The performance of dairy supply chain in Indonesia: a system dynamics approach

Abstract

PurposeFirst, the purpose of this paper is to develop some policies as an alternative scenario to increase the performance of the Indonesian dairy milk supply chain so it can fulfil the target of the government. Second, this study aims to find the best alternative scenario based on the performance resulted from the simulation.Design/methodology/approachThe paper develops a system dynamics-based model by using six approaches, i.e. “population and consumption of dairy milk”, “national milk production”, “dairy cattle feed”, “dairy cattle population”, “profit gained by the dairy farmer”, and “government policy”.FindingsThere is no best scenario; however, the combined scenario can give the better condition to achieve the targets set by the government.Research limitations/implicationsThe limitations of this study include: the relationship between the levels of welfare of farmers and the desire being a dairy farmer is not modelled; the quality of milk is only determined by the content of fat and protein in one litre of milk, and the level of milk consumption per capita increases naturally without any intervention or policy from the government.Practical implicationsThis study provides essential insights into the context of implementing the policies in the Indonesian dairy supply chain.Social implicationsThe research revealed that good policies scenario could be built after simulating and analysing the effect of each scenario on the performance of a dairy supply chain carefully.Originality/valueThis study does not test one policy in isolation. It simultaneously tests various combinations of policy that related to dairy cattle import, operational assistance for dairy cooperative and dairy farmer that may help maximise the performance of the Indonesian dairy milk supply chain.