Vulnerability and Capability Factors for the Indonesian Biodiesel Supply Chain Resilience

Abstract

Biodiesel is one of the biofuels identified as a complement to conventional fuels. Socially and environmentally, biodiesel has been known to provide benefits for creating new jobs, revitalizing rural areas, and reducing global warming. However, the biodiesel industry often faces various challenges, one of which is uncertainty in decision-making. Uncertainty in the supply chain is considered as one of the greatest challenges to managing and controlling the supply chain. Other types of uncertainty are associated with events that decision-makers cannot predict or control, such as natural disasters, accidents, or artificial disasters. Supply chain complexity and global competition have increased their exposure to disruption. Therefore, reacting appropriately to disruptions is necessary for business continuity. Ultimately, resilience capabilities must be developed to help companies become more resilient than before. This paper identifies and determines the vulnerability and capability factors in the Indonesian biodiesel supply chain. The result shows several vulnerability factors, such as turbulence (price, technological failure, and pandemic), external pressures (policy and regulation), and resource limits (supply, capacity, and land availability), that may affect the resilience of the biodiesel supply chain. Meanwhile, capability factors that can be utilized to reduce these vulnerabilities are flexibility in sourcing, flexibility in order fulfilment, capacity, adaptability, visibility, and collaboration. The practical implications are also described in this paper.