Abstract
This paper aims to design key performance indicators (KPIs) for evaluating sustainable supply chain management (SSCM) for palm oil processing industry in Indonesia. Supply chain sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycle of goods and services. The method in designing KPIs using a triangulation method, ie combining of theory (literature study) with field surveys and validate with the opinion of the expert (expert judgment) as well as compatibility with existing regulations (Indonesian sustainable palm oil / roundtable on sustainable palm oil). There are 29 proposed KPIs for measuring SCM’s sustainable palm oil in Indonesia based on literature and expert judgment. In order to obtain a more precise performance, then the importance level of KPI will be measured using Analytic Hierarchy Analysis (AHP) method. According to the preferences of some managers of palm oil using AHP method showed that the economic factor is the most dominant indicator (62,92%), followed by environmental (18,93%) and social factors (18,15%). In subsequent studies, the results of the KPIs will be used to measure the index of sustainability in the palm oil’s supply chain industry in Indonesia.
Highlights
Palm oil industry is an important industrial sector for Indonesia since it contribute significant revenue for Indonesia
It can be seen from the total exports of CPO (Crude Palm Oil) for the last three year that remain high
This paper proposed a set of Key Performance Indicators (KPIs) to measure the performance of sustainable supply chain management (SSCM) corresponding to the palm oil industry in the three factors of sustainability, namely economic, social and environmental
Summary
At late 90's palm oil sector started facing criticism due to environmental and social issue such as forest fire and land ownership [2]. The challenges facing the palm oil industry in Indonesia in 2020 is the European Union plans to apply the rules of obligation 100 percent sustainable supply chain for palm oil-based products. This time there is a tendency of people will spend more money on a product that is a good impact on the environment. To face the challenges mention above, The palm oil industry must improve their sustainability performance throughout their supply chain
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