Resilient Chains in a Regulated World: Navigating Supply Chain Challenges in Indonesia’s Cigarette Industry

Abstract

The Indonesian cigarette manufacturing industry plays a significant role in the national economy through its contribution to employment and government revenue via excise taxes. However, it operates in a highly regulated environment characterized by complex agricultural dependencies and logistical challenges. This study aims to analyze the structure, performance, and key challenges of the supply chain and logistics networks within this industry. The research adopted a qualitative approach using secondary data sources, including academic literature, industry reports, and government regulations. The Supply Chain Operations Reference (SCOR) framework was applied to systematically examine the upstream, midstream, and downstream stages of the supply chain. Results reveal a vertically integrated supply chain supported by strong contractual relationships with tobacco and clove farmers, strategically located production facilities, and an extensive multilevel distribution network. While these elements enhance cost efficiency and supply stability, the industry faces notable challenges such as seasonal fluctuations in raw material availability, heavy reliance on labor-intensive hand-rolled production, rising excise taxes, and regulatory pressures that affect logistics efficiency. This study concludes that improving digital integration, forecasting accuracy, traceability systems, and logistics coordination is essential to strengthen long-term operational resilience and competitiveness in Indonesia’s cigarette manufacturing sector.