The system dynamics modeling of Gayo arabica coffee industry supply chain management

Abstract

This study aims to design a model of supply chain management of Gayo Arabica coffee industry in an effort to increase value added and profit for smallholder plantation and company. The method applied to achieve this goal is a system dynamics methodology which is a modeling approach based on systemic thinking and uses perspectives based on information feedback and delay to understand the complex behavior dynamics of physical, biological and social systems, which occur in the supply chain management. The results showed that through the development of a hybrid production system and quality engineering in supply chain management of the Gayo Arabica coffee industry has been able to respond to the dynamics of consumer order. Scenario I and II made changes to model parameters which resulted in an increase in business profit obtained by company, while smallholder plantations did not experience changes in the profits of their business. Scenario III carried out a structural change model that was divided into two parts, namely the Scenario IIIA which applied institutional innovation between governance of public plantation relations with agro-industrial cooperatives in the form of coffee bean delivery system, while Scenario IIIB applied the governance of public plantation relations with agroindustry cooperatives in the form of transaction systems coffee bean. The results of Scenario IIIA are able to increase the value added and benefit obtained by smallholder plantation and be able to increase company profits and maintain customer satisfaction simultaneously. Scenario IIIB results are only able to increase company profits and maintain customer satisfaction, while increasing profits and value added of smallholder plantations do not occur.