Implementation of efficient Production Process in RGE’s Business Units

The development of the Royal Golden Eagle (RGE) since it was first named as Raja Garuda Mas has been so very rapid. From being a local scale company, RGE has grown into an international-class corporation. Its success is due to various factors, with one of them being an efficient production process in each of its business unit.

RGE’s many subsidiaries take part in different business fields such as palm oil, pulp and paper, special cellulose, viscose fibre, and oil and gas industries, and not only in Indonesia but spread across the globe in Brazil, China, Canada, and Spain.

With assets of over USD18 billion and up to 60,000 employees, RGE owes their success to many aspects. One of them is the efficiency of the production process and a concrete example is applied by the APRIL Group. This RGE business unit which operates in the pulp and paper industry implements a production process called lean manufacturing.

Lean manufacturing is an important management system on an industrial scale of the production process and in the organisation in general. Its success is guaranteed when the system and process is done well, and APRIL, which has become a big player in the pulp and paper industry, is a perfect example of this.

Lean manufacturing can be understood as a way of thinking and philosophy, with methods and management strategies to improve efficiency in manufacturing or production lines. Its implementation has the aim of maximising value for customers and increasing company profits by eliminating activities that do not provide added value (waste). This work system was adopted from a working system of a big company in Japan, that was able to run their organisation very well because they implemented the lean manufacturing work system.

In practice, the emphasis in the lean manufacturing system is the increase of value-added qualities. However, in other parts, the company will cut back on things that do not provide benefits. APRIL chose to implement lean manufacturing and they also managed to run it successfully.

As a result, the APRIL mill is rated as one of the five most efficient pulp and paper mills in the world, and APRIL is known as one of the largest pulp and paper producers in the world. Its main base in Pangkalan Kerinci was able to produce 2.8 million tonnes of pulp in just one year, and adding to that is its paper production, which reached 1.15 million tonnes in the same period.

APRIL does not get their raw materials from natural forests, but instead chose to manage their own plantations. They planted acacia trees, which is a source of raw materials in an area of ​​480,000 hectares. For its day-to-day management, APRIL cooperates with 40 long-term supply partners, a move that made about 79% of the company’s fibre needs met.

Lean manufacturing is run seriously by APRIL. The business unit of the group that stands under the name Raja Garuda Mas consistently tries to increase value while eliminating “waste” that does not boost performance. This principle is in line with the implementation of lean manufacturing.

Companies are required to cut various types of waste so that the production process can run effectively. In the lean manufacturing principle, there are eight known wastes – namely transportation, excess inventory, movement, waiting, excess production, excess processing, reworking and skills. However, nothing is fixed and companies can still sort their waste according to their respective business fields.

Four saving aspects

APRIL chose four aspects that form the basis of efficiency. The first aspect is transportation, followed by energy, water and emissions. In transportation, APRIL had its own advantages. Asia is one of the largest pulp and paper markets in the world, with a sale value that is said to reach USD332.51 billion.

With a factory base in Indonesia, APRIL had a regional advantage to reach the Asian market and they were able to pay less transportation costs as compared to other companies in Europe and North America. And with the production of products made of high quality, it is not surprising that a number of brands produced by APRIL were accepted in the international market. An example is PaperOne, a premium paper brand that has been sold in 70 countries worldwide.

In relation to energy, APRIL chose to boost the use of renewable energy within the company by reducing the use of fossil fuels that were not environmentally friendly. The method taken by APRIL was to treat the waste produced as an electrical energy source. When producing pulp and paper, there is residual production called black liquor or leachate, which is a liquid waste that contains 70% -72% solids. This is produced after the wood that was recycled from the digester in the pulp and paper manufacturing process, is put into the digester.

Leachate can also be processed into energy sources. This is done by operating the world’s largest recovery boiler, which functions to capture energy from black liquor derived from the process of making pulp, which is then converted into electricity. Aside from leachate, APRIL Pulp also utilises waste from wood cleaning. Pieces of bark and dirt are processed into biomass energy and just like leachate, this energy source can be renewed and is environmentally friendly. Thanks to this step, the use of fossil energy at APRIL has greatly reduced.

The impact of energy efficiency by using environmentally friendly renewable energy is clearly visible at APRIL. Their emissions are very few and decreasing, and APRIL continues to absorb emissions. The impact of this is evident when the emissions they produce are far less than what they are able to absorb.

In relation to water utilisation, APRIL did it as effectively as possible by taking water from the Kampar River, which crosses the Pangkalan Kerinci area for production. However, the amount of water they use is very small when compared to Kampar River’s water discharge. The business unit of the group that stands as Raja Garuda Mas only uses 1.89 percent of the average Kampar River water flow, which is far below government regulations. Its use was carried out effectively.

Only 22 percent of water is used in the pulp and paper production process, and as much as 78% can be returned to the Kampar River safely. Previously, around 90% of the water used by APRIL had undergone a recycling process, thus cleanliness and safety are guaranteed. These steps make lean manufacturing work well within APRIL, which is what makes the business unit part of the group, standing under the name of Raja Garuda Mas, be able to develop into a large organisation.