System dynamics modelling approach for palm oil supply chain under various policy interventions: A case study in Indonesia’s private company

The development of Indonesian palm oil industry in international trade does not ignore challenges such as competition with products from other exporting countries as well as trade barriers from importing countries. With the new delegated regulation by the European Commission that considers palm oil does not meet the principle of sustainability in the concept of renewable energy, Indonesian government is encouraged to increase the effectiveness of mandatory biodiesel implementation by adjusting regulation domestically. This situation affects the performance of oil private palm companies, which currently contribute ± 50% to the total land area and production of Indonesian palm oil. This research aims to modelling the supply chain system of a large private company with system dynamics approach that can be simulated under government policies intervention related to the palm oil industry and supply chain performance. System dynamics simulation is used to draw causal relationship of the supply chain and to monitor government regulations on supply chain performance. The result of this research is a conceptual model for decision making that can support the company’s supply chain performance under different policies.