DEVELOPING A MODEL OF RURAL LOGISTICS SYSTEM

• Main Author: Sarma Sinaga, Tuti
• Format: Dissertations
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/79743
• Institution: Institut Teknologi Bandung

The distribution network for agricultural products and agricultural production inputs in rural areas is prone to monopolistic practices carried out by speculators. This condition risks low profits achieved by farmers because the selling price of agricultural products is low. Meanwhile, the cost of purchasing agricultural support products is high. The government has attempted to improve the agricultural products' trade system and supply chain by providing Agribusiness Sub Terminal. Still, Still, these efforts have not been successful in making the selling prices of farm products stable, ensuring product availability and improving farmers' income levels. This condition requires improvements to the distribution and marketing system for agricultural products and the distribution and input supply system in rural areas simultaneously, considering that agricultural products and inputs can influence each other in farm activities. The problems above are solved with a rural logistics approach. SLP (rural logisics system) is a system that connects logistics entities to distribute agricultural products from rural areas to consumers in urban areas (forward flow) and input products needed by farmers (backward flow). This system aims to increase product availability, reduce costs and increase income in rural areas. The problem to be solved in this research is what Rural Logistics System (SLP) model can guarantee the availability of inputs needed by farmers in farming while at the same time increasing farmers' income and ensuring the availability of agricultural products at the consumer level?". This research develops an SLP model that considers two-way product flow simultaneously. The development of SLP Model was carried out in 3 (three) stages, namely: 1) designing the Conceptual SLP Model, 2) selecting the best logistics network and 3) developing the SLP Operational Model. In the initial stage, the SLP Conceptual Model was developed concerning 4 (four) aspects of the supply chain development framework, namely (1) network structure, (2) management, (3) business processes, and (4) business resources. The network structural aspect explains the stages of development of 5 (five) forms of trade logistics networks and 3 (three) alternative freight logistics. The management aspect discusses the design of organizational structures, institutional explanations and the arrangement of management functions in the SLP business. The SLP business process aspect describes preparing SLP business activities, strategies, and performance measures. The part of business resources discusses using material, human and information technology resources by e-commerce platform to achieve SLP goals. The best trade logistics network in the SLP is selected in the second stage. The questionnaire is structured based on 3 (three) dimensions that influence SLP performance: implementation, benefits and operating costs of the system. These three dimensions were then developed into 17 criteria. The research respondents were 67 people consisting of 38.81% farmers, 31.4% intermediaries and 29.85% policy makers (regulators). Furthermore, the data was processed using IBM SPSS Statistics 21. The results showed that all respondents chose the Type-3 of trade logistics networks as the best, which influenced SLP performance strongly. The entities involved in the distribution of Type-3 are Distributors, Exporters, Farm Shops, Farmers and Industries using rural e-commerce as transaction data centres. Based on the results of selecting the form of a trade logistics network, the appropriate form of a transport logistics network is Alternative-3 Furthermore, the Operational SLP Model is developed as mathematical equations. The performance measure of the Operational SLP Model is profit maximization. There is an objective function with 45 limiting functions. Profit is calculated from the total difference between annual sales of agricultural products in the SLP to the total costs of selling and distributing agricultural products and the total costs of providing input products. Besides considering inventory and transportation costs, the Operational SLP Model also considers selling price fluctuations, harvest frequency and single cycle time. The decision variables in the model include the selling price of agricultural products, order frequency, order quantity, reorder point and the decision to open a rural shop to serve the distribution of agricultural products and input. To see the ability of the Operational SLP Model to find the solutions, testing was carried out on a rural logistics network consisting of 7 Distributors and 4 Exporters, each serving ten domestic and foreign consumers, five rural shops, 5 Farmer groups, and two industries supplying inputs. The agricultural products distributed through SLP are corn, peanuts and soybeans, while the input products are seeds and fertilizer. The search for solutions to the Operational SLP Model was tested using two methods, namely the optimization method and the heuristic method. Test results with optimization provide a profit of IDR 4,383,330,000.00 with a processing time of around 52 minutes, while the heuristic method provides a profit of IDR 4,578,500,820.00 with a processing time of 20 seconds. The heuristic method produces 4.45% higher profits than the optimization method. Changes in the scenario of product holding costs and total sales affect the level of profit the SLP Model achieves. This is thought to occur because changes in these two parameters can increase lost sales probabilities, order quantities, reorder points, and transportation costs of the products.