Risk Management of Sugar Production Due to the Magnitude of Losses (Case Study of PT Perkebunan Nusantara X)

Ahmad Zainuddin,Intan Kartika Setyawati,Rudi Wibowo

doi:10.17358/ijbe.3.3.153

Ahmad Zainuddin, Intan Kartika Setyawati + Show 1 more

Open Access

https://doi.org/10.17358/ijbe.3.3.153

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Abstract

High sugar consumption cannot be fulfilled by domestic sugar production. The reason is that the performance and efficiency of the national sugar mills (PG) are still relatively low. Measurement of efficiency of sugar mills can be conducted by counting the sugar losses. This study aims to (1) to analyze the value of loss index and its implications on the efficiency of sugar mills;and (2) to assess the risk due to losses. Primary and Secondary data were used in this study containing annual data of sugar mills performance indicators in PTPN X such as Overall Recovery (OR), Boiling House Recovery (BHR), Mill Extraction (ME),the amount of bagasse, the amount of filter cake, and the amount if molasses at sugar cane factory (period of 2011-2015). The data were analyzed by evaluative descriptive analysis, index calculation, and risk assessment using Failure Mode and Effect Analysis (FMEA) method. The analysis shows that the losses produced by sugar mills in Indonesia are still quite high around 2.60–2.88%. This level of losses shows the performance of sugar mills is inefficient and causes financial losses in sugar mills. Production risk assessment due to losses shows a high level of risk. Therefore, sugar mills must have a program to reduce its level of losses to the minimum level (<2%). Meanwhile, sugar mills must have programs to utilize losses to be value-added co-products. Keywords: losses, FMEA, efficiency, performance, sugar industry

Highlights

Sugar is one of the important and strategic commodities
The research model (Figure 1) and the hypothesis of this study are as follows: H1 : Loss index generated by the sugar mills in PTPN X is greater than 2% resulting in implications for poor efficiency and performance of the sugar mills
The high value of losses will indicate the low values of Mill Extraction (ME), Boiling House Recovery (BHR) and Overall Recovery (OR)

Summary

Introduction

Sugar is one of the important and strategic commodities. The sugar industry in Indonesia is able to absorb a large workforce starting from on-farms to off-farms, has forward and backward linkages, and can improve the welfare of the community (Fahriyah et al 2012; Neves et al 2009; Susilowati and Trinaprilla, 2012; Subiyanto, 2014).The increasing number of population every year has an implication for the increase of national sugar consumption requirement (Hartono, 2012; Sawit et al 2010; Marta, 2011). If viewed from the supply side, national sugar production is still unable to meet consumption needs due to the decline in sugar cane productivity and low efficiency of the sugar mills. This low efficiency is due to the old sugar mill machinery resulting in decreased sugar production; the technology used lags behind other countries, and this has implications for the low quality of sugar (Sugianto, 2007; Bantacut, 2010; Tinaprilla and Ariesa, 2012; Cahyati, 2012; Tayibnapis et al 2016).

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