The Importance of Digitalization in Jepara Furniture Industry
This article is a resume of paper which one of our team has presented in a conference in Milan, Italy.
Furniture is one of the potential commodity owned by Indonesia. It ranks secondly from the top tropical country that exports furniture. However, Indonesian furniture industry has fallen down year to year and faced the degradation of the total amount of furniture export.
On the other side, the growth of digital industries in Indonesia is growing rapidly in the last 6 years. As a result, many e-commerce arise in order to resolve various problems in the distinct field, also gave an impact on economic value in Indonesia. Furthermore, in 2019 the growth of national digital industries is expected to grow above 11% per year
1. The Potential of Furniture Industry
Furniture industry in Central Java is one of the biggest industry, and it has competitiveness on the national and ASEAN level. Jepara identified as export-oriented on wood furniture (Tulus, 2009). In 2009, it is also noted that Jepara contributed 29% of economic in Indonesia (Purnomo 2010). The value of this industry reaches more than 1 trillion rupiahs. In 2017, Jepara exports improved from $110 million to $150 million and give 10% of total amount of national exports, $1,5 billion dollars (Jepara Central Bureau of Statistics, 2015). Local industries play its role as a contributor to the national economic value, and it’s crucial to be developed (Rokhim et al. 2017). In a research study by Tulus (2009) small-medium enterprises (SMEs) have an important role in the development and the growth of Indonesian exports, particularly in manufacturing
2. E-Commerce Furniture Platform
Let’s see Fabelio.com has significant growth when adopting e-commerce in the furniture industry. E-commerce has a profit-giving opportunity for businesses in developing countries driven by the perceived internet potential of reducing transaction costs by passing through multiple intermediaries and facilitating links with global supply chains (Licker and Mola, 2005). In order to take advantage of these potentials, the business can adopt eCommerce. Indonesian furniture industry and the environment is one of the potential sectors that can be developed, particularly in Jepara. Through the platform, selling the furniture goods that supply from the local seller especially in Jepara becomes the primary model of the business process. Due to this reason, now we are developing an e-commerce furniture platform which empowering the creation of local craftsmen – posteak.com
3. The Impact of E-commerce Platform
The adoption of this technology will increase the effectiveness and efficiency of the business process in some areas such as communication, supply chain and logistics. First, connecting customer and supplier to the companies through the platform will enhance communication between the elements of the business. Second, supply chain becomes the main area that can offer big positives impact on the business process. As the results, it can change cost structure such as lowering the cost of the material ordering process, material inventories, and moreover, it is not only about the cost, but also the faster and cheaper identify suppliers, shorten intermediaries, to stimulate the competition between suppliers. Third, logistics also becomes the important sector that can be developed on e-commerce platform regarding to the traditional business process of logistics in Jepara. Thus, e-commerce platform offered service on logistics. Firms that use outsourcing in e-commerce will affect the firm performance, enhance logistics capability, and impact on customer satisfaction.
The conclusion highlights the digitalization as a solution to raise the Indonesian furniture market in Jepara, Central Java. Some studies show the adoption of digitalization especially e-commerce will give advantages to the industry. With a number of SMEs that work on the furniture sector, it is potential to adopt the e-commerce. The adoption of e-commerce will extend their businesses beyond conventional marketing boundaries, and more effectively plan the participation into the environment.
Author(s) of the paper : M. Fariz Zakka Z. , Muhammad Ilham, Istyakara M.