Performance Assessment of Fertilizer Industry Supply Chain Using a System Dynamics Approach

The Indonesian fertilizer industry strongly emphasizes supply chain activities, but the high logistics costs remain a pressing challenge that needs urgent resolution. Therefore, this study has aimed to identify the most efficient fertilizer distribution costs in order to enhance the affordability of subsidized fertilizer allocation to the benefit of farmers. The paper has explored the application of system dynamics to address complex challenges in supply chain management. Two schemes for distributing fertilizer have been examined, namely the single trip and the milk run schemes. A case study focusing on fertilizer distribution in Cluster 4 (Dumai, Pangkal Pinang, and Bengkulu) has been conducted. Through distribution simulation, the goal has been to minimize operational costs based on these two schemes and achieve cost reduction by varying ship sizes. The simulation results have eventually favored the milk run scheme as the most cost-effective option for Dumai, Pangkal Pinang, and Bengkulu.