Value Chain Analysis and Value Added Enhancement of Indonesia Crude Palm Oil Supply Chain

Abstract

PT. XYZ is a manufacturing company that produces Crude Palm Oil (CPO). The competition Crude Palm Oil (CPO) company do not only happen in manufacturing companies but also among supply chain components. Due to the increase of fierce competition, it is necessary to improve companies’ value chain that may increase productivity and reduce costs. The purpose of this study was to analyze the supply chain and value chain of CPO in some companies. Data were analyzed using both qualitative and quantitative analysis within descriptive research. This research was started by conducting a supply chain analysis and followed by a value chain analysis and ended with an improvement of the value chain. The qualitative analysis describes supply chain and value chain while the quantitative analysis is used to find out value-added values and establishment of the value chain. Based on the analysis, the value chain of CPO in the company consists of four main participants: suppliers of raw materials (plantation), processing plant, distributor, and customer. In this research, the analysis was focused on two participants: palm oil plantation and palm oil processing plant. The oil palm plantation activities include nurseries, planting, plant maintenance, harvesting, and shipping while the processing plant consists of reception, sterilizing, threshing, pressing, and classification. The company's value-added actual condition in oil palm plantation was 72.42% and palm oil processing plant was 10.13%. A low-cost strategy had been applied, resulting in the value-added increasing of oil palm plantations by 1.08% and at processing plants by 11.73%. The increase in value-added has been able to reduce the company’s costs. However, this study still has limitations because the analysis only covers plantation and processing plant value chain; the company’s distribution and consumers of CPO products for maximizing the value-added of a CPO value chain have not yet been studied.