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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

Vulnerability and Capability Factors for the Indonesian

Biodiesel Supply Chain Resilience

F Agustina1,2, I Vanany1, and N Siswanto1

1
Department of Industrial and Systems Engineering, Institut Teknologi Sepuluh
Nopember, Surabaya, 60111
2
Department of Industrial Engineering, Universitas Trunojoyo Madura, Bangkalan,
69162
Corresponding email: fitri.agustina@trunojoyo.ac.id

Abstract. Biodiesel is one of the biofuels identified as a complement to conventional fuels.

Socially and environmentally, biodiesel has been known to provide benefits for creating new
jobs, revitalizing rural areas, and reducing global warming. However, the biodiesel industry often
faces various challenges, one of which is uncertainty in decision-making. Uncertainty in the
supply chain is considered as one of the greatest challenges to managing and controlling the
supply chain. Other types of uncertainty are associated with events that decision-makers cannot
predict or control, such as natural disasters, accidents, or artificial disasters. Supply chain
complexity and global competition have increased their exposure to disruption. Therefore,
reacting appropriately to disruptions is necessary for business continuity. Ultimately, resilience
capabilities must be developed to help companies become more resilient than before. This paper
identifies and determines the vulnerability and capability factors in the Indonesian biodiesel
supply chain. The result shows several vulnerability factors, such as turbulence (price,
technological failure, and pandemic), external pressures (policy and regulation), and resource
limits (supply, capacity, and land availability), that may affect the resilience of the biodiesel
supply chain. Meanwhile, capability factors that can be utilized to reduce these vulnerabilities
are flexibility in sourcing, flexibility in order fulfilment, capacity, adaptability, visibility, and
collaboration. The practical implications are also described in this paper.

1. Introduction

One of the biofuels developed in Indonesia is biodiesel. Biodiesel is an alternative fuel sourced from
vegetable oil, animal fat or used cooking oil through a transesterification process using alcohol. The
potential of biodiesel is as a substitute for diesel fuel because of its similar characteristics. In addition,
biodiesel is a renewable fuel, easy to process, safe for the environment and biodegradable [1] [2].
Based on a study by [2], palm oil is an agricultural product with the highest priority as feedstock for
biodiesel production. This study was conducted by considering several criteria, i.e., surplus food, crop
productivity, biofuel yields, multipurpose energy plants, plant development readiness, government
policies and land utilization does not compete with crops /easy to grow on marginal land. Palm oil as a
feedstock for biodiesel production is obtained from Fresh Fruit Bunch (FFB), which is processed to
produce products such as Crude Palm Oil (CPO), Palm Kernel Oil (PKO) and Palm Kernel Cake (PCK).
In addition, to fulfil the needs of the food and pharmaceutical industries, CPO is also used to produce
biodiesel.

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

From year to year, the development of biofuels in Indonesia has increased in quantity and capacity.
This indicates that the government's efforts to encourage the development of biofuels are on the right
track. The target for biofuel utilization of 5% (22.26 million KL) must be realized by 2025 [3]. To
expand the use of biodiesel, the government made a mandatory policy of B20 biodiesel which was
carried out gradually (Decree of Minister of Energy and Mineral Resources No.12, 2015) for both Public
Service Obligation (PSO) and Non-PSO transportation, industry and commercial, and electricity sectors.
In this policy, the minimum percentage of biodiesel is 20% with diesel oil in the blending refinery. In
addition, [4] stated that the B20 mandate had positively affected the economy, social, and environment,
although it is still in progress towards optimality. Furthermore, the number of blending rates is
increasing based on the feasibility research conducted. One of the progressive achievements of the
government's mandate is that the implementation of B30 officially begins in January 2020. However,
the realization rate of biodiesel production is always under the target (from 2009 to 2019) [5]. This
condition implies the existence of a complex problem that causes the production target has not been
achieved. The source of this problem may be internal and external to the biodiesel supply chain.
[6] state that the main problem in managing the supply chain is the existence of uncertainty.
Although it was detected that there were several attempts to minimize the effect of uncertainty in the
decision-making process, such as reducing variation and increasing forecasting accuracy [7]. However,
there is uncertainty with events that decision-makers cannot predict or control, such as natural hazards,
accidents, or even deliberate actions [8]. This can lead to disturbances that have a negative impact on
performance, profitability, sales, cost structure, and inventory [9]. Indonesia is committed to improving
the biodiesel industry, issues related to uncertainty and the impact of the risks should be considered in
the future [10]. In addition to the uncertainty that will disrupt supply chain resilience, the challenge of
biodiesel utilization is also contributed by the complexity of the supply chain network from upstream to
downstream (five connected layers) and involves numerous actors [11]. Therefore, to help enterprises
become more resilient or less vulnerable to disruption, resilience capabilities should be developed in SC
[12]. This study aims to explore and elaborate on the vulnerability and capability factors as a construct
of biodiesel supply chain resilience in Indonesia. Analysis and synthesis were carried out by conducting
literature studies and interviewing experts.

2. Materials and methods

2.1. Research framework

This study adopts the biodiesel supply chain network in the Indonesia by [11], shown in Figure 1. The
network structure shows that there are three parts with five layers, following the supply chain concept
plan, source, make, and deliver as follows:

1. The upstream network ensures and provides Fresh Fruit Bunches (FFB) harvested from private,
government, and individual oil palm plantations. FFB is the raw material for Crude Palm Oil
(CPO) production.

2. The midstream network is responsible for producing biodiesel in the bio-refinery.

3. The downstream network will distribute biodiesel to end customers through dispensing stations.
Previously, biodiesel must be mixed with diesel oil according to a mandated ratio of 20 or 30%
at the blending station.

The biodiesel supply chain has different characteristics than the manufacturing supply chain.
Furthermore, the biodiesel supply chain uses raw materials for agricultural products, which are
characterized by (1) perishable agricultural products, (2) planting, growing, and harvesting processes
depending on climate and season, and (3) various sizes and shapes of products, (4) large, i.e., the product

2
International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

is difficult to transport or manage because of the size, shape, and complexity of the product [2].
Considering these factors, the uncertainty factors will be more complex in the biodiesel supply chain
than in the general manufacturing supply chain.

UPSTREAM MIDSTREAM DOWNSTREAM

Biomass production
CPO Feedstock
at Oil Palm Biorefinery Blending Station Dispensing station
Production
Plantation

Petroleum Industry
Private estate plantation

Government estates Terminal for biodiesel End Customer

CPO PLANT Biodiesel Plant blending and storage
plantation

Smallholder plantation
Export Export
CPO B100

Managed Demand Management

Managed Order Fulfillment
Managed Customer Relationship Management

Figure 1. An integrated Indonesian biodiesel supply chain.

This research was conducted in two steps. The primary objective of this study is to determine
vulnerability and capability factors in the Indonesian biodiesel supply chain. The steps described as
follows:

1. The first step is to determine the dimensions of supply chain resilience. Resilience can be
examined from two aspects: vulnerability and capability [13] [14]. [15] defines vulnerability as
the properties of a production system that can impair or limit its ability to threats and
unanticipated occurrences deriving from both within and outside the system's boundaries.
Meanwhile, capability is a characteristic that allows a company to predict and overcome change
[14]. The next step is to identify the vulnerability and capability factors of the Indonesian
biodiesel supply chain. According to prior research, the biodiesel supply chain is susceptible to
a number of uncertainties. This study classifies disruptions according to their origin, namely
internal sources such as oil palm supply, demand, lead time, and external sources, such as natural
disasters and artificial disasters [16] [17]. The capability factors will be explored according to
the supply chain resilience literature in the context of biodiesel.

2. The second step is to validate vulnerability and capability factors with experts. This process is
conducted by making a questionnaire addressed to three experts in the biodiesel supply chain.
Experts will assess with scores from 1 to 5; the higher the value given to the assessment, the
more important these factors are to be considered. After that, we determine a cut value to select
these factors. Most of the research on supply chain resilience focuses solely on the aspect of
supply chain capability. The supply chain's resilience increases along with its capabilities to
mitigate vulnerabilities.

2.2. Research Instrument

A qualitative approach with an in-depth literature study combined with a quantitative survey will be
carried out in this research. A literature study is used to analyze the dimensions of supply chain resilience
[18]. However, in this study, the input uncertainty that can cause disruption to the supply chain is based

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

on the uncertainty identified in previous studies (Figure 2), added to the current condition, namely the
COVID-19 pandemic as a natural disturbance. The COVID-19 pandemic is affecting public health and
business operations. Moreover, the spread is very fast and deadly. The biodiesel supply chain network,
characterized by many actors and layers, will experience a domino effect from the pandemic. Therefore,
the biodiesel supply chain must be sustainable and robust to adapt to fluctuating market risks due to the
covid-19 pandemic.
This study employs a questionnaire to validate the factors of resilience, vulnerability, and supply
chain capability by providing a rating score from 1 to 5, showing 1 - not important, 2 - little importance,
3 - quite important, 4 - important, and 5 - very important.

Oil Oil Land

palm palm farming
supply price availability

CPO CPO Production

price supply CPO production and Technology
uncertainty operation

Oil palm Biodiesel supply

Biorefinery
production chain performance
uncertainty
uncertainty

Dispensing
Blending station
station

Crude Transport
Policy and Biodiesel Biodiesel Policy and
oil ation and
regulation price demand regulation
price logistic

Figure 2. Uncertainties identified in the Indonesian biodiesel supply chain [11]

2.3. Data Collection

In this study, we validated the vulnerability and capability factors to three experts as decision makers in
the biodiesel supply chain. Respondents will be asked to rate several questions (vulnerability and
capability factors) that reflect their supply chain resilience practices and experiences. Data collection
was performed through questionnaires to experts involved in the biodiesel supply chain, as shown in
Table 1.

Table1. Demographic profile of experts

Company Company type Position of interviewee Experience in present position

A Upstream site Production manager 3 years

B Midstream site Purchasing manager 5 years

C Midstream site Supply chain manager 2 years

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

3. Results and discussion

As defined [19], resilience is a characteristic that makes a supply chain more competitive in the face of
disruption. [20]. Supply chain resilience is designed so that the supply chain is capable of responding
efficiently to disruptive various influences. Some supply chain resilience strategies include redundancy,
responsiveness, flexibility, resilience, speed and collaboration [16] [20]. Resilience has two constructs,
namely vulnerability and capability. [15] defined vulnerability as the characteristics of a production
system that can weaken or limit its resistance to threats and unforeseen circumstances from within and
beyond the system's boundaries. According to [14], capability is a characteristic that allows a company
to predict and overcome change.
Based on Figure 2 and an extensive literature review, Tables 2 and 3 are generated; the findings
highlight the vulnerability and capability factors with definitions, sub-factors, and references for each
factor.
Table 2. Vulnerability factors for biodiesel supply chain
Vulnerability Factor Definition Sub-factor
Turbulence [21] [12] Frequent, uncontrollable changes 1. Fresh Fruit Bunch (FFB) price
in the external circumstances 2. Crude Palm Oil (CPO) price
3. Technology failure
4. Biodiesel price
5. Biodiesel demand
6. Crude oil price
7. Pandemic
External pressures [21] Influences not particularly aimed Policy and regulation change
at the corporation that impede or
impede commercial operations
Resources limit [12] Constraints on production 1. FFB and CPO supply
dependent on the availability of 2. Land farming availability
factors of production 3. Production and operation
capacity
4. Transportation and distribution
capacity.

Table 3. Capability factors for biodiesel supply chain

Capability Factor Definition
Flexibility in sourcing [22] Having able to rapidly switching
between inputs or input modes
Flexibility in order fulfilment [22] Rapidity in modifying outputs or
delivery methods
Capacity [12] Assets that are readily available to
support continuous production
levels
Visibility [16] A comprehension of the state of
operational assets and the
environment
Adaptability [14] [19] Capability to adjust activities in
response to barriers or
opportunities.
Collaboration [21] Capability to collaborate
efficiently with other entities to
mutual advantage
Sub-factor
1. Supplier contract flexibility
2. Multiple sources
1. Alternate distribution channels
2. Multi-sourcing
Reserve capacity
1. Information technology
2. Information exchange
1. Lead time reduction
2. Alternative technology
development
3. Learning from experience
1. Collaborative forecasting
2. Risk sharing with partners

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

[4] has described several challenges related to optimizing the use of biodiesel to promote energy
security, including distribution patterns that are still not synchronized between government regulations,
the biofuel industry, and oil companies (Pertamina). For example, inaccuracies in determining the
delivery point in the distribution network of biodiesel and fossil fuels will affect the mode of
transportation and lead to varying transportation costs. The significant price difference between
biodiesel and diesel fuel poses challenges for the development of the biodiesel industry. In addition, the
rapid upgrading and adoption of production technology will increase production capacity. Although
Indonesia is the biggest producer of palm oil in the world, the productivity of oil palm plantations still
needs improvement.
The literature study results need to be validated using expert opinion to determine whether the
vulnerability and capability factors reflect actual conditions in the biodiesel supply chain. Experts have
provided helpful feedback for developing a supply chain resilience model. Some relevant vulnerability
and capability factors in the biodiesel supply chain are indicated in both Table 4 and Table 5. We set a
threshold value to decide whether these factors deserve to be considered final. The decision threshold
value is 2.5, representing the scale's median value.

Table 4. Vulnerability factors of biodiesel supply chain based on expert opinions

Code Vulnerabilities A B C Average Decision

Turbulence:
Fluctuations in Fresh Fruit Bunch
T1 4 3 3 3.33
(FFB) price selected
Fluctuations in Crude Palm Oil
T2 4 4 3 3.67
(CPO) price selected
T3 Technology failure 4 4 3 3.67 selected
T4 Fluctuations in biodiesel price 2 2 2 2.00 not selected
T5 Unpredictable biodiesel demand 1 1 1 1.00 not selected
T6 Fluctuations in crude oil price 5 4 4 4.33 selected
T7 Pandemic 4 5 5 4.67 selected
External pressure:
E1 Policy and regulation change 4 5 3 4.00 selected
Resources limit:
R1 Fluctuation in FFB supply 1 1 2 1.33 not selected
R2 Fluctuation in CPO supply 3 4 5 4.00 selected
R3 Land farming availability 4 4 3 3.67 selected
R4 Production and operation capacity 4 4 4 4.00 selected
Transportation and distribution
R5 3.00
capacity 3 4 2 selected

In the supply chain vulnerability factors shown in table 4, there are several factors that were not
selected based on expert opinion. These factors are fluctuations in biodiesel price, unpredictable
biodiesel demand and fluctuations in FFB supply. On the other hand, the capability factors obtain an
average value above the decision threshold value (2.5) in Table 5. Therefore, the overall capability factor
will be considered in developing the supply chain resilience framework. It is hoped that these experts
have experience handling vulnerabilities and have developed appropriate mitigation capabilities.

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

Table 5. Capability factors of the biodiesel supply chain based on expert opinions
Code Capabilities A B C Average Decision
Flexibility in sourcing:
FS 1 Supplier contract flexibility 4 3 4 3.67 selected
FS 2 Multiple sources 3 5 4 4.00 selected
Flexibility in order fulfilment:
FF 1 Alternate distribution channels 3 2 3 2.67 selected
FF2 Multi sourcing 5 5 3 4.33 selected
Capacity:
C1 Reserve capacity 3 3 3 3.00 selected
Visibility:
V1 Information technology 4 5 4 4.33 selected
v2 Information exchange 5 3 4 4.00 selected
Adaptability:
A1 Alternative technology development 4 4 5 4.33 selected
A2 Learning from experience 3 4 3 3.33 selected
A3 Lead time reduction 2 4 3 3.00 selected
Collaboration:
CO1 Collaborative forecasting 4 3 5 4.00 selected
CO2 Risk sharing with partners 3 4 3 3.33 selected

A supply chain that fails to build sufficient capabilities to compensate for the high level of
vulnerability will be vulnerable to risk. On the other hand, supply chains that invest too much in
capabilities while vulnerabilities are low will erode profits. Thus, supply chain resilience is obtained
from balancing vulnerability and capability factors. In line with [12], this study determines the
vulnerability and capability factors in the biodiesel supply chain. In the cooperation and coordination of
all supply chain entities, each actor and company must maintain the balance between these capabilities
and vulnerabilities.

4. Conclusion
The resilience of the Indonesian biodiesel supply chain is affected by the types of vulnerabilities and
capabilities that entities have along the supply chain. In this study, several vulnerabilities and capability
factors have been identified. Price, technology failure, pandemic, policy and regulation, supply,
capacity, and land availability are vulnerability factors. Meanwhile, capabilities that should be
developed to mitigate negative risks from vulnerabilities such as supplier contract flexibility, multiple
sources, alternate distribution channels, multi-sourcing, reserve capacity, alternative technology
development, learning from experience, lead time reduction, information technology, information
exchange, collaborative forecasting, and risk sharing with partners. The practical implication is that
practitioners will understand the significant vulnerability and capability factors that can be a source of
information for developing biodiesel supply chain resilience. Several issues related to these factors
should be considered in further studies so that the use of biodiesel is more expansive and achieves the
target as mandated by the government. A detailed analysis of disturbances, recovery processes, and
adaptation efforts will be a significant agenda in future research, particularly in determining the
relationship between capability and vulnerability factors. Finally, considering the relationship between
vulnerability and capability factors, supply chain resilience will be mapped, and strategies to increase
resilience will be formulated.

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

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International Conference on Biomass and Bioenergy (2022) IOP Publishing
IOP Conf. Series: Earth and Environmental Science 1187 (2023) 012037 doi:10.1088/1755-1315/1187/1/012037

[19] Helena Carvalho H, V Cruz-Machado and Tavares J G 2012 A mapping framework for assessing
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