• International Journal of Technology (IJTech)
  • Vol 13, No 3 (2022)

Institutional Development in the Supply Chain System of Oil Palm Agroindustry in South Kalimantan

Institutional Development in the Supply Chain System of Oil Palm Agroindustry in South Kalimantan

Title: Institutional Development in the Supply Chain System of Oil Palm Agroindustry in South Kalimantan
Hesty Heryani, Agung Cahyo Legowo, Noor Ridha Yanti, Marimin, Sapta Raharja, Machfud, Taufik Djatna, Sri Martini, Taufik Baidawi, Irawan Afrianto

Corresponding email:


Cite this article as:
Heryani, H., Legowo, A.C., Yanti, N.R., Marimin, Raharja, S., Machfud, Djatna, T., Martini, S., Baidawi, T., Afrianto, I., 2022. Institutional Development in the Supply Chain System of Oil Palm Agroindustry in South Kalimantan. International Journal of Technology. Volume 13(3), pp. 643-654

238
Downloads
Hesty Heryani Department of Agro-industrial Technology, Faculty of Agriculture, University of Lambung Mangkurat, Banjarbaru 70714, Indonesia
Agung Cahyo Legowo Department of Agro-industrial Technology, Faculty of Agriculture, University of Lambung Mangkurat, Banjarbaru 70714, Indonesia
Noor Ridha Yanti Department of Agro-industrial Technology, Faculty of Agriculture, University of Lambung Mangkurat, Banjarbaru 70714, Indonesia
Marimin Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Sapta Raharja Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Machfud Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Taufik Djatna Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Sri Martini Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Taufik Baidawi Department of Agro-industrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University, Bogor 16002, Indonesia
Irawan Afrianto Department of Computer Science, Faculty of Mathematics and Natural sciences, Bogor Agricultural University, Bogor 16002, Indonesia
Email to Corresponding Author

Abstract
Institutional Development in the Supply Chain System of Oil Palm Agroindustry in South Kalimantan

Developing oil palm agroindustry in South Kalimantan involves internal and external factors for its sustainability. The long distance of each stakeholder requires a digitally connected system. The research aimed at identifying criteria, sub-criteria, and alternatives in the developed network model, determine the sensitivity to determine the relevance of actor's role, determine the effectiveness and efficiency before and after implementation of the system, and analyse the level of certainty and importance of assumptions developed. The methods used were surveys, focus group discussions, and questionnaires. Experts in the Analytical Network Process (ANP) method were from academia, business, society and government. Supply Chain Operation Reference (SCOR) method to analyse supply chain performance involved 178 respondents. The level of certainty and importance of assumptions was with Strategic Assumption Surfacing and Testing (SAST). The results of the analysis show there was an interdependence between the sub-criteria on the specified criteria and alternatives applied to achieve the goals. Pairwise comparisons showed the highest sub-criteria cluster was the replanting program with a weight of 0.662, for alternative cluster the highest priority weight in the system involving all actors playing a role was 0.391, with relevant sensitivity test results. The results of the analysis of effectiveness and efficiency before and after implementation of the system showed an increase in SCOR value for all actors. The results of SAST analysis were in Quadrant I with the highest level of importance and certainty of 7.6 meaning very important and certain. The implications of the research results can be seen in fostering the use of technology in realizing transparency, especially regarding the price, quality, and traceability of fresh fruit bunches, the realization of a monitoring system for policymakers and capital assistance for independent oil palm smallholders.

Analytical Network Process (ANP); Effectiveness; Efficiency; Strategic Assumption Surfacing and Testing (SAST); Supply Chain Operation Reference (SCOR)

Introduction

    The agricultural sector, especially the oil palm plantation sub-sector, is experiencing rapid growth and involves the community, especially independent oil palm smallholders, on a large scale. On the other hand, the development of the CPO processing industry and  its derivatives is in line with the growth in plantation areas and palm oil production as a source of raw materials for the cooking oil industry, industrial oil (cocoa butter substitute, margarine/shortening, oleo chemical, and soap) and fuel (biodiesel) (Lee et al., 2014; Hasibuan et al., 2018; Hidayati et al., 2018; Syahza & Asmit, 2019).

    Based on data from the Central Statistics Agency (BPS) in 2019, 7.94 million hectares (54.42%) of oil palm land were controlled by private plantations, 6.04 million hectares (41.35%) by smallholders, and 0.62 million hectares (4.23%) by large state plantations. Palm oil production in 2019 was 30.06 million tons of Crude Palm Oil (CPO) (62.08%) from private plantations, 16.22 million tons (33.51%) from smallholder plantations and 2.13 million tonnes (4.41%) from large state plantations. The area of oil palm plantations in South Kalimantan reaches 497,261 ha, with Tanah Bumbu Regency reaching 73,865 ha, then Tanah Laut Regency reaching 73,121 ha (BPS, 2020).
    Generally, Oil Palm Mills (PKS) obtain fresh fruit bunches (FFB) from plasma plantations, secondary cooperatives, independent oil palm farmers, and FFB traders. Independent smallholders are responsible for producing FFB for sale to mills (Matondang et al., 2020), however, independent smallholders are less informed than plasma smallholders (Alwarritzi et al., 2015; Marimin et al., 2020). For this reason, it is necessary to develop a system and strengthen institutions. Institutional development and supply chain systems strengthen organization's partnerships which work together during a business process in managing operations contributing to improved performance in individual supply chains for national and global economic development (Peters et al., 2011; Kauppi, 2013).
    Currently, the traceability system supports supply chain sustainability management in two ways. First, production areas connected to the supply chain and second, identification of key actors operating in a given supply chain including producers, traders, shippers and consumers who are able to produce more cost-effective and coordinated interventions (Godar et al., 2016).
The various supply chain management (SCM) concepts have attracted the attention of several researchers conducting a supply chain assessment known as Leagile Supply Chain (LASC), information sharing (IS) and supply chain performance dimensions (Abdulameer et al., 2020) and market orientation, supply chain management of an industry (Ashari et al., 2018). Integrated supply chain collaboration for business performance based on a working model for strategic planning and operational multi-criteria analysis can use the Analytic Network Process method in comprehensive decision making (Dano et al., 2019; Aritonang et al., 2020; Heryani & Yanti, 2020). Jeon et al. (2017) and Rahmanda et al. (2017) use ANP as a supply chain collaboration for e-business performance-based framework to bring organizations to achieve competitive advantage.
 This study aimed at identifying criteria, sub-criteria, and alternatives in the network model developed according to the goals set and to analyse the relevance of the roles of the actors by conducting a sensitivity test. The next stage was analyzing the supply chain performance of independent smallholders to determine the effectiveness and efficiency before and after implementation as well as analyzing the level of certainty and importance of the assumptions developed in the institutional network model of the palm oil supply chain system of independent smallholders in South Kalimantan. 

Conclusion

    Based on the results of pairwise comparisons on the network model, the highest priority weight for the sub-criteria cluster, namely the replanting program on government regulatory criteria, is 0.662. The alternative strategy with the highest priority weight is a system which involves all actors playing a role of 0.391, a policy brief refers to an area of 0.326, arrangements between parties involving traders with standard prices are set at 0.200 for third place and arrangements between parties without involving Traders are 0.081 in the final rank. The sensitivity test results of actor involvement as a priority in the network model are relevant.  The results of the analysis of effectiveness and efficiency before and after implementation show an increase in the SCOR value for all actors. The results of the SAST analysis are in quadrant I with the highest level of importance and certainty at a value of 7.6 which means very important and definite. It means that the assumptions applied are relevant in the implications of FFB price incentive policies, funding support from the government and the private sector in realizing the STDB program for independent oil palm smallholders, technology utilization development programs in an effort to achieve transparency, particularly regarding the price and quality of FFB, traceability, establishment of monitoring system for policymakers regarding the application of benchmark prices in every transaction involving actors in the field. The limitation of the research is because it is based on IoT, of course, it requires an internet network and assistance so that the system is felt to be more user friendly.

Acknowledgement

    To the Ministry of Finance and the Oil Palm Plantation Fund Management Agency (BPDPKS), we would like to pass our gratitude for the fund which has been entrusted to the Research Team through the cooperation agreement number: PRJ-17/DPKS/2020 dated June 15, 2020 and the Adendum of the cooperation agreement number: PRJ- 7/DPKS/2021 dated June 14, 2021, in carrying out the Pilot Project Implementation of Performance Assessment Information System and Institutional Strengthening of Oil Palm Supply Chain in Riau, Jambi and South Kalimantan Provinces.

References

Abdulameer, S.S., Yaacob, N.A., Ibrahim, Y.M., 2020. Measuring Leagile Supply Chain, Information Sharing, and Supply Chain Performance: Pre-Test and Pilot Test. International Journal of Technology, Volume 11(4), pp. 677687

Alwarritzi, W., Nanseki, T., Chomei, Y., 2015. Analysis of the Factors Influencing the Technical Efficiency among Oil Palm Smallholder Farmers in Indonesia. Procedia Environmental Sciences, Volume 28, pp. 630–638

APICS., 2017. Supply Chain Operations Reference Model SCOR Version 12.0. Chicago: IL 606313439 USA

Aritonang, K., Nainggolan, M., Djunaidi, A.V., 2020. Integrated Supply Chain for a Single Vendor and Multiple Buyers and Products with Crashing Lead Time. International Journal of Technology, Volume 11(3), pp. 642–651

Ashari, H., Yusoff, Y.M., Zamani, S.N.M., Talib, A.N.A., 2018. A Study of the Effect of Market Orientation on Malaysian Automotive Industry Supply Chain Performance. International Journal of Technology, Volume 9(8), pp. 16511657

Statistics Indonesia (BPS), 2019. Indonesian Oil Palm Statistic 2019. Statistics Indonesia (BPS). ISSN: 19789947

Statistics Indonesia (BPS), 2020. Kalimantan Selatan Province in Figures 2020. Statistics Indonesia (BPS) Kalimantan Selatan Province. ISSN: 0215–2258

Dano, U.L., Balogun, A.-L., Matori, A.-N., Wan Yusouf, K., Abubakar, I.R., Said Mohamed, M.A., Aina, Y.A., Pradhan, B., 2019. Flood Susceptibility Mapping Using GIS-Based Analytic Network Process: A Case Study of Perlis, Malaysia. In Water, Volume 11(3), pp. 1–28

Ervural, B.C., Zaim, S., Demirel, O.F., Aydin, Z., Delen, D., 2018. An ANP and fuzzy TOPSIS-based SWOT analysis for Turkey’s energy planning. Renewable and Sustainable Energy Reviews, Volume 82, pp. 1538–1550

Etikan, I., Musa, S.A., Alkassim, R.S., 2016. Comparison of convenience sampling and purposive sampling. American Journal of Theoretical and Applied Statistics, Volume 5(1), 1–4

Godar, J., Suavet, C., Gardner, T.A., Dawkins, E., Meyfroidt, P., 2016. Balancing detail and scale in assessing transparency to improve the governance of agricultural commodity supply chains. Environmental Research Letters, Volume 11(3), pp. 1–12

Hasibuan, S., Thaheer, H., Juliza, H., 2018. Life Cycle Impact Assessment of Palm Biodiesel Production towards the Sustainability of Downstream Industry of Indonesia Palm Oil. IOP Conference Series: Materials Science and Engineering, Volume 453, pp. 1–8

Heryani, H., Yanti, N.R., 2020. Assessment and determination of potential sustainable biomass waste using the analytic network process method. IOP Conference Series: Earth and Environmental Science, Volume 499, pp. 1–10

Hidayati, J, Mumtaz, G., Hasibuan, S., 2018. Developing strategic planning of green supply chain in refinery CPO company. IOP Conference Series: Materials Science and Engineering, Volume 309, pp. 1–8

Hidayati, J, Sukardi, S., Suryani, A., Fauzi, A.M., Sugiharto, S., 2018. Palm oil plantation revitalization model for the agroindustry development. International Journal on Advanced Science Engineering Information Technology, Volume 8, pp. 588–595.

Jeon, J., Kim, J., Park, Y., Lee, H., 2017. An analytic network process approach to partner selection for acquisition and development. Technology Analysis & Strategic Management, Volume 29(7), pp. 790–803

Karlsson, E., Eriksson, M., 2017. Critical success factors' impact on agility of humanitarian supply chains: A case study of the typhoon Haiyan in the Philippines 2013. pp. 192.

Kauppi, K., 2013. Extending the use of institutional theory in operations and supply chain management research. International Journal of Operations & Production Management, Volume 33(10), pp. 1318–1345

Kholil, K., Sulistyadi, K., 2017. Gender-Responsive of Micro Enterprise Development Strategy Using SAST (Strategic Assumption Surfacing and Testing) and ISM (Interpretative Structural Modeling) Case Study in Kendal Regency Central Java, Indonesia. SNaPP Proceedings: Science, Technology, Volume 7(2), pp. 384391

Lee, J.S.H., Ghazoul, J., Obidzinski, K., Koh, L.P., 2014. Oil palm smallholder yields and incomes constrained by harvesting practices and type of smallholder management in Indonesia. Agronomy for Sustainable Development, Volume 34(2), pp. 501–513

Marimin, Djatna, T., Machfud, Asrol, M., Papilo, P., Taufik, B., Darmawan, M.A., 2020. Supply chain performance measurement and improvement of palm oil agroindustry: A case study at Riau and Jambi Province. IOP Conference Series: Earth and Environmental Science, Volume 443, pp. 1–21

Matondang, N., Hidayati, J., Buchari, Permana Arifin, E., Panama, J., 2020. Analysis of Crude Palm Oil Supply Chain using Food Supply Chain Network (FSCN): A Case Study. IOP Conference Series: Materials Science and Engineering, Volume 1003, pp. 1–7

McCarthy, J.F., Gillespie, P., Zen, Z., 2012. Swimming Upstream: Local Indonesian Production Networks in “Globalized” Palm Oil Production. World Development, Volume 40(3), pp. 555–569.

Palma-Mendoza, J.A., 2014. Analytical hierarchy process and SCOR model to support supply chain re-design. International Journal of Information Management, Volume 34(5), 634–638

Peters, N.J., Hofstetter, J.S., Hoffmann, V.H., 2011. Institutional entrepreneurship capabilities for interorganizational sustainable supply chain strategies. The International Journal of Logistics Management, Volume 22(1), pp. 52–86

Rahmanda, P.O., Arifudin, R., Muslim, M.A., 2017. Implementation of Analytic Network Process Method on Decision Support System of Determination of Scholarship Recipient at House of Lazis Charity UNNES. Scientific Journal of Informatics, Volume 4(2), pp. 199207

Rachmayanti, D., Hubeis, M., Maarif, M.S., Affandi, M.J., 2015. The Strategic Assumption to Enhance Top 10 CSR Issues and Trends in the Global Economy: Empirical Study in Indonesia Mining Sector. Volume 24(61), pp. 255266

Saaty, R. W., 2016. Decision making in complex environments: The Analytic Network Process (ANP) for dependence and feedback: Including a tutorial for the superdecisions software and portions of the encyclicon of applications. Pittburgh (US): Creative Decisions Foundation. ISBN Number 1-888603-00-3, pp. 1187

Supply Chain Council, 2012. Supply Chain Operations Reference Model Revision 11.0. Supply Chain Operations Management. United States of America: Supply Chain Council, ISBN 0-615-20259-4, pp. 1–971

Syahza, A., Asmit, B., 2019. Regional economic empowerment through oil palm economic institutional development. Management of Environmental Quality: An International Journal, Volume 30(6), pp. 1256–1278

Yadav, S., Garg, D., Luthra, S., 2020. Development of IoT based data-driven agriculture supply chain performance measurement framework. Journal of Enterprise Information Management, Volume 34(1), pp. 292327