RISK MANAGEMMENT OF QUININE (CINCHONA SP.) VALUE CHAIN BUSINESS IN PT. SINKONA INDONESIA LESTARI (SIL), WEST JAVA

• Main Author: Nabihah, Firyal
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/75713
• Institution: Institut Teknologi Bandung

<p align="justify">Cinchona is one of the plantation commodities in Indonesia that produces cinchona bark for use as raw material in pharmaceuticals, refreshing beverages, catalysts, cosmetics, and tanning industries, making it a prospective business in both domestic and international markets. PT. Sinkona Indonesia Lestari (SIL), the largest cinchona bark producer in Indonesia, is involved as the second-ranked company in the Global Value Chain worldwide. In its business operations, PT. SIL faces complex business risks, including raw material scarcity from suppliers, with 60% of the raw materials being imported from Africa, operational issues, marketing challenges, and interconnected human resources, which impact the value creation of products along its business chain. The complexity of business risks along the value chain necessitates a strategy to mitigate risks, leading to a study on value chain risk management in the cinchona bark business at PT. Sinkona Indonesia Lestari (SIL). This research aims to identify value chain activities, types and levels of risks, and risk mitigation strategies in the cinchona bark business value chain at PT. SIL. The value chain analysis employs the ACIAR (Australian Centre for International Agricultural Research) framework. The types and levels of risks are identified using Failure Mode Effect Analysis (FMEA) and Risk Matrix . The determination of priority mitigation strategies for major risks is conducted through Analytical Hierarchy Process (AHP) assessment using Expert Choice 11 software. Based on research findings, the study shows that the value chain activities of Cinchona salt at PT. Sinkona Indonesia Lestari (SIL) have a linear-integrative core process flow from the procurement of raw materials in the form of Dried Cinchona Bark Flour (DCBF) by Bukit Tunggul Cinchona Plantation to the export of Cinchona salt by PT. Sinkona Indonesia Lestari, involving a total of 12 actors/participants along the value chain. The governance relationship in the Cinchona salt value chain is relational and market-based. Through the identification of risks in the Cinchona salt value chain, 25 risks were identified, consisting of 15 risks in cluster A related to raw material procurement (cultivation), 6 risks in cluster B related to processing and manufacturing (production), and 4 risks in cluster C related to product marketing and distribution. The risk assessment using Failure Mode Effect Analysis (FMEA) and the Risk Matrix resulted in 12 priority risks, including 3 risks categorized as very high: absence of long-term planting matrix (A7), high distribution cost (C1), and fluctuation of the dollar exchange rate (C3), as well as 9 risks categorized as high. Based on the Analytical Hierarchy Process (AHP) method, strategies were developed for each risk code in the value chain activities, with the highest priority given to the implementation of a multicultural system (0.389) for the risk factor of limited capital, increasing maintenance intervals for aging equipment (0.584) for the risk factor of outdated equipment, and collaborating with product delivery services (0.470) for the risk factor of high distribution cost. Keywords: AHP, Cinchona, FMEA, , management, risk, value chain