SOCIETAL AND BEHAVIOURAL ASPECTS OF IMPLEMENTING CIRCULAR ECONOMY CONCEPTS IN INDONESIAN AGRI-FOOD SUPPLY CHAIN

• Main Author: Nattassha, Ruth
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/63626
• Institution: Institut Teknologi Bandung

The agri-food industry is one of the most important industries for humanity, as it is related to the procurement of sources for one of human’s most staple needs: food. However, along with the development of human community, there are several issues arising from this industry. These issues can be handled through the usage of supply chain management to handle the industry. Supply chain management in agri-food industry itself has several characteristics, with one of them being the inevitable existence of by-products from the processes. These by-products are generally viewed as wastes and immediately discarded, resulting in the loss of possibility of gaining economic value from them. This can be avoided by the implementation of circular economy concepts within the supply chain. The key of circular economy is the usage of wastes as resources by other processes, which would then later provide resources for the original processes. Introducing them to the agri-food supply chain can come in many forms, with the most popular one being producing fertilizer from animal wastes and using the fertilizer to produce plant products which then could also be used to feed animals. While there have been various researches regarding how to implement these concepts within supply chain, there is lack of research regarding the societal and behavioural aspects: relationship and interaction between stakeholders and the behaviour of the stakeholders. These aspects of the supply chain are actually important to consider, as provided by the various research in agri-food supply chain and also from the cases of circular economy implementation in the supply chain. There are failed implementation cases, most of them caused by problems in the behaviour of the supply chain’s stakeholders. This research attempts to define the key to successfully implementing circular economy concepts in agri-food supply chain, particularly in the societal and behavioural aspects. In conducting the research, there are five main concerns addressed in the research questions: the supply chain processes to implement circular economy concepts, the required actors for implementation along with their characteristics and behaviour, interaction mechanism between the actors, and how to measure the success of implementation. The research questions would be answered through the development of three models: soft system model, supply chain operations reference model, and agent-based model. These models would be developed based on a case study of a company which produces organic fertilizer, OrganicFe Co. The soft system model is developed to gain better understanding of the case’s current condition and possible adjustments to the system for better performance. The basic description regarding supply chain actors along with their characteristics and behaviours can be found in this model too. The supply chain operations reference model is used to determine the required supply chain process in the implementation, along with the actors who conduct the processes. Interaction between actors is also defined in the reference model. Finally, by using the agent-based model, the current system and the proposed system are simulated. Both systems are then compared based on the performance metrics to observe if the proposed system performs better than the current system. From the research, it is found that the most important processes in implementing circular economy concepts in agri-food supply chain are the planning and use/recycle processes. The planning stage is especially important for information sharing between actors so they can make supply chain decisions based on said information. The use/recycle processes are basically how wastes are processed to become resources, the main focus of circular economy concepts. The key actors in the implementation are waste handler actors: waste collectors, waste sorters, and waste processors. However, there might be instances where these roles are conducted by only one actor. As for the required behaviour of the actors, there are three important behaviours: trusting, cooperative, and willing to gain knowledge. While there are several possible interaction mechanisms to be used in the implementation, there are four of them applicable to the system: information sharing, performance accountability, incentive alignment, and decision synchronisation. In OrganicFe Co.’s case, it is important to observe the profit and revenue of both OrganicFe Co. and the farmers to determine if the proposed scenario is better than the current system. From the simulation result, while there is some improvement in revenue for OrganicFe Co., farmers might gain better profit in the current system than in the proposed system. Thus, it is suggested that convincing the farmers to stay in the system should involve incentives other than profit.