Supply challenges remain a systemic obstacle for micro, small, and medium enterprises (MSMEs). The availability of raw materials in terms of quantity, quality, price, and timeliness is fundamental to sustaining business operations. Disruptions in raw material supply affect production processes, increase operational costs, and weaken the ability of MSMEs to respond optimally to market demand.
Director of Community Service at Universitas Gadjah Mada (DPKM UGM), Dr. Rustamaji, explained that formal supply chain management practices, such as raw material planning, supply source diversification (multi-sourcing), supply contracts, inventory control (using methods such as EOQ or safety stock), and the use of supply chain information systems, have yet to become common practice among MSMEs.
This condition leaves MSME vulnerable to price fluctuations and logistical disruptions, which ultimately reduce production capacity utilization and workforce productivity.
“Various economic studies and policy reviews show that adopting basic supply chain management practices can improve production efficiency, reduce stockouts, and enhance the timeliness of product delivery to customers,” said Dr. Rustamaji during the opening of UMKM Class Series #28 on Strengthening Raw Material Availability and MSME Branding, held at DPKM UGM, Bulaksumur, Tuesday (Sep. 16).
The UMKM Class Series #28 was organized by DPKM UGM, featuring three speakers: Dr. Megita Ryanjani Tanuputri, a lecturer at the Faculty of Agricultural Technology, UGM (FTP UGM); Dr. Novita Erma Kristanti, also a lecturer at FTP UGM; and Muhammad Helmi Rakhman, founder and owner of Angkringan Jogja.
The discussion was moderated by Dr. Muhammad Prasetya Kurniawan from FTP UGM.
Dr. Tanuputri highlighted that based on a UNDP–LPEM UI survey, around 48 percent of MSMEs reported difficulties in securing raw materials, particularly during the recent crisis. These challenges directly disrupted production, increased operational costs, and weakened the ability of MSMEs to meet market demand effectively.
She further explained that MSMEs’ connectivity to broader supply chains, which are structured domestic networks and global value chains, remains low.
Data from business associations and national media show that only around 7 percent of MSMEs are integrated into domestic supply chains, while just 4 percent participate in global supply chains.
“This limited connectivity restricts MSMEs’ access to large-scale suppliers, purchasing contracts, long-term financing schemes, and quality standards needed to achieve economies of scale and maintain supply stability,” she noted.
According to Dr. Novita Erma Kristanti, marketing aspects, particularly branding, serve as strategic instruments to build perceptions of quality and increase consumer trust. The adoption of formal brand protection and management among MSMEs remains very limited.
Official data show that of the tens of millions of MSMEs in Indonesia, only about 11 percent have registered their intellectual property (trademarks).
“This limitation weakens MSMEs’ bargaining power, increases the risk of product counterfeiting, and hinders their market expansion,” she said.
Meanwhile, Muhammad Helmi Rakhman emphasized that shifting consumer behavior and the growth of digitalization present significant opportunities for MSMEs.
Based on government data and sectoral studies, in 2023, around 22 million MSMEs, or about 33-34 percent of the total, had engaged in the digital economy through social media and e-commerce platforms, using them as sales and branding channels.
“Although digital adoption continues to grow, many MSMEs have yet to integrate consistent branding strategies, including visual identity, brand narrative, and social proof, with effective supply chain management practices,” he explained.
Author: Agung Nugroho
Post-editor: Rajendra Arya