My Perspectives on the Changing Role of Industrial and Systems Engineering in Contributing to the Sustainable Development Goals in the Industry 4.0 Era with special focuses on lean and green

1. Sustainability: A System Perspective
Prof. Dr. Ir. Akhmad Hidayatno ST MBT IPU

2. Prof Dr Ir Akhmad Hidayatno IPU
Professor and Head of Systems Engineering, Modeling and Simulation Laboratory
Industrial Engineering Department, Faculty of Engineering, Universitas Indonesia
Interest
• Technology Policy, Energy-Industry-Sustainability Transitions, Multi-method Modeling, and Simulation
• Technical Skills in Systems Thinking, Systems Dynamics, and Discrete-Event Processes Modeling
Copyrights
• Copyrights on several Serious Simulation Games, including Operation Management Game, Project Management Game,
Strategic Sourcing Management Game, and Integrated Maritime Planning Game (pending)
Selected Publications
• Examining the effectiveness of policies for developing battery swapping service industry. Energy Reports. 2023
• Investigating policies on increasing the adoption of electric vehicles in Indonesia. Journal of Cleaner Production. 2022
• Evaluating feed-in tariff policies on enhancing geothermal development in Indonesia. Energy Policy. 2022
• A model-based strategy for developing sustainable cosmetics small and medium industries with system dynamics, Journal
of Open Innovation: Technology, Market, and Complexity, 2021
• When and why does transition fail? A model-based identification of adoption barriers and policy vulnerabilities for
transition to natural gas vehicles. Energy Policy. Volume 138. March 2020.
• Investigating policies on improving household rooftop photovoltaics adoption in Indonesia. Renewable Energy, Volume
156, August 2020.
• A corporate sustainability maturity model for readiness assessment: a three-step development strategy. International
Journal of Productivity and Performance Management.
Association Member
• Member of Institute of Industrial and Systems Engineers (IISE)
• Member of INCOSE (International Councils in System Engineering)
• Member of System Dynamics Society (SDS)
• Member of International Simulation and Gaming Association (ISAGA)
Invited Examiners
• University of Queensland, School of Earth and Environmental
Sciences, Australia. A Study of the Greenhouse Gas Emissions from
Land Reclamation Activities in Jakarta, Indonesia
• Delft University of Technology TU Delft, Technology, Policy and
Management (TPM) Faculty, Belanda, Exploring the Evolution of
Biofuel Supply Chains: An Agent-Based Modeling Approach
• Eindhoven University of Technology TU Eindhoven, Department of
Industrial Engineering & Innovation Sciences, Belanda. Responsible
Innovation: from Concept to Application
Course Facilitated
• S1: Pengantar Teknik Industri, Keterampilan Interpersonal,
Pemodelan Sistem+Praktikum, Simulasi Industri+Praktikum,
Rekayasa Sistem Jasa
• S2: Berpikir Sistem, Metodologi Penelitian, Rekayasa dan Analisa
Sistem, Pemodelan Kebijakan Teknologi dengan Sistem Dinamis
2

3. • The System Perspective in Industrial and Systems Engineering (ISE)
• Sustainability Principles: the new required roles of ISE
• Look Holistically, Design Correctly, and Process Better
• Sustainability as Systems Perspectives: Re-Orient the Organization as a Systems

4. Controls
(Directive and
Constraints)
If we revisit the classic definitions of systems: processes that manage itself through feedbacks on the
required outputs
Input Process Output (IPO)
Model/Pattern is a classical
and widely used approach
to describe a system
Process
(A process is an integrated set of
activities that transforms inputs into
desired outputs.
Output
(Processed Data,
Products and
Services)
Input
(Data and Material)
Feedbacks
Constraints
Enablers
(Support, Resources, Tools,
Technologies)
The Importance of Context that
would create constraints
It is the base of why IE is
now easily moved to
systems into now ISE

5. (1) Design and (2) Install
Processes Output
Input
(3) Improve
Specify
Predict
Evaluate
Results
Man, Money, Machine, Material,
Methods (5M)+Information+Energy
Environment
Industrial Engineering is
concerned with the design,
improvement, and
installation of an
integrated system of
people, materials,
equipment, and energy.
It draws upon specialized
knowledge and skill in the
mathematical, physical,
and social sciences
together with the
principles and methods of
engineering to specify,
predict and evaluate the
results to be obtained from
such a system
The classical
representation of the
system is input
process output
feedback
System design, installation,
and improvement should be
based on the results or
expected results, which is
usually hard to specify
quantitatively. We usually use
5W+Hs to do this.
Results will be the basis of evaluation, which in
turn will guide the improvement process
The Processes will be grouped into what we usually called
5M. Since All production or services systems consist of 5M,
is what makes IE can work almost everywhere
IE must be able to simulate the
future predictions of the
design and improvement
IE uses the term install and not build
because, in systems, the build is
embedded in the meaning of install.
To be able to install means it is built
and ready to go operational
An integrated System
[Hidayatno 2022] 5
ISE Professions Definitions
can also be mapped as a
System

6. • The System Perspective in Industrial and Systems Engineering (ISE)
• Sustainability Principles: the new required roles of ISE
• Look Holistically, Design Correctly, and Process Better
• Sustainability as Systems Perspectives: Re-Orient the Organization as a Systems

7. And now the challenges of the systems in mind have grown into a macro level of complexity, and
demand for your roles has been increasing exponentially: creating a sustainable system
7
Increasing Population will increase Goods
and Services Demands
We only have one earth
to support the increasing population
Energy
Renewable
and Non-
Renewable
Social
Capital
Health,
Productivity
Economic
Capital
Infrastructure,
Production,
Services, dsb
Environment
Capital
Flora dan fauna,
Water, air,
Minerals
Jobs, Income
Productive Labor, Consumption
Conservation
Awareness and
Movements
Quality of
Life
Conservation
Investment
Natural
resources,
Pollution
Absorption

8. Let us begin by defining: What is Sustainability?
Brundtland Commission
Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs
Brundtland Comission (1987). Our Common Future. G. H. Brundtland. London, United Nations.
At Micro Level Corporations Translated this into multiple policies such as
Terms Definition
Community
Development
Development of the affected people surrounding the
corporation site of work (geographically bounded)
Corporate Social
Responsibility (CSR)
Actions to take responsibility for the impacts of its activities on
society and environment, consistent to their best interes
Sustainable Growth Critique: If there is no growth then there is nothing to sustain?
Business Ethics How the business is conducting their business based on sound
ethical considerations
Good Corporate
Governance
A formal documents consisting the intent of the organization on
becoming a good corporate citizen in this world
• Green Economy (vs. Brown Economy)
• Circular Economy
• Sustainable Development - with Goals
(SDG)
• UNIDO’s Sustainable Supply Chains
At Macro Level, Nations Translated this to
8

9. Sustainability is usually used at macro levels, and the Triple Bottom Line (3BL) is used in the micro levels
In the business community sustainability is coined “the
triple bottom line”, expressing that industry has to expand
the traditional economic aspects to include environmental
and social dimensions - to create a more “sustainable
business”. (Elkington 1997)
• The three pillars of sustainability: Economic, Social, Environmental
9

10. • The System Perspective in Industrial and Systems Engineering (ISE)
• Sustainability Principles: Changing roles of ISE
• Look Holistically, Design Correctly, and Process Better
• Sustainability as Systems Perspectives: Re-Orient the Organization as a Systems

11. ISE should respond by understanding that we need to create a more Sustainable Consumption and
Production
Design and Build Cleaner Production
• Lean and Green Production Systems
• Cleaner and Renewable Energy
• Sustainable Supply Chain Systems
• Triple-Bottom Line
• Life Cycle Thinking
• Life Cycle Analysis
Consume only what is needed
• Reduce, Reuse, Recycle
• Better Prediction and Forecasting
• Just in Time Consumption
• This concept of resource efficiency and effectiveness
11

12. ISE Could Responds to this challenge in 3 Groups
12
ISE must Responds this by ..
Less Waste, Less Resource,
Cleaner Processes, and Less
Impacts
Design the Right Product-Service
Systems at the beginning
Think in Life Cycles
Key examples
• Sustainable Value Chain Systems
• System Life Cycle Analysis
• End-to-End Analysis
Key Examples
• Design Thinking
• Value Thinking
• Human-Centered Design
Key Examples
• Green Manufacturing
• Green Logistics
• Cleaner Production
• Circular Economy
• Life Cycle Analysis
• Food Lost and Waste

13. • The System Perspective in Industrial and Systems Engineering (ISE)
• Sustainability Principles: Changing roles of ISE
• Look Holistically, Design Correctly, and Process Better
• Sustainability as Systems Perspectives: Re-Orient the Organization as a Systems

14. Systems have a Life Cycle that needs to be considered at all stages of aystems: from design to disposal
14
Systems Life Cycle
Life Cycle Model
Management
Infrastructure
Management
Portfolio
Management
Human Resource
Management
Quality
Management
Knowledge
Management
Organizational Project-Enabled Processes
Conceptual
Development
Stage
Engineering
Development
Stage
Operation
Stage
Retirement
Stage
Systems Perspectives and Thinking in Systems
1. Business or
Mission
Analysis
2. Stakeholder
Needs and
Requirements
Definition
3. System
Requirement
Analysis
4.
Concept
Definition
5.
Preliminary
Design
6.
Detailed
Design
7. System
Analysis
Process
8. Engineering
Process
9. System
Integration
10. System
Evaluation
11.
Production
12.
Operation
13.
Maintenance
14.
Retirement
and Disposal
Technical
Processes
Acquisition
Supply
Agreement
Processes
Technical Management Processes
Project
Planning
Project
Assessment
& Control
Decision
Management
Risk
Management
Configuration
Management
Information
Management
Measurement
Quality
Assurance
The Systems
Engineering Body of
Knowledge from
INCOSE grouped 4
Aspects of SE into
Technical, Technical
Management,
Organizational
Support for Projects,
and Agreement
Processes. It is
supported by
understanding the
Systems Life Cycle
and Systems
Thinking.

15. Why Processes? Not components, aspects, factors, or subjects .. because the core of a systems is a
process and the need to switch focus at different perspectives of system
• The primary processes can be dynamically change depending on the systems of interest
Systems of Interest (SOI) the
system whose life cycle is under
consideration.
Defining SOI is important before
the start of ISE Design or
Improvement Projects
SOI 1
WSOI
SOI2
SOI 2.1
Case 3: Re-Design the Processes of Sub-Systems 2 because of a new standard
The primary process is the Technical Process with the help of Quality Assurance.
Case 1 : Our Outsourcing Mechanism is not strong to support the company’s
growths
The primary process is the Agreement Process with support from IT infrastructure
Case 2: The Sub-Systems of HR are not adequate for a new level of
innovation
The primary process is the HR Process with the help of the Agreement Process
by inviting external consultants.
Human
Resource
Management
Knowledge
Management
Project
Planning
Acquisition
Acquisition
Quality
Assurance
Quality
Assurance
Quality
Management
Infrastructure
Management
15

16. This is because in Systems Perspectives the Helicopter Views is the fundamental views of system
analysis
Helicopter Views are the foundations of the ability to see something as a systems
It is important to use
helicopter views not just as
vertical views (Scale) but
also Horizontal view, so
you can have dynamic
views of the systems
16

17. As an example of life cycle approach, in one the primary methods of Systems Engineering there is a Vee Model that
pushes the systems designer to look ahead and reflects in each stage of systems development.
17
Left Side: How do
you want the systems
to operate and easy
to maintain will
generate Concepts of
Operations. We
called this
“projections”
Right Side: Let’s
always verify and
validate our work to
the left side. We
called this “reflective

18. Therefore for sustainability, ISE must now adopt the Life Cycle Thinking
• The main goal of life cycle thinking is to reduce resource use and emissions from/to the environment as well as to
improve social performance in various stages of a product’s life.
• In this way, companies can achieve cleaner products and processes, a competitive advantage in the marketplace,
and an improved platform to meet the needs of a changing business climate.
• The 6 REs
• Re-think the product and its functions. The product may be used more efficiently, thereby reducing use of energy and other
natural resources.
• Re-duce energy and material consumption throughout a product’s life cycle.
• Re-place harmful substances with more environmentally friendly alternatives.
• Re-cycle - Select materials that can be recycled, and build the product such that it is disassembled easier for recycling.
• Re-use - Design the product so parts can be reused.
• Re-pair - Make the product easy to repair so that the product does not yet need to be replaced.
18

19. Life Cycle Thinking would be the base of Life Cycle Management (LCM)?
• LCM is the application of life cycle thinking to modern business practice to manage
the total life cycle of an organization’s products and services towards more
sustainable consumption and production
• LCM is the systematic integration of sustainability, e.g., in company strategy and
planning, product design and development, purchasing decisions, and
communication programs
• LCM is not a single tool or methodology but a flexible integrated management
framework of concepts, techniques, and procedures incorporating environmental,
economic, and social aspects of products, processes, and organizations
• LCM is voluntary and can be gradually adapted to the specific needs and
characteristics of individual organizations
LCM is a dynamic process; organizations may begin with small goals and objectives with the
resources they have and get more ambitious over time.
[Hunkeler et al. 2004]
19
LCM, in this topic, is for
managing the product life
cycle, which usually managed
the progression of a product
through 5 distinct stages—
development, introduction,
growth, maturity, and decline.
The concept was developed by
German economist Theodore
Levitt, who published his
Product Life Cycle model in the
Harvard Business Review in
1965.

20. LCM Drivers
• Corporate strategy
• Expansion of product stewardship programs
• Competitive advantage: being at the forefront of
development
• Reduce costs: Increased operational and resource
efficiency
• Improve public reputation, image and general relations
to stakeholders
• Enhance product innovation: development and design of
new products
• Increased brand value (‘sustainable’ products)
• Market requirements
• Increased market share: advantages to ‘first movers’ on
sustainability issues
• Ability to focus on sustainability and go beyond the
production fence; e.g.
• Supply chain management (supplier evaluation)
• Communication in the value chain
• Environmental product declarations
• Financial sector requirements
• Increase shareholder value, to get a ‘Dow Jones
Sustainability Index’
• Less risky business with decreased liabilities
resulting in lower insurance rates and reduced fines
• New regulations or legislative demands
• Anticipate future legislative demands, e.g. ‘Take
back legislation’
• Joining eco-labeling schemes and green public
procurement programs
• Joining corporate social responsibility programs
20

21. The Map of LCM = Objectives, Strategies, Systems/Frameworks, Tools
LIFE CYCLE MANAGEMENT
Objective
Concept
Strategies
Tools
SUSTAINABILITY
LIFE CYCLE THINKING
Pollution Prevention
Product- and supply
chain management
Systems ISO 9001, TQM, EFQM
ISO 14001 & POEMS
Cleaner Production,
LCA, EcoDesign,
Management
Level
Social dimension Environmental dimension Economical dimension
EMA & LCC
Explanations: OHSAS = Occupational Health And Safety, POEMS = Product Oriented Environmental
Management System, TQM = Total Quality Management, EFQM = European Foundation for Quality
Management, LCA = Life Cycle Assessment, EMA = Environmental Management Accounting, LCC =
Life Cycle Cost Analysis.
Work place assessment
Corporate social
responsibility
OHSAS 18001
21

22. So, where Industry 4.0 helps in this? Examples
• Traceability, Visibility, and Real-Time Monitoring Across Supply Chains
and Life Cycle
• Using IoT, Data Analytics, Block Chain Technology, and Industry 4.0
technologies enables real-time monitoring of production processes,
logistics, and inventory levels. This real-time visibility allows
stakeholders to track products, materials, and their associated data
anytime during production, usage, and disposal.
• Data Analytics
• Data analytics can provide valuable insights into product performance,
usage patterns, and customer feedback after selling the product. By
analyzing customer usage data, product performance data, and
feedback, manufacturers can identify areas for improvement and
prioritize future product enhancements. By analyzing energy
consumption, waste generation, and product lifecycle assessments,
manufacturers can identify opportunities for energy efficiency, waste
reduction, and material optimization.
• Supply Chain Integration
• Industry 4.0 facilitates the integration and synchronization of the
manufacturing process with the broader supply chain. Manufacturers
can collaborate closely with suppliers, customers, and logistics partners
through real-time data sharing and visibility.
22
• Digital Twins
• Digital Twin: Digital twin technology creates virtual
replicas of physical manufacturing assets, such as
machines, production lines, or entire factories. These
virtual models enable real-time monitoring, simulation,
and optimization of manufacturing processes. Digital
twins help manufacturers identify bottlenecks, test
different scenarios, predict outcomes, and optimize
production parameters for better performance and
productivity.
• Simulation
• Using Life Cycle Analysis Methods, we could simulate the
total environmental impact of our products and services.
(Life-cycle analysis (LCA) is a method in which the energy
and raw material consumption, different types of
emissions, and other important factors related to a
specific product are measured, analyzed, and summoned
over the product's entire life cycle from an
environmental point of view. )

23. Systems should fit the needs of the market.. Don’t produce something that the market does not need
• Switching from delivering products or service to delivering value
23
Value:
Is not just price vs performance
It is about what is expected and
what is delivered
Delivering Value means
delivering service/products that
fits the need of the customer
I am selling Coffee
I am adding Value of
Enjoying Coffee
I am building Cars
I am delivering Value
of Personal Transport Thinking in Value:
Opens up new ways of
improving your products and
services because it creates a
better understanding of what the
customer needs and wants
Delivering value to
customer is hard, because
customer is Subjective,
Changing and not easily
Satisfied
So Why don’t we Creating
the Value with the
Customers
Examples:
Value Co Creation

24. What type of Systems Realization is the focus of ISE?
• Three Generic Groups of Systems Realization in ISE
Product Systems Engineering Service Systems Engineering Enterprise Systems Engineering
Product systems engineering (PSE) is
at the core of the new product
development process (NPDP) that is
needed to successfully develop and
deploy products into different market
segments. A market can be consumer
based (e.g., private enterprises or
general consumers) or it can be public
(not-for-profit). Public markets address
the strategic needs of a country or
region, such as military, healthcare,
educational, transportation, and
energy needs.
The SoS consist of Product, Product
System, Product Realization System
and Product Sustainment System
Service System Engineering is a
multidisciplinary approach to manage and
design value co-creation of a service
system. It extends the holistic view of a
system to a customer-centric, end-to-end
view of service system design.
Primary Method is service systems
development process (SSDP):
1 Service Strategy/Concept,
2 Requirements Analysis and Engineering,
3 Systems Design/Development,
4 Service Integration, Verification &
Validation,
5 Service Transition/Deployment,
6 Service Operations/Continuous Service
Improvement (CSI)
Enterprise systems engineering (ESE) is
the application of systems engineering
principles, concepts, and methods to
the planning, design, improvement,
and operation of an enterprise.
It is worth noting that an enterprise is
not equivalent to an "organization”
24

25. First, ISE designers must better immerse themselves into what the customer is thinking
• This is called Design Thinking
25
interaction-design.org
Design thinking is a problem-solving approach that emphasizes understanding user
needs, generating creative ideas, and developing practical solutions.
It is a human-centered and iterative process.
The core principles of design thinking involve empathizing with the users, defining
the problem, ideating potential solutions, prototyping and testing those solutions,
and iterating based on feedback.

26. Then.. If possible.. Identify and Create the Value together by using Value Co-Creation
26
Value co-creation is a joint process on
a co-creation platform involving a
service provider and a customer,
where the service provider's service
(production) process and the
customer's consumption and value
creation process merge into one
process of direct interactions.

27. So, where Industry 4.0 helps in this? Examples
• Data Analytics
• Data analytics aids in understanding customer behavior, preferences, and buying patterns. By analyzing customer data,
social media sentiment, and market trends, manufacturers can tailor marketing strategies, optimize pricing, and target
specific customer segments more effectively. Data-driven insights help identify new features, optimize product
functionality, and stay ahead of customer needs and market trends. In developing new products, this data-driven
approach helps create products that better meet customer needs, reducing the risk of costly design errors and
improving the success rate of new product introductions.
• Product Simulation
• Using CAD – Computer Aided Design, we can create digital prototypes quickly so the customer can confirm on how it
looks
• Additive Manufacturing (especially for Rapid Prototyping)
• Industry 4.0 promotes the adoption of additive manufacturing, commonly known as 3D printing. 3D printing allows the
production of complex and customized parts with reduced lead times and costs. It enables on-demand manufacturing,
rapid prototyping, and the ability to create on-site spare parts, enabling greater flexibility in production.
27

28. • The System Perspective in Industrial and Systems Engineering (ISE)
• Sustainability Principles: Changing roles of ISE
• Look Holistically, Design Correctly, and Process Better
• Sustainability as Systems Perspectives: Re-Orient the Organization as a Systems

29. Produce in less waste and cleaner .. by adding the impacts of waste to the environmental impacts
• Lean Production is GREEN… REALLY?
29
Waste prevention
Cleaner Production
Source: based on a diagram by David Newby ERM
Lean is not green, as its main
objective is to maximize customer
value. It is not necessary that
customer value matches
environmental issues. They believe
that Lean achieves sustainability by
accident, not because it is its main
concern

30. So how to make lean is also green?
• By making sure the systems aiming and directed to the green goals
30
Indicators of
Performance
Controls
Context + Environment
Process
(A process is an integrated set of
activities that transforms inputs into
desired outputs.
Output
(Processed Data,
Products and
Services)
Input
(Data and Material)
Feedbacks
Constraints
Enablers
(Support, Resources, Tools,
Technologies)
Outcomes
(Accumulated
Outputs, Longer time
period)
System Goals
System Boundaries
System Structures
Strategy
Vision Mission
Values

31. What Processes must Exist in Organizations
• Processes can be grouped as
31
Technical
Sub-System
Knowledge
Techniques
Facilities
Equipment
Goals and Values
Sub-System
Culture
Values
Overall goals
Group goals
Individual Goals
Tasks
Workflow
Workgroups
Authority
Information Flow
Procedures & Rules
Structural
Sub-System
Human Resources
Attitudes
Perceptions
Motivation
Group Dynamics
Leadership
Communication
Interpersonal Relations
Psychosocial
Sub-System
Managerial
Sub-System
Goal Setting
Planning
Assembling Resources
Organizing
Implementing
Controlling
• Model-Based Management: Using
Models to Find Ideal State as the
Objectives, Compare with Current State,
Identify Gaps for Improvement
people
technology
material
equiptment
processes
information
industrial
systems
people
technology
material
equiptment
processes
information
industrial
systems
industrial
systems
Compare
Ideal model current
Gaps for
Improvement
Environmental Systems
Product and
Management
Standards
Market
Pressure
Rules and
Regulations

32. Translating this into frameworks of sustainability – Why we need them
A framework could help you as an “ideal mirror”, you could reflects from the model
and its explanations onto your organizations. You could see your organization
strength and weaknesses. You would also find where to start improving your
organizations
Frameworks could explain the multi-dimension aspect of multiple measurement
Multidimension of multiple measurement could came from
• Globalization (Geographical Dimension) = Different areas (country) sees a measurement
differently
• Time = Yesterday it is okay, today it is questionable
• Functions = You could comply to regulations, but your cost is getting higher (tradeoffs)
• Aspects = which aspects (eg social) that must come first
Complexity regarding these is better explained using a good framework. How each of
measurement is related to other measurement
Frameworks serves a Model of how the corporations should ideally work
32

33. We must aware of the Multidimensional Aspects of
Objectives/Organization Measurement
33
Bagaimana agar setiap individu bekerja dengan arah yang
sesuai dengan arah organisasi secara efisien dan efektif
(Performance Appraisal)
Kinerja Produk biasanya diukur dalam konsep kualitas produk
dengan menggunakan standar (product standard) sebagai patokan
kinerjanya
Bagaimana agar suatu fungsi/kelompok yang strategis dapat
bekerja-sama secara efisien dan efektif sesuai dengan arah
organisasi (termasuk didalamanya kompetisi yang sehat antar
kelompok)
Bagaimana memformulasikan, menginterpretasikan dan
menjabarkan arah, tujuan dan sasaran kedalam semua skala
organisasi
Kita tidak bisa bekerja sendiri, jadi harus bekerja sama.
Bagaimana menciptakan jaringan yang memiliki tujuan
yang selaras dengan tujuan organisasi kita
Jangka Panjang – Long Term Goals
Menengah/Medium
Pendek/
Short
Menengah/Medium Menengah/Medium
Pendek/
Short
Pendek/
Short
Pendek/
Short
Pendek/
Short
Pendek/
Short
Pendek/
Short
Pendek/
Short
Pendek/
Short
How organizations reduce
the carbon footprint of its
operations?
How individuals or team grows
in organizations through
Coaching, Rewarding,
Disciplinary Action,
Performance Appraisal,
Documenting performance
Have the right
equipment and tools
available for an
efficient and effective
operations
How information
flows in the right
time, the right way
to the right persons
How all processes in the organizations is
aligned with the goals of the organizations
Have we managed
money as
accordance to
standards?

34. Framework A:
Epstein’s Corporate Sustainability Model
Epstein, M. J. (2008). Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social,
Environment and Economic Impacts. Making Sustainability Work. Sheffield, UK, Greenleaf Publishing Limited.
External
Context
Internal
Context
Business
Context
Human and
Financial
Resources
Leadership
Sustainability
Strategy
Sustainability
Structure
Sustainability
Systems,
Programs,
and Actions
Sustainability
Performance
(may be both
an output and
outcome)
Inputs Processes Outputs
Stakeholders
Reactions
Long-term
Corporate
Financial
Performance
Outcomes
Feedback Loops
34

35. Framework B:
Blackburn’s Sustainable Operating System (SOS)
Drivers
Blackburn, W. R. (2007). The Sustinability Handbook: Complete Management Guide to Achieving Social, Economic
and Environment Responsibility. London, Earthscan.
Drivers Efficient Enablers Pathway Evaluators
A champion/leader Organizational Structure Vision, Values and Policy Indicators and Goals
Approach for selling
management on
sustainability
Deployment and
Integration
Operating Systems
Standards
Measuring and Reporting
Progress
Accountability
Mechanism
Stakeholder engagement
and feedback
Organization
Drivers
Efficient Enablers
Pathway
? 
Evaluators
? 
Sustainability
35

36. Framework C: “Show Me the Money” Model, which try to translate the sustainability programs to
business values
Elements Affected by
Sustainability Program
Sales and Cost Factors Economic and
Business Values
Reputation
Innovation
Addressing Sustainability Trends
Meeting Customer Needs
Employee Relations, Morale
Workplace Safety
Waste Prevention, Energy Efficiency
Risk Control
Governmental Burden
Community Relations
Waste Prevention, Energy Efficiency
Sustainable Supply Chain of Materials
History of Meeting Commitments
Business Practices
History of Meeting Commitments
Reputation with Ethical Investors
Governance/Risk Management
History of Meeting Commitments
Safety and Quality of Products
Legal Compliance
Fair Dealing
Reputation, Brand Strength
Competitive, Effective,
Desirable, Products &
Services; New Markets
Reputation
Productivity
Supply Chain Cost
Cost of Capital
(Lender and Investor Appeal)
Legal Liability
Operational Burden,
Interference
Cost
Profits
Cash Flows
Stock Price
Sales
Stock
Dividends
36

37. How to use The Framework Models
Get the big picture first
Start by getting the big picture from the author. Each authors have different backgrounds and
experience, this is reflected in their framework. Then focus on where the framework start, the
processes and expected results. Looking at how mature are you
Where components in the model that I do not have? How important are they?
Do you have a function that you currently not have in your organization structure? Certain procedure
or system? Do they must have, nice to have, or not necessarily available?
How the components should be improved?
Within the timeframe that you have. Can we obtained or develop the necessary competence? Can we
improve the components? How? Could we maintain the current level that we have?
Why?
This a probably the last and most important questions that guide you to understanding the
frameworks. Is it because your company wants to get an external certifications? Do the company want
to become a good corporate citizens? Do you company’s market is demanding sustainability.
37

38. What the Frameworks have in common
The Importance of Leadership
Leadership is needed because sustainability movement sometimes requires “a leap of faith” and discipline, due to
consistent investment and the long timeframe of results
Performance Metrics is necessary
The balancing act of managing economy, social and environment is best describe by the metrics to measure them.
Similar to Balanced Scorecard, the corporations must balanced the short term gain and long term benefits achieved
by sustainability efforts. They must balanced between internal measures (Shareholder) and external measures
(Stakeholders).
Put the business Perspectives Front and Center
In the end, corporations has to make money, hopefully responsibly. Therefor, event the focus is in social and
environmental factors, the bottom line is still important
Illustration is in the next slide
Performance Metrics for non financial is based on Risk Management
Risk Management is the basis on the development of the non-financial measurement
38

39. Management by Objectives (MBO)
• Is a systematic and organized approach that allows
management to focus on achievable goals and
attain the best possible results from available
resources
• Aims to increase individual and organizational
effectiveness by aligning organizational goals and
subordinate objectives
• Clarifies and quantifies objectives to allow for
monitoring, evaluation, and feedback throughout
the hierarchy of objectives
• Peter Drucker, (1954, “The Practice of
Management”)
• MBO emphasises the importance of objectives as a
tool to be used by managers in fulfilling their
managerial roles (accomplish their tasks)
• Divide problem into manageable, “bite-size”
chunks
39
Vision
Mission
Tactical
Plans
Management
By Objectives
Operational
Plans
Standing
Plans
Single-Use
Plans
Top
Managers
Middle
Managers
First-Level
Managers
• Single-use Plans are developed to achieve objectives that are not likely to be
repeated in the future. Single-use plans include both programs and projects.
• Standing Plans are used to provide guidance for tasks performed repeatedly within
the organization. The primary standing plans are organizational policies, rules,
and procedures.
• Operational Plans are used to identifies specific results to be accomplished within
a given short term time period. Detailed day to day operations

40. The Challenges of Complex Multi Dimension Organization Measurement - What to Measure?
40
Intent
Output
Outcomes
Impact
I want to make people smarter by
creating a seminar.
The Seminar was attended by 120
people. I have made 120 people
smarter.
From 120 people, 80 people have
improved their “test” scores.
From 120 people, 20 has passed
the “national test”
Prove: Strategic Plan,
Budget Allocation
Prove: Activity Report,
(Absent List)
Prove: Survey (Test Scores
Report)
Prove: Survey, Test
Reports
Internal Measurements
The Plan
External Measurements
Time Evaluation: Long
This is the focus of Sustainability
Measurement
External Measures
Time Evaluation: Short
Internal Measures
Time Evaluation: Short
Process
The Seminar is guide by a detailed
manual, distinguished speakers,
and candidate selection process
Prove: Activity Report,
(Absent List)
Internal Measurements
Process Control
Input
I have allocated a plan and budget
for mind technique seminar
Prove: Annual Plan,
Budget Allocation
Internal Measurements
Creating and Providing the input
Harder
to
Measure
Harder
to
Manage
Longer
Time
Period

41. So, where Industry 4.0 helps in this? Examples
41
Logistics 4.0 (Vertical Integrations)
Internet of Things
Cyber Security
Could Computing
Big Data and Analytics
Advanced Analytics
Simulation
Advanced Manufacturing Systems
Cyber Physical System
Autonomous Systems
(Robots & Material Handling)
Human Machine Interfaces
Digitation and Automation of knowledge work (AI)
Smart Connected Sensors
Advanced Materials
Mobile and Wearable Devices
Augmented Reality
Efficient
Effective
Excellence
1
E
2
E
3
E E
E
E
Effective is result based (Doing the
Right Things). It is also known as
Customer Oriented. The Customer do
not care about your process, they
want results.
Efficient is Process Based (Doing
Things the Right Way). You must
continuously improve your process
to reduce resources consumption
without reducing results
Excellence is the product of both Es:
doing the right things the right way.
This is the ultimate goal of a world
class institution
1
2
3

42. It is the responsibility of ISE to bear the burden of sustainability in what we do.. by
42
Less Waste, Less Resource,
Cleaner Processes, and Less
Impacts
Design the Right Product-
Service Systems at the
beginning.
Think in Life Cycles
There is a sufficiency in the world for man’s needs but not for man's greed.
Gandhi
To waste, to destroy our natural resources, to skin and exhaust the land instead
of using it so as to increase its usefulness, will result in undermining in the days
of our children the very prosperity which we ought by right to hand down to
them amplified and developed.
Theodore Roosevelt
“The greatest threat to our planet is the belief that someone else will save it.”
Robert Swan

43. Sustainability: A System Perspective
Prof. Dr. Ir. Akhmad Hidayatno ST MBT IPU