision making and drive achievement of company goals [15].
There are six important process in warehouse need to be considered in warehouse performance measurement, i.e. picking, print label, packing, tracking, delivery time, and return process [16]. This study adopted indicators that has been carried out by [14], [18]- [23]. These indicators are then selected according to the principles and criteria of sustainability in leather warehouse in Yogyakarta,one of province in Indonesia. In order to determine the importance weight o the KPIs, the Analytical Hierarchy Process (AHP) method is employed.

Methodology
There are three stages in identifying KPIs. The first step is to identify the sustainability of KPIs based on literature. The second step is to validate the KPIs according to condition in the leather warehouse through expert's surveys. The third step is to determine the importance weight of KPIs by using Analitycal Hierarchy Process (AHP) based on experts preferences. The results of this study are a set of KPIs that can be used to measure the sustainability index of a leather warehouse.

Identifying KPIs from literatures and experts
This research began by identifying KPI from literatures and the result is evaluated by expert. There are five experts (expert is someone who has comprehensive knowledge or skills in warehousing for more than 7 years) to give opinions on the importance level of KPIs. The experts are from several positions including Procurement/Supply Chain Manager, Logistic Supervisor, Warehouse Staff (Receipt / Expenditure), Inventory Staff, Warehouse Administration Staff. They are asked to weigh the importance of KPI using Likert scale with a range of 1 to 5 (from very unimportant to very important). From 34 KPIs, there are 30 KPIs which are declared valid with an average value of 3. KPIs i with an average value of less than 3 will be omitted because it is considered insignificant as shown in Table 1.

Determining KPIs important weight using Analytical Hierarchy Process (AHP)
Each KPI has different contribution to warehouse performance, therefore to find out the priority contribution of each KPIs, then their importance weight are identified using analytical hierarchy process (AHP) by sending AHP questionnaire to five experts. The result of AHP is summarized on Figure 1. This result is considered valid because the value of consistency ratio are less than 0.1.
Analytic Hierarchy Process (AHP) was first introduced by Thomas L. Saaty in 1971 and became a method of decision making in complex problem solving. The AHP method is designed to find solutions for complex problems with many criteria into multiple domains. AHP is a very important tool for practitioners and academics to conduct and measure management theory [24].
Cheng e tal., said that AHP has several benefits. First, it helps to solve an unstructured problem into a rational decision-making hierarchy. Second, it shows a lot of information from experts and decisionmaking with paired comparisons of various individual groups. Third, to measure the level of importance of each element needs to have calculation producer, standard of consistency to validate the consistent ranking from experts and decision makers. Storing process consists of activities which started with arranging the pallet in storing space and ended when they are taken to be stored. The activities are pallet orientation, stacking, utilizing efficient storing slots, pallet relocation, and inventory calculation.

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Outbound Processes (OP) Yayyab Wakas Amjed& Norma J Harrison [14] Outbound processes related to stock movements aimed at fulfilling customer orders including adjusting or packaging products into a new form (standard), to meet specific customer / business / market needs.

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Work In Process Faulkneer et.al [18] Inventory of in-process goods, in this case can be in form of fresh cluster of fruit, loose fruit or CPO.

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Shiping Cost Per Customer Frazelle [17] Shipping cost to customers.

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Environment  Figure 1. Importance Weight of Sustainable Warehouse Base on the result, the most importance weight for sustainable warehouse is Economic (0.4796) followed by Social (0.4035) and Environmental (0.11). Indicators of processing order on time is consider to be highest priority in economic, while occupational health and safety is the most important KPIs in Social. Indicator of energy storage system is the highest ranking in environmental aspect. By focusing to each indicators that have higher impact could lead to increasing warehouse sustainability performance.