A model for supporting policy formulation of cocoa industry development based on supply chain driver performance

Abstract

As the third largest cocoa beans producer in the world Indonesia is currently working to improve the added value of these commodities through the development of the cocoa industry. Various policies and programs both upstream and downstream sectors have been implemented to achieve industrial competitiveness cocoa. However, the complexity of the development of the industry makes it difficult to formulate effective policies. Many factors influence the development of the cocoa industry. Previous studies one of the factors in the development of the cocoa industry is a supply chain management and infrastructure. Supply chain factor is an important consideration in the development of Indonesian cocoa industries, because geographically widespread cocoa activities in various islands in Indonesia. Raw material production of cocoa beans is mostly on the island of Sulawesi, Sumatra, and Kalimantan, while for manufacturing activity is still concentrated in Java and some parts of Sulawesi. In supply chain management logistics aspects such as location, capacity and flexibility of its facilities, inventory, and equipment and transportation costs greatly affect the company's decision to expand or adding capacity. In addition, an aspect of the flow of information and the selection method of procurement is also a consideration that affects the development of the industry. Aspects mentioned above have referred to as drivers (driving forces) that will determine the performance of the supply chain. To determine the performance of the supply chain required measurement system that is able to evaluate the performance of the supply chain holistically. However, choosing the system of supply chain performance measures is quite difficult due to the complexity of the system. In addition, the design of supply chain performance measurement is very diverse. Performance measurement at the firm level has been done such as SCOR method and Balance Score Card. But, the problem was how to measure an inter-company level performance of the supply chain. The development of the cocoa industry in Indonesia needs a supply chain performance measurement at the industry level (inter-company) to support the government's role in creating a climate that was more conducive to the development of the cocoa industry. This study aims to design a model of cocoa industry development policy formulation based on driver of supply chain performance. While the stages include: a) analyses on policy issues and Indonesian cocoa; b) analysing the cocoa supply chain as an effort to develop the cocoa industry, c) Describe the driver cocoa supply chain performance, and d) Measuring supply chain performance cocoa industry. Cocoa industry was limited to the processing industry that produces cocoa beans, cocoa cake, cocoa liquor, cocoa butter, and cocoa powder. The supply chain analysis shows that the cocoa industry development needs a partnership between industry and farmers/cooperative. Development of a pilot project in the production area with the provision of extension workers was proven to produce high quality cocoa beans that support a sustainable supply of cocoa for v industry. While the mechanism for fair and free barriers of trade should be supported by government policy in terms of standard scales (metrology), trade monitoring, road infrastructure improvement, and deregulate fees/levies. The decomposition of supply chain driver obtained 5 drivers of efficiency and responsiveness aspects. These five drivers are facilities, inventory, transportation, sourcing, and information. This study has been able to break down into 35 sub drivers for efficiency and 27 sub drivers for responsiveness. Tendency analysis results show that the facilities, inventory and sourcing driver tend to prioritize responsiveness. While the transportation and information driver tend to give priority to efficiency. The Weighted Scoring Model calculation produces Supply Chain Performance Index score total of 29.75. This value was relatively low compared to the ideal value of 45.00 which indicate the need for immediate improvement on the entire drivers. Based on the performance of supply chain drivers, this study has been formed twelve government‟s policies and eight firm‟s policies for the development of the cocoa industry. Using ISM technique the policy formulation previously unknown structure can be structured and have relationships clearer. The results of this study indicate that the fiscal incentives policy, the expansion of the application of SNI (Indonesian National Standard) cocoa beans, telecommunication network expansion, and the policy of removal of trade barriers were the four policies that its success were depend on other policies. In the cocoa industry development context, the fiscal incentives policy was the final determinant of successful policy. This was in line with the fiscal policy goal to support national economic policy. The improvement of the cocoa productivity urgently needs to encourage cooperation between government and industry in the field of extension services. Furthermore, the pattern of cooperation could be adopted for the government revitalization extension services through a series of outreach activities and creative mentoring. This study indicates that improvements of road infrastructure policy were the basic policies that will provide encouragement and support to other policies. Organized with the other infrastructure policies such as the road infrastructure (including bridges), infrastructure and improved management of the port, and fulfillment supply of energy (electricity and gas) was expected to lead other policies. The policy was not just a physical infrastructure development, but also non-physical which encourage the strengthening and empowerment of the cocoa farmers. A model for supporting policy formulation of cocoa industry development was validated using face validity method by experts. The results show that the set of formulating policy and the structural models have been able to describe what should be done to develop the cocoa industry in Indonesia. Emphasizing on using supply chain driver performance as a basis for policy formulation has been assessed by experts to meet the real demands of industrial development faced by existing investor or industry owner.