18

CHAPTER II

REVIEW OF LITERATURE

A brief review of the studies made on different aspects of operations in

leather tanning industry connected with the present study directly or indirectly has

been attempted. The review was highly useful to design the present study. It was

useful to find out the research gap in the area operations in leather tanning industry.

2.1 Reviews Related to Operation Process in Tanneries

The leather tanning industry is an international industry and tanners depend

tremendously on access to raw materials and to export markets. This industry

plays an important role in the development of economy and generates

employment. The leather tanning industry utilizes hides and skins which are by-

products from the meat and dairy industry. Otherwise this would have to be

disposed of by other ways, such as landfills and incineration. Operations

management is a function that transforms inputs including people, capital, energy,

materials and technology into outputs, namely goods and services1.

Leather is the tanning sector's primary output. Leather tanning has

numerous steps involved in converting animal raw hide or skin into finished

leather. Hides and skins and their downstream products are very important source

of foreign exchange. This finished leather can be used in the manufacture of a

wide range of consumer products. It is a transitional industrial product, with

19

functions in downstream sectors of the consumer goods industry. Footwear,

garment, furniture, automotive and leather goods industries are the most considerable

resources for tanners' production. Leather tanning as an industry has been subjected to

changes as technology makes use of new materials, techniques and concepts.

The operations manager makes the association between operations and other

functions of the system. The decision of operations manager relies on other functions

of the system. The other functions of the business cannot be carried out efficiently

without information from operations2. Figure 1 shows these relationships.

Figure 2.1 OM and Other Functional Departments

20

The operations manager needs information concerning competition, product

design, customer desire and other aspects of the market to react according to the

need of the market. They can provide information about current operating

capabilities, inventory levels and output rates.

Finance department provides information about financial measure, budgets

and stockholder requirements to operations department. Operations manager

cannot give capital requirement and capital investment planned without knowing

financial constraints.

Operations department rely on information about forecast of demand,

quality required, delivery to supplier and workers schedules. Information system

must be capable of bringing latest technological information to update the

execution of the operations management.

For processing of product, information about operations capacity and

design requirement are needed. Operations management must be informed about

product specification and technological tradeoff.

Operations manager must understand the trend of job market, hiring and

training costs. Human resource manger must hire right people for required jobs.

Accounting manager needs current performance measures in terms of

inventory management, capacity information and labor standard. Operations

manager must communicate information about billing and process improvement.

21

The relevance of operations management with respect to leather tanning

industry and the existing factors involved are based on process operations, power

aspects, marketing situations, financial state, general problem and governmental

policies.

The significance of the environmental issues faced by the leather tanning

industry emerge to be known to persons apprehensive and there is considerable

uncertainty and anxiety about the future prospects of the leather tanning industry

in Vellore district.

To meet the global demand for supply of good quality leather products, the

leather tanners have to increase the utility of imported hides and skins to advance

the representation of Indian Leather and Leather products. The small tanneries

produce semi-finished leather, the medium units engage in producing both semi-

finished leather and finished leather and the large units are fully integrated units.

There are many disadvantages in this industry, lack of upgraded technology, lack

of proper finance for high capital investment, poor and irregular raw material,

production, process and infrastructure.

The conditions of leather tanning industry are revealed with respect to

operations aspects. The tanning sector ranges from small-scale cottage units to

large-scale tanneries, so the environmental awareness of the tanning industry in

the country varies substantially.

22

There has been an increasing emphasis on its planned development, aimed

at optimum utilization of available raw materials for maximizing the returns,

particularly from exports. India ranks first among major livestock holding

countries in the world and thus has a rich endowment of raw materials in terms of

the cattle population. Information is provided on the micro structure of the Indian

leather industry. The modernization of leather industry and set up of new unit for

footwear, components and leather products results in terms of productivity, right-

sizing of capacity, cost-cutting, and design-development will give way to further

development to this industry. (Center for Management Research (CMR) 20053).

Apart from the quality of raw material, the process of its conversion into leather

and later of the design, product development and process of manufacture of leather

products play a key role in adding value to leather industry (The Indo-Italian

Chamber of Commerce & Industry 20084).

The slaughterhouses, tanneries and leather manufacturing industries can be

considered to be the major constituents of the leather industry network,

considering their impact on the environment and the workforce employed therein.

All these players of the leather industry network are contributing to the social,

economic and environmental sustainability and unsustainability aspects of this

network (Sustainable Industrial Networks and Its applications on Micro Regional

Environmental Planning (SINET) 20105).

23

In the present study, the prevailing condition of leather tanning industry

has identified with the help of reviews that all tanneries need a large amount of

water for processing leather and depends on ground water sources for their daily

requirements. The government needs to be a facilitator to improve this industry

( K. Anbalagan, G. Karthikeyan and N. Narayanasamy, 20016; Meenu Tewari and

Poonam Pillai, 20047).

Operations management is defined as the design, operation, and improvement

of the systems that create the firm‟s primary products and services. This involves the

transformation of inputs to outputs and is the core of any business (Chase et al.,

20048). Managing global supplier, production and distribution networks are the

current issues of operations management.

Existing Indian Industrial cluster is reviewed on credit availability,

marketing support, market intelligence, technological support and skill

development, technology transfer and innovation, quality testing and skill

development, Institutional support and networking. The promotion of industrial

clusters may achieve country‟s macro-economic objectives of export promotion

and employment generation. There is adequate financial availability through

commercial banks, state financial institutions, private sector banks and private

financing and leasing firms. Domestic marketing is mostly through private

channels, where a public support system is available for exports. Informal

channels are more common for technology information. A network of small units

24

is likely to derive economies on several fronts such as technology, marketing, raw

material and equipment sourcing information, infrastructure provision and

experience sharing. It can carry out technological investigations in line with the

global technological scenario (Shridharan, Mathew J.Manimala, 19999).

The leather supply value chain is that it provides an integrated approach to

determine and become aware of the problems and constraints from the basic level

of rearing animals for the raw skin to purchase and use of finished leather products

by the customers (Viju Mathew, 2008)10

.

Promoting a cluster-based approach among the companies provide easy

transfer of the best practices among the companies which improve their

operational efficiencies, costs and collaboration with customers and suppliers.

Implementations of best practices in manufacturing technologies and manufacturing

will improve which results in better quality and delivery (Report for National

Manufacturing Competitiveness Council (NMCC), 2009)11

.

In this study, operations management of leather tanneries has been

measured with some important aspects, namely power outrages, operations

process, marketing aspect, financial implications, governmental policies etc.

Processes are core technologies of all organizations for producing and

delivering products that satisfy customer needs (Ravi Anupindi et. al.200612

).

"Leather tanning" is a general term for the numerous processing steps involved in

converting animal hides or skins into finished leather. Trimming, soaking, fleshing,

25

and unhairing, the first steps of the process, are referred to as the beam house

operations. Bating, pickling, tanning, wringing, and splitting are referred to as tan

yard processes. Finishing processes include conditioning, staking, dry milling,

buffing, spray finishing, and plating.

In the tanning industry, the cost of complying with environmental

regulations has been estimated to be approximately 5% of the production cost or

2-4% of the turnover. It is important to make another distinction here, between

„cleaning‟ and „cleaner‟ technology, where the first means end-of-pipe solutions

and the latter changes in the production process. For the tanning industry in India,

the main focus of the regulations has been on water pollution rather than problems

related to air pollution and solid waste. Changes in the financial and in the

insurance markets could be effective tools to improve the environmental

performance of the tanning industry (Ane Schjolden, 200013

).

Chrome-tanned leather tends to be softer and more pliable than vegetable-

tanned leather, which has higher thermal stability and is very stable in water, and

takes less time to produce than vegetable-tanned leather (Leather Tanning 200514

).

The team concepts, cultural change, modular production, computer-aided

design and computer-aided manufacturing and computer applications, aimed

basically at achieving lower work in progress and shorter lead times, had varying

degrees of success (Marcia Perry, Amrik S. Sohal 200115

).

26

The global operational supply chain of the leather industry identifies

temporal and cross-country changes at various stages, mobilizing funds, to review

the policies and practices for exporting coping with domestic and global

environmental requirement.

The leather processing industry is going through a phase change due to

global environmental regulations. Its innovative technologies are essential for

protecting the leather tanning industry from consequences.

Majority of leather firms are not organized. Their production processes are

traditional and the product quality cannot meet international standard.

Modernization of tanneries can use latest information technologies like Computer

Aided Design (CAD) – Computer Aided Manufacturing (CAM) will improve

product quality. Modernization of tanneries increase productivity, reduce

wastages, automation of production process realize customer‟s requirement and

introduction of new technologies enable tanneries to competitive globally.

Clean technology is to preserve resources and improve efficiency. Cleaner

production technology consists of replacement of various materials, redesigning of

products and changing process. Cleaner technology decreases operation costs, in

addition to ecological benefits.

Conservation of water will have economical benefit in saving chemicals and

energy, apart from environmental advantages. High consumption of water will

lead to higher quantity of waste water, consequently higher capital for treatment of

27

waste water. Some measures to control excessive water are batch washing instead

of continuous washing, optimize batch washing, sequential washing, reuse and

recycling and control on leakage.

The power cuts have become a huge problem for the leather industries.

Many small and medium-scale tanneries face problems such as non-availability of

funds, non-availability of raw material of proper quantity and quality, competition

in product markets, infrastructure bottlenecks such as power failure or erratic

power supply, break-down of transport and communication and lower social

standing. (Sahasranaman A, 200016

). In the present study, the power outages at

leather tanneries have been included.

Tannery is energy intensive industry and demands a continuous supply of

electricity for its daily operations. Power outages are frequent in India. Power

outages are the main hindrance of the leather tanneries competitiveness. The major

issue is change in timings of power distribution; tanneries are unable to schedule

the timings in advance. The cost of power outages is considerably higher to the

tanneries that increase the cost of production.

Marketing is the core of the modern leather product business and the

principal main marketing agents have the necessary trade information and have

established a wide network of sales channels that allow them to contract production,

provide finance and serve the costumer on time (within three to five weeks after

28

placing the order) managing the complex mechanism of supply chain within the

strategy of buyer-driven commodity chains (Schmel199817

, Magretta 200018

).

Profits in buyer-driven chains derive not from scale, volume, and

technological advances as in producer-driven chains, but rather from unique

combinations of high-value research, design, sales, marketing, and financial

services that allow the retailers, designers, and marketers to act as strategic brokers

in linking overseas factories and traders with evolving product niches in their main

consumer markets (Gereffi, 1994)19

.

For the majority that have retained a domestic orientation, the general lack

of interaction with overseas buyers and international commodity chains has meant

that they have not embarked on the steep learning curve required for upgrading

towards full-package or original equipment supply for overseas markets. This

failure is a particularly acute problem since large parts of the domestic market

have been taken over by cheap imports (Richard Ballard 200120

).

South African exporters engage in various additional functions such as

retail, logistics and warehousing, own design and branding. While these suggest

they are pursuing the exporting „high road‟, indicates the need for a more flexible

approach to forms of exporting in order to increase exposure to international

markets (Richard Ballard 200221

).

Marketing of finished products is essential in the tanning business and

should be an integral part of the technology development and promotion. In the

29

initial planning of the project, they completely omitted the marketing component

and only concentrated on technology development. The success of a rural tannery is

based on the degree to which tanned leather and leather goods have found successful

market outlets. (F.O. Wayua., M. Ngutu, B. Nyamori and A. Kagunyu 200622

).

Trade fairs remain a critical method for acquiring new business. Support in

this regard is therefore valuable and should be promoted or expanded if possible

(M. Morris and Myriam Velia 200223

). The present study incorporates the

marketing aspect of leather tanning industry and reviews have been drawn from

global buyers who want to know how products are made and how they are sourced.

They want to have a lot more information about both their immediate suppliers and

about what is happening further back along the supply chain (John Humphrey 200224

;

United Nations Industrial Development Organization, 199925

; 200926

).

The exports of leather and leather products have attained well merited

recognition in international markets. There has been an increasing emphasis on its

planned development, aimed at optimum utilization of available raw materials for

maximizing the returns, particularly from exports.

The Asian Development Bank, United Nations Industrial Development

Organization, the Netherlands and Germany have given financial and technical

assistance to mitigate the environmental problems of the Hazaribag tannery area

and for promotion of leather and leather products (Moinul Islam Sharif Khandaker

Mainuddin 200327

).

30

It is essential for the public to gain an understanding of foreign aid because

it embodies crucial contemporary issues that have political, economic, and social

implications for fairness and justice. The structure and function of foreign aid is

complex and incomprehensible (Linda Fray Shrewsbury, 200728

). Taxpayers in

donor states finance the foreign aid and populations in recipient states are subject

to its forces. People in least developed countries struggle against powers of which

they have little or no understanding. Meanwhile taxpayers in donor states are

made complicit in an economic world order with which they very likely disagree.

The government rather than the taxpayer individually is the source of funds.

Multiple funds would have to compete in contrast to the single monolithic entities

of the International Monetary Fund, the World Bank, and the United Nations

system. There would be no question of foreign control either by the US

government, international development organizations, or even the proposed

development funds themselves. Many small and medium-scale tanneries face

problems such as non-availability of funds, in terms of fixed and working capital

and inadequate access to bank loans.

In the present study, the financial implications among the leather tanneries

have been included.

The major problems faced by this cluster are of finance and working

capitals. Since these units are managed by family members or a group of persons,

the investments in the units are limited (G P Agarwal 201029

). The inability of the

31

tanneries and exporters to operate in clusters limits the advantage to economies of

scale and hence opportunities to access high value markets (Peter Kalunda

Kiuluku 200830

). In the present study, the general problems of leather tanneries

have been identified with the help of reviews that the acknowledgement of the

opportunities for technological upgrading that could trigger a better use of

resources and the factors intervene in the general organization of the industry are

with regard to the management of capital and the industrial strategies ( Shivam

Gupta et al., 200731

; Allen Blackman 200732

; Nicolas Flamant 200433

). The main

problems faced by the cluster are pollution, cost of production, lack of working

capital, outdated marketing units, unlikelihood to export, week institutional

linkages etc.

Governments have a number of roles to play in assisting producers,

particularly small producers: 1. Inform and assist the private sector and workers

organizations to understand opportunities and threats posed by their participation

in leather global value chains. 2. Assist producers to enter the chains and to

reposition themselves in the chain by improving their capabilities in areas such as

design, marketing and negotiating abilities for the establishment and strengthening

of internal and external links. 3. Improve access to productive capital, trained

human resources and promote the use of trade policy rents (Kaplinsky 200034

).

The policy of the government towards the leather industry has been guided

by the imperatives of two primary aspects: the first aspect is based on the premise

32

that this is a traditional industry providing employment to a large number of

people who constitute the bottom of the economic and social hierarchy, that

production based on a small-scale that encourage to maximisation of employment

and harnessing of skills in the sector and that production of many articles made of

leather should therefore continue to be produced in artisanal or small-scale units;

the second aspect is based on the fact that the sector has always been a large

foreign exchange earner and that export should concentrate on adding value to raw

material such that outflow of raw material from the country in semi-processed or

finished form should be regulated and exports of more and more value added

items should be encouraged (Sumangala Damodaran and Pallavi Mansingh

200835

). Both policies for small-scale sector development as well as policies for

export promotion have thus influenced the leather industry.

The government policies related to leather tanning industry have been

drawn from the reviews that networking of tanners, business development services

providers and governmental institution is beneficiary to tanning industry by

providing tax concession for new industrial undertaking that encourages Tanneries

(A. Blackman(2006)36

; United Nations Industrial Development Organization,

199937

;200038

;200139

; Sriyani Dias 198740

). The support of governmental policies

and subsidies for development of leather industry make this industry to be

competent with global market.

33

2.2 Review of Previous Studies

Geoff Lockett (1973)41

presented a model that has been developed for the

hides-leather sequence of processes with a view to increasing the profitability

overall. It is based on a small linear programme and has been implemented on a

routine basis. The problem deals with resource allocation for the hide-leather

process. Here mathematical formulation is given in the form of linear programme

and the application is explained and problems of implementation are discussed.

The general problems considered are what hides should be bought, what leathers

sold, production constraints of the company and purchase and selling situation of

the market. The objective is to maximize the profit. The deterministic linear

programming model is developed where hide price and availability problem are

ignored. The main use of the models is to indicate which hides should be put into

work each week. The objective is to quantify the marketing alternatives to

management in speculation and conversion to maximize the profit.

Kumar .R and Ganesh Srinivasan. M (1996)42

described the seriousness of

the environmental problem faced by the leather tanning industry that appears to be

known to persons concerned and there is considerable uncertainty and anxiety

about the future prospects of the leather tanning industry in Tamil Nadu. With

liberalisation, foreign firms are interested in setting up tanneries in India,

especially in Tamil Nadu, because of the high level of local talent and the

availability of basic infrastructure which includes the facilities available in Central

34

Leather Research Institute. The technologists feel that the industry has to shift to

continuous process from the present batch-wise process, for optimisation of

operations. The managements of tanneries do not care for the cleanliness in

tanneries as much as they do in their administrative work. There has been a lack of

coordination among the tanners.

International Network for Environmental Management (1997)43

gave a

report about Curtigran Ltd, which is situated in the metropolitan district of Bogotá.

Curtigran Ltd, participated in PROPEL project which helps to minimize waste

and effluents, in order to reduce operating costs and improve competitiveness, to

attain optimal use of raw materials and reduce the amount of inputs ending up in

the waste streams, to participate in clean technology programme and to improve

its image within the local community. The problems identified were delays on

payments to suppliers, late delivery of orders and high level of product returns

because of poor product quality, leading to loss of customers and business, low

productivity, low employee morale and waste of raw materials. A cost system and

clean technology was conducted to improve Curtigran‟s economic and environmental

performance. The company has since reduced its pollution by 50 per cent, improved

the quality of its products, and increased its product yield.

K. Anbalagan, G. Karthikeyan and N. Narayanasamy, (1997)44

conducted a

study that was carried out to assess the magnitude of the pollution problem in

Kamatchipuram village, 5 kms away from Dindigul town. The tannery effluents

35

have damaged the environment and affected people‟s livelihood opportunities. The

effluents have also affected the health of livestock and humans. The agricultural

land has been made unsuitable for crop production because of high saline deposits

over the soil. This study showed that the knowledge of local people is considerable,

up-to-date and provides a long-term perspective. In this context, it should be of

great relevance to decision-makers. This study offered an opportunity for physical

scientists and social scientists to work together to tackle a serious environmental

problem and learn from each others‟ approaches.

Loraine Kennedy (1999)45

, in his research report entitled “Cooperating for

Survival: Tannery Pollution and Joint Action in the Palar Valley (India) “, has

clearly explained that majority of tanneries focus on the first stage of leather

making that is processing raw skins and hides into an intermediary product called

“semi-finished leather.” This study area located in and around the towns of

Vaniyambadi, Ambur, Pernambattu, Melvisharam and Ranipet. The small, mainly

family-owned, firms are independent producers, buying raw material and selling

the processed leather on the market. Most of their works are job-basis and the large

tanners take up job as a consequence of unfavorable market conditions. He also adds

about the difficulties from collective action, notably monitoring and compliance, and

explores public-private interaction in search for environmental goals.

In Tamil Nadu most of the tanneries are concentrated in a handful of

locations dominated by the Palar valley in Vellore district and the Cauvery river

36

basin. Meenu Tewari (2001)46

examines the two of the most critical challenges

facing the leather sector nationally, that the growing emphasis on environmental

and pollution control standards, and greater scrutiny over labour practices of local

firms. Government policy and collective efforts of industry clearly need to be

aimed at helping local firms, especially smaller firms to meet these challenges.

They have succeeded in achieving profitability and increasing productivity despite

the government‟s employment focus by adopting innovative practices that involve

the upgrading and close mentoring of small suppliers by large firms. An important

legacy of this older period is the creation of a set of institutions in the public and

private sector such as Council for Leather Exports, Central Leather Research

Institute and All India Skin and Hide Tanners and Merchants Association that

have played a critical role at each turning point in the industry.

Ingstav Ostrava, Marianske Hory, Czech Republic (2001)47

explained the

best practice for reducing the environmental problems associated with leather

production that can be applied throughout Croatia. The project established a model

for reducing the environmental pollution associated with leather production

through implementation of certain low-pollution processes such as salt trashing

and hair saving, the project demonstrates notable reductions in environmental

impacts and production costs. The project environmental benefits include

reductions in water and chemical consumption and wastewater pollution. Leather

industry should include pollution control costs in the price of their products in

37

order to stimulate investment in environmental protection and to balance the profit

level amongst tanneries.

Mammo Muchie (2001)48

examined that a comparative reference to the

Indian leather industry is also drawn as a lesson. The Kenyan government

withdrew support to its industries by shifting its policy from import substitution to

export promotion, while, the Indian state retained an intelligent engagement with

the liberalization trend, preferring to continue to protect some industries and

liberalize others. Indian government lowered import duties to support the leather

industry. A case of Jua Kali tanneries on analysis shows how the small scale

enterprises impact the environment.

GP Demonstration Projects (2001)49

reported that the Green Productivity

(GP) programs at Tanchem Industries and Nasser Tanning Co. showed that the

application of creative thinking can result in financial benefits for a factory while

allowing it to comply with regulatory requirements. One of the major

achievements of implementation of GP solutions was that the marketability of

products has increased by over 4.3 times. The unit‟s productivity also rose to

about 210 batches per annum. The implementation of GP at the two sites also

showed that a step-by-step program could provide an effective way for both

small-sized and medium-sized enterprises to generate green productivity options.

Consulate General of India (2003)50

explained that Hong Kong is the sixth

largest importer of Indian Leather and leather products in the world. Hong Kong

38

has three important leather trade fair events like Asia Pacific Leather fair, Fashion

and Finished products show and Raw materials and Manufacturing. The export

policy should allow to export all types of leathers including raw hides & skins,

semi- processed leathers such as East India tanned hides & skins, wet blue chrome

tanned leathers, crust leathers etc, without any restriction. The council for leather

export (CLE) serves as a bridge between Indian Leather exporters and buyers all

over the world. They can interact about the standards, rules and regulations and

technical details in the two standard regimes between India and Hong Kong and

create an option for common standards.

Allen Blackman and Arne Kildegaard (2004)51

described that original firm-

level survey conducted in cluster of small-scale and medium-scale leather

tanneries in León, to econometrically identify the factors that drive the adoption of

two clean tanning technologies. Recycling is reusing the contents of the chrome

bath instead of discharging them into the sewer after a single use. The finding

suggests that efforts to promote clean tanning technologies should be as successful

among the SMEs that dominate industrial clusters as they are among large firms.

Findings suggest that the private-sector institutions can play a key role in

facilitating improved environmental performance through less coercive means

such as technical assistance.

Sankar U (2005)53

stated that leather industry which is perceived as a

highly polluting industry. The objective of the study is to study the global supply

39

chain of the leather industry from raw material stage to finished product stage and

identify temporal and cross-country changes at various stages, to review the

policies and practices adopted by other exporting countries in coping with

domestic and global environmental requirement etc. The Government can ease the

pollution burden by offering low interest loans on plant and equipments and

providing subsidies on activities which yield external benefits. Government can be

a facilitator to reap the gains of trade liberalization and also improve the quality of

domestic environment.

Elisabeth Farmer (2005)54

analysed that penetrate into global market

Ethiopian Leather and Leather Products Industry had overcome the constraints at

all levels of value chain. Vertical inter-firm linkages are one of the most promising

developments with the introduction of subcontracting between Ethiopian

manufacturers and foreign manufacturers/distributors, but such linkages are few. It is

difficult for Ethiopia to compete with countries such as China and India in the mass

market. To expand existing markets and identify new markets, they have to promote

clustering, support existing branding efforts and integrated Ethiopian leather sector.

Tewari, Meenu and Poonam Pillai, (2005)55

stated that the process of

negotiated collective action and environmental compliance are dominated by small

firms. The government focused to reduce cost by substituting the chemicals and in

longer term technology transfer and technical assistance. These helped lower the

cost to the small tanneries and the extensive technical assistance that small tanners

40

received from the chemical companies helped sustain their switch to the

substitutes. Bilateral negotiations between the standards imposed and buyer

governments helped facilitate the transfer of technology, funds and infrastructure

from the standards setting country to supplier country by which it benefits the

entire sector and help in costs of the country.

Waste generation and the disposal of waste form part of our everyday lives,

even more so for industries such as tanneries. Solid waste streams originate from

the splitting of the hides and as a result of the effluent treatment plant. Therefore

Carol Hooghiemstra (2005)56

suggested that sustainable options should be

investigated and these include reduction, reusing and recycling of waste. Waste

management at the tanning facility forms part of environmental management and

good housekeeping. Future legislation may force an industry to demonstrate its

commitment to waste minimization by going through the process of classifying

and delisting the waste sludge. The purpose for delisting the waste was to dispose

of it to a general landfill site at Rosslyn as opposed to the current arrangements to

dispose of it to the hazardous landfill site. The motivation for changing the disposal

from a hazardous to a general landfill site was based on the waste disposal costs that

would be reduced without taking into account the transport costs.

Palanisamy, Jonnalagadda Raghava Rao, Balachandran, Thirumalachari

Ramasami (2005)57

summarized that the leather processing methods was rationale

for environmental problems. The success of cleaner technologies depends on the

41

following factors: (a) reduction of pollution in terms of quantity and quality,

(b) tanners' benefits in terms of leather quality improvement and/or cost reduction,

(c) reproducibility of the process, (d) cost effectiveness to be economically viable,

and (e) wide market opportunities. Approaching the zero-discharge value is an

intellectual as well as a global challenge. State-of-the-art technologies comprising

both in-plant and end-of-pipe treatment solutions have been reviewed for their

technical suitability and commercial feasibility. It turned out that a combination of

both technologies is essential for protecting the leather industry from environmental

consequences.

Export-Import Bank of India (2006)58

reported that hides and skins are the

basic raw materials for the leather industry, which originate from the source of

livestock. Export-Import Bank of India (Exim Bank) has helped the leather

exporting units to modernize and upgrade their production facilities, install

pollution control and environmental safety systems of internationally accepted

standards and develop export market for value added products through strategic

export market development plans. Exim Bank implemented Agency Line of Credit

and Export Development Project, joining hands respectively with International

Finance Corporation (IFC), Washington and the World Bank to support small and

medium enterprises in the leather sector. Composition of Indian leather exports

has undergone a radical change, from being a mere exporter of raw hides and

skins, to a status of an exporter of value added leather products. Strategies for

42

Indian Leather Sector are Shifting of Manufacturing Base, Government Support,

Strong Production Base, and Investment by Large Corporate, New Markets,

Diverse Marketing Techniques, Enabling Infrastructure, Fairs and Exhibitions and

Training Facilities.

Mrs. Anamika Singh (2006)59

research has been made on the processes

involved in tanning. Problems of tanneries are environmental pollution due to lack

of facilities for treatment and disposal of hazardous wastes, lack of financial

assistance, high cost of semi-tanned leather, unhygienic working conditions

leading to health hazards for the workforce, lack of facilities for quality testing.

Supply Chain of leather goods which includes animals that are slaughtered in

various suburbs of Mumbai, wholesalers in turn sell the tanned leather to leather

goods manufacturer in Mumbai, transportation cost of skins and hides to Kanpur /

Chennai, transportation cost of leather chemicals, State / Central Government‟s

sales tax/value added tax, Octroi / Entry tax to the State Governments, profit

margin and commission of intermediaries. In conclusion the clustering can help in

controlling the cost of tanned leather, which is a major input for leather goods.

This will not only bring cost advantage to the leather goods manufacturer, but also

save fuel for the nation. The Government of Maharashtra has taken the initiative of

developing a special zone.

D S Yadav and Rajeev Aggarwal,(2007)60

say that Tamil Nadu is the biggest

leather exporter in the country accounting for 43 percent of the country's share.

43

Availability of low-cost skilled labour force is one of the advantages of this sector

in India. The liberal licensing policy of the Indian government is also an

advantage. The key policy initiatives include: delicensing of integrated tanneries

that convert raw hides and skins into finished leather. The government has

announced certain concessions on imported specified machinery and chemicals for

the purpose of improving the quality of leather products. The government has

withdrawn duty on export of raw hides and skins, semi-finished leather, and

leather products to make the leather industry more competitive. The council of

leather export serves as a bridge between Indian leather exporters and buyers all

over the world.

Sustainable Industrial Networks and Its applications on Micro Regional

Environmental Planning (SINET) (2007)61

report identifies the leather industry

network like livestock, slaughter houses, raw Hide/Skin Collection, tanning

Industry, leather Industry, other allied Industries and export Market. The leather

industry can benefit from several characteristics of the Indian market which

includes availability of low-cost skilled labor, abundance of raw material and

availability of supporting institutions. Demand for leather products was advantage

is large and growing domestic market and Regulatory / policy-related advantages

are Government Regulation, Government Support and Licensing Policy. It is

concluded with SWOT Analysis of Indian Leather Industry. Scope is limited for

44

mobilizing funds through private placements and public issues, as many

businesses are family-owned.

United States Agency for International Development (USAID)/Ecuador is

in the process of initiating a new competitiveness program, focus on improving the

competitiveness of micro, small and medium businesses that use cluster and value-

chain activities in agriculture, industry, agro-industry and eco-tourism operations.

The technical assistance will include market intelligence information for market

and product diversification. Bernai Velarde, (2007)62

says that some of the major

activities that require funding under this proposed Guideline Daily Amounts

(GDA) activity. The GDA fund help in increasing the number of micro and small

producers that will join this value chain so that new products are developed and

sold to international buyers. The bulk of the resources will be used to finance

technical assistance and training to consolidate the leather cluster and increase its

suppliers and producers from a regional to a national level.

S M Uvaneshwaran, L Manaivanann and T Devasenathpathi,(2007)63

claim

that the leather entrepreneurs are one of the largest foreign exchange earners of

our country. Leather entrepreneurs are facing a lot of problems in the areas of

production, processing, marketing, finance and personnel. This study attempted to

identify the common problems faced by the leather entrepreneurs. For this

purpose, data were collected through questionnaires and analysed using Henry

Garrett Technique. The results of the study indicate that the most important

45

problems in each functional area such as inadequate funds to construct water

effluent treatment plants, delay in payment by the buyers, slow process in

sanctioning funds by bankers, unauthorized labour absenteeism, poor quality of

equipments and government restrictions.

International Finance Corporation (2007)64

report is about the

Environmental, Health, and Safety (EHS) Guidelines for Tanning and Leather

Finishing which include information relevant to tanning and leather finishing

projects and facilities, and specifically to operations related to preliminary

treatment of the raw hide, tanning processes, post-tanning processes, and finished

products manufacturing. The potential for increased efficiency through process

change is significant and should be clearly identified in the design of the facilities

and processes. General wastewater management measures and process

optimization in tanning facilities should aim to reduce the need and intensity of

end-of-pipe treatment through implementation of wastewater prevention measures,

including: reduction of water consumption through recycling of process streams;

use of „batch” instead of „running water‟ washes; segregation of wastewater

streams to improve treatment speed and efficiency.

Study of Leather and Leather Products Cluster of Chennai (2009)65

investigates the cluster entrepreneurs who are yet to explore BDS (Business

Development Services) options. There are constraints on the procurement front that

are apparent in terms of absence of warehousing options in Chennai. Many micro and

46

small tanners experience constraints with regard to access to institutional finance to

secure inputs, e.g. working capital to procure raw hides and skin or finance for

unit upgradation. Many of the small tanneries remain as jobbers to larger firms.

Upgrading plans are also constrained. The compliance norms and costs leave the

industry uncompetitive without intervention.

United Nations Industrial Development Organization (2009)66

diagnoses

the emergence of Madras as a major trading center for leather during the British

rule inspired the people in the trade to put up tanneries. Vaniyambadi, Ambur,

Pernambut and Ranipet, which fulfilled the basic requirements, attracted the

leather men. The phase of mechanization gained momentum in the seventies and

eighties with the introduction of chrome tanning, necessitated by the increasing

demand for chrome tanned leather in international markets. The Supreme Court

admitted the petition and directed the tanneries not only in Vellore district but also

in other parts of Tamil Nadu, to put up individual or common effluent treatment

plants and comply with the standards prescribed by the Tamil Nadu Pollution

Control Board (TNPCB) for treatment and discharge of effluents and disposal of

sludge. Consequently, tanneries are unable to use the groundwater within the

factory premises for processing hides and skins. They are now bringing water

from open wells and borewells in the upstream of Palar river 8 to 10 Kilometers

away from factories.

47

Patrice, Mariliz and Jorge (2009)67

evaluate the use of water during the

processing of hide into leather. They investigate the environmental impact on

water resources of tanneries in Rio Grand do sul state in Brazil, evaluating the

water demand and concentrations of certain chemicals in the waste water

discharged from the beam house, tanning and retanning processes of this industry.

Field research helps to formulate questions which could identify water

management problem in tanneries and the possible alternatives available to

improve tanneries. The IRGO(insufficient, regular, good and optimal) was applied

with collaboration from Association of Tanneries Industries and the results show

that there is a large demand for water in the process but very little water is reused.

The IRGO tool was shown to be efficient and dynamic in its application to the

tanneries, and each tannery could be quickly evaluated in terms of its current

situation and where it must arrive in terms of implementing processes which

address environmental concerns.

Arthur Harvey (2009)68

explains that vegetable tanning materials occur in

nearly all forms of plant life. They are used commercially where the amount of tan

is high and large quantities can be extracted economically. In leathers tanned with

oak bark the grain resistance to breaking load is higher than that achieved with any

other vegetable tanning. Union tanned leather is a combination of both hemlock

and oak bark as a tanning agent. The tanners of the time believed that mixing

hemlock and oak barks would produce leather of better quality than either bark

48

could do by itself. Pit tanning is when the leather is put in a pit dug into the ground

and covered with a combination of water and wood bark. The drawback to this

method is the amount of time it takes for the tanning process to complete.

Environmental Guidelines Part III: Micro- and Small Enterprises (2009)69

describes opportunities for mitigating those impacts, with an emphasis upon

“cleaner production” strategies that may also provide financial benefits to micro-

and small enterprises (MSEs). Cleaner production methods comprise of

substituting different materials, modifying processes, upgrading equipment and

redesigning products. In addition to environmental, health and safety benefits,

many cleaner production techniques provide opportunities to substantially reduce

operating costs and improve product quality. Identify opportunities to improve

efficiency.

IL&FS Cluster Development Initiative Limited (2009)70

is a diagnostic

study of Kanpur leather cluster that was conducted to identify the main concern

areas of interventions for developing a dynamic and sustainable market for

Business Development Services. Business Development Services (BDS) market is

very weak, unorganized and fragmented. As leather and leather product sector is

closely integrated with global market, a leather cluster has to remain competitive

so as to position itself in global and also in domestic market. It is concluded that to

ensure sustainability of BDS market for micro units in the cluster, the project has

to pursue interventions for capacity building especially, organizing these micro

49

units as networks and strengthening their backward and forward linkages for better

delivery of embedded services.

Javed Ahmad Chattha and M. Mobeen Shaukat (2010)71

intend to address

the environmental pollution problems in the leather-manufacturing sector of

Pakistan. The paper gives an overview about the environmental issues of tanneries

along with possible cost-effective remedies including recycling of different wastes

to solve these problems. This study is aimed at helping the local tanneries to

comply with National Environmental Quality Standards (NEQS), forthcoming

ISO14000, and to enable them to produce environmentally clean product.

Chemical recovery and reuse is an economically feasible alternative for the leather

sector. With their short payback period chemical recovery plants are financially

attractive options. Leather industry should make all attempts to reduce its impact

on environment by making every effort to reuse and recycle chemical compounds.

Report- Uttarakhand (2011)72

is about the fact that the Indian leather

industry has attained well-merited recognition in the international market besides

occupying a place of pride within the domestic market. The basic thrust of Indian

economic policy in the recent years has been to integrate the Indian economy with

the global economy and expose the Indian manufacturers to the global market and

competition. Leather and Leather Products as a sector has been given considerable

attention by the Government of India at various levels due to its inherent strengths

and prospective features. The entire leather sector is now de-licensed and

50

de-reserved, paving the way for expansion on modern lines with state-of-the-art

machinery and equipments. Zero Duty on the import of all types of raw materials,

embellishments and components, concessional duty on import of specified

machinery, liberal import-export of consumer products and components have been

introduced. Identification of this sector as a Focus Sector in the Foreign Trade

Policy 2004-09 to implement Special Focus Initiatives is a bold move towards

further upgradation of the leather industry.

H. Zahir, M. Ahmeduzzaman (2012)73

noted that Leather industry plays an

important role in Bangladeshi Economy due to its large potential for employment,

growth and export. At the same time, it poses serious environmental threats by

discharging liquid effluents and solid wastes directly into surrounding low-lying

areas without proper treatment. In a study of 2001, relatively high concentrations

of Chromium, Lead and Sulfide was identified in the groundwater in Hazaribagh

area but in another study of 2008 there was no sign of any contamination. This

paper describes a recent survey conducted in 2010 whose major objective was to

monitor the water quality of selected DWASA deep tubewells of Hazaribagh area

for the presence of contamination by tannery wastewater and to identify the trend

of change of water quality. A high concentration of chemical oxygen demand

(COD) (from 7.9 to 8.5 mg/l) was observed in the month of April in all wells of

Hazaribagh. Sulfide concentrations in some of the samples were found to be

excessively high, varying from 0.0-10.0 μg/l. Relatively higher concentration of

51

iron (0.0 to 1.2 mg/l) and ammonia (0.0 to 1.272 mg/l) were detected in some water

samples. EC concentration was higher for all the wells (300 μg/cm to 500 μg/cm).

The groundwater resources at Hazaribagh area that have been sampled in this

investigation mostly satisfy the WHO and Bangladesh drinking water standard for

the parameters tested in the study. But some elevated levels of COD, sulfide and

lead have been detected which may be a matter of concern.

Asiatic Society of Bangladesh (2012)74

reported that one of the rare

government studies to measure water quality in Hazaribagh was a 2008,

Department of Environment survey on industrial pollution. BOD and COD

concentrations found in the Hazaribagh samples were notably higher than those

from seven other industrial zones near Dhaka, and revealed that Hazaribagh

wastewater vastly exceeds Bangladesh‟s permitted standards for tannery effluent.

Tannery effluent also threatens the groundwater under Hazaribagh, although there

is no research showing negative effects on human health from this potential route

of exposure. However, the issue is particularly significant given that an estimated

95 percent of Dhaka city‟s water supply (used for bathing, cooking, and cleaning by

an estimated 14 to 15 million people) is derived from various groundwater supplies.

J.J. Beaumont et al (2012)75

stated that although the vast majority of

chromium detected in the 2001 study on Hazaribagh groundwater in trivalent

form, trace amounts of chromium were detected in hexavalent form. Hexavalent

chromium is much more toxic than trivalent chromium: inhaled hexavalent

52

chromium increases risk of lung cancer, while touching certain forms of

hexavalent chromium can cause dermatitis and skin ulcers. There is recent data

from China associating higher levels of hexavalent chromium in well water with

significantly higher rates of death from stomach cancer in humans. A study in

2006 reported lower concentrations of chromium in Hazaribagh groundwater than

the 2001 study. However, it did find that groundwater samples from Hazaribagh

were higher in sodium, magnesium, ammonium, chlorine, sulfate, and calcium as

well as chromium, copper, lead, aluminum, and sulfur than adjacent areas.

It warned that “there is the possibility of contamination of the deeper groundwater

in the future if protection of the soil and groundwater environment from untreated

tannery wastes is not considered.”

Mwinyikione Mwinyihija and William Quiesenberry (2013)

76 stated that the

leather sector is one of the most lucrative agro based industry in the world. The

hides, skins and leather sector is characterized with a long value chain with

multiple socio-economic dimensions such as enhanced employability, creation of

wealth and acts as a precursor towards rural development. However, Africa

contrasts this observation irrespective of having 21% of the global livestock

population. Notwithstanding, the continent also produces 14% of the hides and

skins production and an estimated 3.5% of value added leather and leather

products globally. In retrospect, total earnings for Africa translate to about

$4billion annually in comparison to a global earning of $100billion from the

53

leather sector. This scenario is indicative of the high losses, low value addition

initiatives and unexplored opportunities that are eminent in the continent„s leather

industry. Dilemma in translating negatives such as unexplored opportunities

(e.g. value addition, high demand of leather products, increased consumption per

capita etc.) to positives (e.g. availability of raw materials, qualitative increase of

population, improved regional and international markets etc.) forms the greatest

„bottleneck‟. Therefore, the inability to attain the potential accruals from the

leather sector, denied Africa the opportunity to tackle on important socio-economic

challenges such as employment, income generation, poverty alleviation and rural

development. The review envisages that the solution to the challenges experienced

lies in appropriate strategies, policy framework and prioritization by both the public

and private sector in enhancing value addition initiatives in Africa.

Mwinyihija, M (2014)77

noted that the leather sector in the world has shown

tremendous growth in recent times. In this paper a major shift on leather and

leather products development from Europe to Asia has been observed. Areas of

notable interest in the leading countries of the world indicates that total production

of leather is estimated 6.3billion Sqft for Europe (e.g. Italy, France, United

Kingdom etc) and 12.1 billion Sqft for Asian countries (e.g. China, India,

Vietnam, Korea, Japan etc). Other global regions such as South America

(0.83billion), North America (0.30billion) and Oceania (0.14billion) depict various

levels of production of leather footwear. For footwear (including synthetics)

54

estimation shows that there are 0.68 billion pairs in Europe and 9.98 billion pairs

in Asia. Currently Africa is not performing favourably, due to its weak legal and

policy framework, poor infrastructure and Government goodwill. However, there

are minimal reforms in some of the countries in the continent, seriously embarking

on value adding initiatives worth noting. The projections indicated in this paper

depict a very promising future where the continent will play a major role in leather

and leather products development by 2030 and beyond, however critical strategic

interventions need to be addressed and these could include appropriate leather

policies, capacity building, technology transfers based on adaptable research and

transformation of the sector to be more competitive and also rejuvenate awareness

in leather utility and associated benefits. This will be tangible once the initiative is

coupled up with loss recovery in the production chain, adoption of appropriate

leather processing techniques for high value products obtained from materials

sourced from free range and extensive animal husbandry systems. The future of

leather and leather goods will depend on how the sector is revitalized to became

more competitive and develop appealing products that will comfortably dislodge

the synthetics.

Research Gap

Even though, there are so many studies related to leather tanning,

operations management, only a few studies are related to leather tanning but the

scope is not confined to Vellore district. So far numbers of studies related to

55

leather industry are reviewed. However leather tannery is a less studied area

compared to leather industry. Leather tanneries in Vellore district is not explored

so far. Hence the study is undertaken. Hence, the present study focuses on the

various problems like power outage, operation process, marketing scenario, loan

facility, general problems and governmental policies for leather tanning industry.

56

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