Digital Transformation of Sheep Supply Chains: An Integrated Business Model Innovation Framework for Rural Indonesian Agriculture

Abstract

This study investigates the digital transformation of sheep supply chains through business model innovation in Langkat Regency, North Sumatra, Indonesia, addressing critical gaps in agricultural value chain optimization. Despite the importance of livestock farming to rural economies, traditional supply chains remain fragmented with multiple intermediaries capturing 40-60% of value margins, leaving farmers with limited bargaining power and market access. This research introduces and validates an integrated digital supply chain framework that leverages mobile technology, cooperative networks, and direct market linkages to transform traditional agricultural business models. Using a mixed-methods approach, we conducted in-depth interviews with 53 stakeholders across the supply chain in Langkat Regency, North Sumatra, complemented by six months of field observations and quantitative impact assessments. The findings reveal that the integrated digital model increases farmer profit margins by 35-45%, reduces transaction costs by 25%, and improves market access by 50-80%. The research contributes a replicable framework for digital agricultural transformation, demonstrating how technology-enabled business model innovation can bridge traditional farming practices with modern market requirements in rural Indonesian contexts.