Performance analysis and strategic planning of dairy supply chain in Indonesia

Abstract

Purpose The purpose of this paper is to measure and evaluate the performance of the relationships between farmers, dairy cooperatives and industrial milk processors. Design/methodology/approach Data used in this study were primary data collected through personal interviews and closed questionnaires with 1–5 Likert scale. The sample consisted of the representative of the management of 12 dairy cooperatives located in Central Java Province, representative of the management of 12 dairy cooperatives located in West Java Province and some farmers who are members of those dairy cooperatives. This study uses balanced supply chain management scorecard for measuring the performance of dairy supply chain, importance-performance analysis (IPA) for identifying the indicators that are most in need of improvement, and strength, weakness, opportunity and threat (SWOT) analysis for formulating strategic planning. Findings The results of balanced supply chain management scorecard combined with IPA analysis showed that the performance relationship between farmers, dairy cooperatives and industrial milk processors in West Java Province is slightly better than that in Central Java Province. It can be seen from the average value of the score of indicator, the category of each indicator and the category of the performance index of each relationship. The major weakness of the relationship between dairy farmers, cooperatives and industrial milk processors in Central Java Province lies in the different perspective (no perspective is dominant), whereas that in West Java Province is dominated by the perspective of the customer. On the other hand, the major strength of the relationship in Central Java Province is dominated by the perspective of the customer, whereas that in West Java Province is dominated by the perspective of learning and growth. Research limitations/implications The limitation of this study is related to the number of the dairy cooperatives as the sample and the type of scale used to measure the performance of the relationships between farmers, dairy cooperatives and individual milk processors. So, the future research may replicate this study by surveying all the dairy cooperatives in Central Java and West Java Provinces. It may also enhance the measurement of the performance of the relationships by using a direct measure of each indicator in each perspective, rather than recording the management of dairy cooperative perceptions. Practical implications This research provides essential insights for the management of dairy cooperative in the context of strategic planning development. The research reveals that there is a different strategic planning for improving the performance of the relationship between dairy farmers, cooperatives and industrial milk processors in each province. It depends on the major weakness and strength of the relationships, and also, opportunity and threat faced by the dairy industry. One important thing, the management of dairy cooperative in both provinces should have strategic planning related to the use of machine milking by farmers to improve the milk quality. Social implications The research revealed that strategic planning could be built after analyzing the internal and external conditions carefully. It may encourage more dairy cooperatives to measure and analyze the internal and external conditions at the bottom of strategic planning of their business. Originality/value Although this research only used the balanced supply chain management scorecard and IPA analysis for measuring the performance, and SWOT analysis in formulating the strategic planning for improving the current performance, it will make a difference. First, instead of measuring the performance of dairy cooperatives, this research measured the performance of the relationships between dairy farmers, cooperatives and industrial milk processors. This way, the dairy cooperatives were only sources of data collection. Second, the investigation was quite complicated since the objects of the research were represented by the relationships between farmers, dairy cooperatives and industrial milk processors in Central Java Province and West Java Province.