Supply Chain Performance Measurement Model of Passion Fruit Agro-Industry for Sustainable Micro, Small, and Medium Enterprises with System Dynamics in North Sumatra Province

Abstract

Supply chain management covers integrated activities of planning, coordinating, and controlling of all business processes and practices in the supply chain to meet the demands of consumers at the lowest possible cost. Sustainable supply chain can be achieved by taking into account three pillars of sustainable development, namely, economy, social, and environment. Passion fruit agro-industry supply chain actors consist of farmers, collectors, agro-industries, and retailers. This study aims at identifying factors affecting the passion fruit agro-industry supply chain performance for sustainable micro, small, and medium enterprises and designing a supply chain performance measurement model of MSME passion fruit agro-industry with system dynamics. This research used a survey method through observations, in-depth interviews, and expert opinions. Data were processed using a combination of the hard system (system dynamics analysis) and soft system (expert opinions).The feedback structure along the passion fruit syrup agro-industry system was modeled in a causal loop diagram using system dynamics through version 10 of Powersim Studio software. It was then translated into a stock-flow diagram as the implementation of the simulation model. The model was verified using a computerized statistical analysis (Absolute Means Error) technique. To formulate recommendations and development strategy scenarios for sustainable MSME passion fruit agro-industry supply chain, a system approach method was used and expected to produce an effective and operational decision in accordance with the objectives previously set. The results obtained through expert opinions and Analytic Hierarchy Process (AHP) which have the highest weight with various conditions for each variable. Seven key variables were proven to influence the performance of passion fruit agro-industry supply chain, which were also used to design a sustainable MSME supply chain development scenario. The behavior of the sustainable passion fruit agro-industry supply chain model took the form of positive growth and the error rate of 7.43. Developing a sustainable MSMEPFASCPM can be carried out with a moderate strategy by developing: 1) pattern of good relationships among the actors, 2) gradual increase in the availability of raw materials, 3) environmental support capability, 4) gradual increase of profits, 5) moderate skills, 6) employment opportunities, and 7) land availability.