Sustainability and profitability of Malaysia crude palm oil supply chain management: system dynamics modelling approach

Abstract

PurposeThe agriculture industry has a considerable impact on Malaysia’s economy, as seen by its contribution of roughly 8.2% of gross domestic product in 2018 and its potential to absorb 11.09% of Malaysian labor in the same year. This study aims to simulate rising output in a system model of sustainable and profitable crude palm oil (CPO) supply chain management (SCM) and to formulate policy solutions to build sustainable and profitable SCM of Malaysian CPO.Design/methodology/approachThis research included both primary and secondary data. This study used the dynamic system model to simulate palm oil land expansion, replanting policies and environmentally friendly growing techniques.FindingsThis study’s findings suggest that the dynamic system model of Malaysia’s CPO’s sustainable and profitable SCM is valid when its structure and performance are tested. The fifth scenario provides the best results, with the most significant net benefit value compared to the other scenarios.Originality/valueThe ideal policy alternative is replanting sustainable agricultural practices without burning technologies during new land clearing to achieve the best net advantages.