Business Model Canvas for Kenaf Fiber Agro-industry

Development in Upstream Supply Chain Networks

N Nurhasanah1, M R Hakim1,2, A Chirzun1, I K Sriwana3, A Ramadanti1,2

1
Industrial Engineering Department, Faculty of Science and Technology, University of
Al-Azhar Indonesia, Sisingamangaraja Street, Jakarta, Indonesia
2
Industrial Engineering Department, Faculty of Industrial Engineering, University of
Telkom, Bandung, Indonesia
1
Email: nunungnurhasanah@uai.ac.id

Abstract. The industrial revolution 4.0 prompted the government of the Republic of
Indonesia to issue a strategy for revitalizing the Indonesian manufacturing sector which was
aimed at building a strong manufacturing industry. This revitalization strategy is contained in
Making Indonesia 4.0 which was initiated by the Ministry of Industry. The purpose of this
research is to design a business model for kenaf fiber agroindustry in the upstream supply
chain network. This study has four specific objectives, the specific objectives achieved are: (1)
Evaluating the business model of kenaf fiber agroindustry in the upstream supply chain
network, (2) Identifying priority aspects of the business, (3) Designing the institution of kenaf
fiber agroindustry in the upstream supply chain network, and (4) Designing a future state
business model for kenaf fiber agro-industry in the upstream supply chain network. This study
uses a problem solving method with systematic literature review, business model canvas,
exponential loading method, interpretative structural modelling (ISM), and focus group
discussion. Data processing with the ISM method will use ISM software. The phenomenon of
volatility, uncertainty, complexity, and ambiguity (VUCA) that occurs in the industrial world
influences business changes. Business changes are influenced by developments in information
technology, customer behavior, market trends, and distribution channels. This condition cannot
be resisted by industry players, but must be able to be adaptive. Therefore, this research will
model the business of kenaf fiber agroindustry in the supply chain network with a business
model canvas.

Keywords: Business model canvas, interpretative structural modelling, kenaf fiber agro-
industry upstream supply chain network

1. Introduction
The industrial revolution 4.0 prompted the government of the Republic of Indonesia to issue a strategy
for revitalizing the Indonesian manufacturing sector which was aimed at building a strong
manufacturing industry. This revitalization strategy is included in Making Indonesia 4.0 which was
initiated by the Ministry of Industry [1].
Kenaf fiber is one of the vegetable fibers needed as an industrial raw material. Kenaf fiber in the
industrial world is widely used as a raw material for paper [2], composite material [3], textiles and
their derivative products [4]. As a result of processing FAO statistical data, it is known that there is an
imbalance between demand and supply of kenaf fiber in the world by 91.41% [5]. Kenaf fiber
imports in Indonesia reached 90.08% [5], because only 9.92% could be supplied from the domestic
kenaf fiber industry.
Measurement of the performance of the upstream supply chain network has been carried out in
previous studies [6] so that business development is a recommendation for efforts to improve supply
chain performance. The business model canvas (BMC) in this study is the approach used to describe
the business model of kenaf fiber agro-industry in the upstream supply chain network. BMC has been
successfully implemented in research in the aviation industry [7], batik creative industry [8], food
product small scale industry [9], fruit processing small scale industry [9], the renewable energy
industry [10], industri asuransi [11], start-up company [12], and public services [13].
BMC is a framework that helps business people describe the current business model. This approach
is a static approach that uses past data. However, this approach becomes dynamic after being
integrated with certain scientific methods so that it is able to describe its business model in the future.
The purpose of this research is to design a business model for kenaf fiber agroindustry in the
upstream supply chain network. This research has four specific objectives, the specific objectives
achieved are:
1. Identify the superior value of the supply chain of kenaf fiber agro-industry
2. Analyzing gaps in internal and external factors supply chain of kenaf fiber agro-industry
3. Formulate a supply chain development strategy for kenaf fiber agro-industry
4. Determine the most influential important elements in implementing the strategy for developing
the kenaf fiber agro-industry supply chain
When referring to the root of the problem identified from the results of previous research on
upstream supply chain performance measurement [6], namely that the performance of raw materials is
still low, the productivity of kenaf crops is not optimal, unable to serve exports, and the cost of supply
chain management is high. The development of the kenaf fiber agro-industry business in the upstream
supply chain network is an important recommendation in solving the identified problems. Business
development is carried out with BMC, because BMC is a very flexible business modeling tool
approach to be implemented in various types of business models.
The phenomenon of volatility, uncertainty, complexity, and ambiguity (VUCA) that occurs in the
industrial world influences business changes. Business changes are influenced by developments in
information technology, customer behavior, market trends, and distribution channels. This condition
cannot be resisted by industry players, but must be able to be adaptive. Therefore, this research will
model the business of kenaf fiber agroindustry in the supply chain network with BMC.

2. Method
The framework of this research is based on the design of a supply chain business model for the kenaf
fiber agroindustry in the upstream network. The design of a business model is built using a business
model canvas approach with 9 elements as input. The design of this business model begins with
determining the most influential stakeholder elements and having the strongest driving force, as well
as an urgent strategy to be implemented in the development of kenaf fiber agroindustry. The
framework for this research is presented in Figure 1.
 Figure 1. Research frame work

3. Result and discussion

3.1. The determination of the most influential stakeholder elements

The determination is made using an interpretative structural modelling approach. This model was
developed with the support of SIS-ISM software. The results of software processing are presented in
Figure 2 and 3.
In this structural model there are 7 elements, namely seed suppliers (Balittas), fertilizer suppliers,
kenaf farmers, consumers, the textile industry, the ministry of industry, and fiber farmers. ISM
processing results show that seed suppliers have the strongest driving force, so that they are
determined to be the most influential stake holders in the sustainability of this agro-industry. This is as
visualized at Figure 2.
 Figure 2. Structural model of the most influential stakeholder elements

3.2. The determination of the most influential program elements

In this structural model there are 7 elements, namely information technology, government policies,
funding, marketing guarantees, institutions, and technology. The results of ISM processing show that
institutions have the strongest driving force, so that the institutional formation strategy becomes the
most influential action in the sustainability of this agro-industry. This is as visualized in Figure 3.

Figure 3. Structural model of the most influential program elements

3.3. The value proposition
The proposition value (value proposition) of kenaf fiber agro-industry is carried out to identify pain,
gain, and customer jobs. The pain to be identified is pain associated with causes or obstacles that are
not yet developed and are able to compete with kenaf fiber agro-industry at the global level. The gain
to be identified is the advantage currently possessed by this agro-industry. The customer jobs
identified here are businesses carried out by customers related to kenaf fiber products produced by this
agro-industry. The value proposition visualized in Figure 4.

Figure 4. The value proposition

3.4. The business model canvas

At this stage identification and analysis of the business model of the Kenaf fiber agro-industry with the
current condition of the business model canvas for 9 elements is carried out. The business model is
presented in the canvas as shown in Figure 5.

Figure 5. Business model canvas of kenaf fiber agro-industry on up-stream supply chain network
4. Conclusion
The canvas business model for the development of kenaf fiber agro-industry in the upstream supply
chain network has been successfully designed. On the canvas, nine elements of the business model
have been successfully visualized. In the first ISM structural model it is identified that the main
element that has the highest driving force is Balittas which acts as a supplier of seeds in this supply
chain. In the second ISM structural model it is identified that institutions are the most influential
elements in the development of kenaf fiber agro-industry.

5. Acknowledgements
A gratitude to the Institute of Research and Community Services (LP2M) University of Al-Azhar
Indonesia for funding this research and publications.

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