Supply Chain Management Analysis in the Palm Oil Industry: A Case Study at PT. Sempurna Sejahtera, Nunukan

Abstract

This study examines the implementation of supply chain management in the palm oil processing industry through a case study of PT Sempurna Sejahtera, a commercial palm oil mill located in a border region of Indonesia. Using a qualitative case study approach, data were collected through direct observation, in-depth interviews, and documentation during fieldwork activities. The findings reveal that the company operates within a multi-tier and highly fragmented supply chain, characterized by strong dependence on smallholders and intermediaries. This structure creates significant vulnerabilities, including unstable raw material supply, inconsistent quality of fresh fruit bunches (FFB), and inefficient financial flows due to delayed payment systems. In addition, centralized decision-making at the head office limits operational responsiveness at the plant level, exacerbating supply disruptions and weakening relationships with suppliers. A critical insight from this study is the emergence of cross-border supply leakage, where local suppliers prefer selling to buyers in neighboring countries due to faster payment systems, despite lower prices. This highlights the role of governance and institutional inefficiencies as key determinants of supply chain performance in smallholder-based industries. This study contributes to the literature by demonstrating how supply chain dependency and centralized governance structures jointly create structural inefficiencies in palm oil supply chains in peripheral and border regions. Practically, the findings emphasize the need for improved supplier integration, accelerated payment mechanisms, and greater decentralization of operational decision-making to enhance supply chain resilience and competitiveness.