DOI : https://doi.org/10.18517/ijaseit.9.2.7708

Value Chain Analysis and Value Added Enhancement of Indonesia Crude Palm Oil Supply Chain

Juliza Hidayati (1), Sawarni Hasibuan (2)
(1) Industrial Engineering Department, Universitas Sumatera Utara, Medan, Indonesia
(2) Master of Industrial Engineering Program, Universitas Mercu Buana, Jakarta, Indonesia
Fulltext View | Download
How to cite (IJASEIT) :
Hidayati, Juliza, and Sawarni Hasibuan. “Value Chain Analysis and Value Added Enhancement of Indonesia Crude Palm Oil Supply Chain”. International Journal on Advanced Science, Engineering and Information Technology, vol. 9, no. 2, Mar. 2019, pp. 397-04, doi:10.18517/ijaseit.9.2.7708.
Citation Format :
PT. XYZ is a manufacturing company that produces Crude Palm Oil (CPO). The competition Crude Palm Oil (CPO) company do not only happen in manufacturing companies but also among supply chain components. Due to the increase of fierce competition, it is necessary to improve companies’ value chain that may increase productivity and reduce costs. The purpose of this study was to analyze the supply chain and value chain of CPO in some companies. Data were analyzed using both qualitative and quantitative analysis within descriptive research.  This research was started by conducting a supply chain analysis and followed by a value chain analysis and ended with an improvement of the value chain. The qualitative analysis describes supply chain and value chain while the quantitative analysis is used to find out value-added values and establishment of the value chain. Based on the analysis, the value chain of CPO in the company consists of four main participants: suppliers of raw materials (plantation), processing plant, distributor, and customer. In this research, the analysis was focused on two participants: palm oil plantation and palm oil processing plant. The oil palm plantation activities include nurseries, planting, plant maintenance, harvesting, and shipping while the processing plant consists of reception, sterilizing, threshing, pressing, and classification. The company's value-added actual condition in oil palm plantation was 72.42% and palm oil processing plant was 10.13%. A low-cost strategy had been applied, resulting in the value-added increasing of oil palm plantations by 1.08% and at processing plants by 11.73%. The increase in value-added has been able to reduce the company’s costs. However, this study still has limitations because the analysis only covers plantation and processing plant value chain; the company’s distribution and consumers of CPO products for maximizing the value-added of a CPO value chain have not yet been studied.

Hasibuan, S., Thaheer, H., and Juliza, H. (2018). Life cycle impact assessment of palm biodiesel production towards the sustainability of downstream. IOP Conf. Ser.: Mater. Sci. Eng., 453: 1-8.

Hidayati, J., Mumtaz, G., and Hasibuan, S. (2018). Developing strategic planning of green supply chain in refinery CPO company. IOP Conf. Ser.: Mater. Sci. Eng. 309: 1-8.

Hamdani, A. (2015). Manajemen pemupukan tanaman kelapa sawit (Elaeis guineensis Jacq.) di Perkebunan Bangun Bandar PT. Socfin Indonesia, Medan, Sumatera Utara. Bogor: Institut Pertanian Bogor.

Anugrah, P. (2017). Pengelolaan Pemanenan dan Transportasi Tandan Buah Segar Kelapa Sawit (Sawit (Elaeis giuneensis Jacq.) di Bangun Bandar Estate, PT. Socfin Indonesia, Serdang Bedagai, Sumatera Utara. Bogor: Institut Pertanian Bogor.

Gibbon, P., Bair, J., and Ponte, S. (2008). Governing global value chains: An introduction, Economy and Society 37(3): 315-338.

Lie, C.C. and Yang, J. (2000). Knowledge value chain. Journal of Management Deployment, 19(9): 783-793.

Budiarto, R. (2016). Potensi energi limbah pabrik kelapa sawit. Yogyakarta: Universitas Gadjah Mada.

Giuliani, E., Pietrobelli, C., and Rabellotti, R. (2005) Upgrading in global value chains: lessons from Latin America clusters. World Development, 33(4): 549-73.

Hidayanto. (2010). Limbah kelapa sawit sebagai sumber pupuk organik dan pakan ternak. Samarinda: Balai Pengkajian Teknologi Pertanian Kalimantan Timur.

Hidayati, J., Sukardi, Suryani, A., Sugiharto, and Fauzi, A.M. (2016). Identifikasi faktor-faktor peningkatan produktivitas untuk revitalisasi perkebunan kelapa sawit di Sumatera Utara. Jurnal Teknologi Industri Pertanian, 26(3) : 255-265.

Hidayati, J., Sukardi, Suryani, A., Sugiharto, and Fauzi, A.M. (2015). Optimization of palm oil plantation revitalization in North Sumatera Indonesia. International Journal on Advanced Science, Engineering and Information Technology, 5(6): 450-468.

Salman, F., Najib, M., and Djohar, S. (2017). Cost and benefit analysis of RSPO certification: Case study in PT BCA Oil Palm Plantation in Papua. Indonesian Journal of Business and Entrepreneurship 3(3): 219-228.

Simatupang, T., Piboonrungroj, P., and Williams, S. (2017). The emergence of value chain thinking. International Journal of Value Chain Management 8(1): 40-57.

Bolo, A.W., Lorika, J., and Obonyo, P.K. (2011). Effectiveness of the value chain strategy in the selected producer-owned dairy groups in Kenya. Business Administration and Management (BAM), 1(3): 93-100.

Hidayati, J., Sukardi, Suryani, A., Sugiharto, and Fauzi, A.M. (2014). Analysis of productivity improvement in the palm oil plantation revitalization of North Sumatera using Analytic Network Process. International Journal on Advanced Science, Engineering and Information Technology. 4(3): 38-44.

Peppartd, J. and Rylander, A. (2006). From value chain to value network: insights for mobile operators. European Management Journal, 24(2-3): 128-141

Kogut, B. (1986) Designing Global Strategies: Comparative and Competitive Value-Added Chains. Sloan Management Review Summer, 26(4): 15-28.

Beamon, B. M. (1999). Measuring supply chain performance. International Journal of Operations and Production Management, 19(3): 275-292.

Rosales, R.M., Pomeroy, R., Calabio, I.J., Batong, M., Cedo, K., Escara, N., ”¦ Sobrevega, M.A. (2017). Value chain analysis and small-scale fisheries management. Marine Policy, 83: 11-21.

Cucagna, M. E., and Goldsmith, P.D. (2018). Value adding in the agri-food value chain. International Food and Agribusiness Management Review, 21(3): 293-316

Authors who publish with this journal agree to the following terms:

    1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
    2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
    3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).