Digital Transformation Risk Management in Subsidized LPG Distribution: An Integrated FMEA and ISO 31000 Approach at the Agent Level

Abstract

This study aims to examine the distribution process of 3 kg subsidized liquefied petroleum gas (LPG), identify operational failure modes, and formulate risk response strategies. This assessment is necessary because digitization through the Pertamina Merchant Application (MAP), while intended to improve targeting accuracy and accountability, does not eliminate subsidy misallocation or weaknesses in digital controls. A qualitative instrumental case study used interviews, observations, and document analysis; triangulation and member checking supported credibility. The analysis combined ISO 31000:2018 with Failure Mode and Effects Analysis (FMEA) to prioritize operational risks. The study mapped six distribution stages, used MAP mainly for depot-level consumer transactions, and identified 11 failure modes. Four risks received the highest priorities: diversion of LPG to unauthorized parties (RPN 432), consumers’ failure to provide their National Identification Number (NIK) (378), retailers exceeding allocated quotas (294), and potential manipulation of MAP data (280). The findings indicate that digitization shifts risk exposure from logistics control toward data integrity, downstream actors’ behavior, and transactions beyond system monitoring. Agents and stakeholders should strengthen data validation, physical and digital supervision, inter-actor coordination, and risk escalation procedures. Further research should validate these findings using MAP transaction data from more agents and regions.