SUPPLY CHAIN UNCERTAINTY: AN EMPIRICAL STUDY OF INDONESIA’S AGRO-INDUSTRY

Yandra Rahadian Perdana

doi:10.21107/agrointek.v15i3.9306

Abstract

Supply chain management (SCM) is a multi-stakeholder network for managing the flow of raw materials, finished products, information and money. The supply chain’s network refers to the interdependencies of the processes and activities. Taking this into account, stakeholders deal with an environment of volatility, uncertainty, complexity and ambiguity (VUCA). The dynamic nature of the supply chain’s environment implies uncertainty in the upstream and downstream sides. Drawing from the literature, manufacturers need to mitigate any uncertainty in their supply chains, which can consist of supply, demand, and technology uncertainties. However, the previous literature neglected any discussion of supply chain uncertainty in the context of the agro-industry. Hence, to answer this gap, this study aimed to investigate the supply chain’s environmental uncertainty factors in the agro-industry’s sectors. Accordingly, this study obtained 30 respondents from the agro-industry in Indonesia. This study reported that the agro-industry in Indonesia has uncertainties about supply, demand and technology. It is faced with the inability of suppliers to consistently deliver raw materials, in terms of their quantity and quality. Meanwhile, demand uncertainty is caused by the fluctuations in customers’ demands and the industry’s low forecasting accuracy. Moreover, the rapidly changing technology has implications for uncertainty in services and product standards; making it difficult for manufacturers to anticipate the changes. This uncertainty in the supply chain’s environment needs to be controlled by the agro-industry through supply chain integration

Highlights

The agroindustry supply chain is a series of procurement, production, transportation, and consumption processes involving suppliers, manufacturers, distributors, and consumers (Routroy and Behera, 2017)
This study showed that all the respondents agreed that the agroindustry in Indonesia faces uncertainties about supply, demand, and technology; these are elaborated on in the following sub-section
This study found that the guarantee of quality raw materials from suppliers is critical for the agroindustry

Summary

Introduction

The agroindustry supply chain is a series of procurement, production, transportation, and consumption processes involving suppliers (farmers), manufacturers, distributors, and consumers (Routroy and Behera, 2017). This series of processes illustrates the complexities in the supply chain network, one of which is the supply chain's environment, which is volatile, uncertain, complex, and ambiguous (VUCA)(Bennett and Lemoine, 2014). The uncertainty is challenging to manage and exists in every process in the supply chain's network (Hudnurkar et al, 2017; Michael, 2018). Inaccurate demand forecasts will result in lower consumer satisfaction and lost profits. Mismatched strategies to anticipate demand, supply, and technology uncertainty negatively affect competitive advantage (Ahmad et al, 2020)

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Discussion

Conclusion