Indonesian Packaging Manufacturer Case Study: Closed-Loop Recycling Solution Cuts Waste Disposal Costs by 60%
Location: West Java, Indonesia | Industry: Plastic Packaging Manufacturing | Equipment Installed: Heavy Duty Plastic Crusher, Industrial Cooling Tower, Vacuum Autoloader
A mid-sized plastic packaging manufacturer located in the Cikarang industrial zone of West Java, Indonesia operates two automated blow molding lines producing HDPE containers and bottles for the food, beverage, and personal care industries. With a workforce of 180 employees and a monthly production output of approximately 420 tons of finished containers, the company supplies major consumer goods brands serving the Indonesian domestic market and export customers in Malaysia and the Philippines.
The factory was established in 2016 and had expanded to its current scale by 2022. By mid-2024, management faced a dual challenge: increasing resin prices were squeezing material costs, and new Indonesian government regulations on industrial waste disposal were driving significant increases in landfill and hazardous waste handling fees.
An operational and financial review conducted in July 2024 identified two critical cost pressures that were materially affecting the factory's competitiveness:
The two blow molding lines generated substantial quantities of process scrap — including start-up reject containers, flash from mold parting lines, off-spec products from material changeovers, and damaged goods from line clearance. This scrap accumulated to approximately 28 tons per month, representing 6.2% of total monthly output.
All of this material was being collected by a licensed industrial waste handler and transported to a licensed landfill facility. Under Indonesia's revised Regulation No. 22/2021 on Environmental Protection and Management, the waste handler's fees had increased by 45% in the 18 months to July 2024. Monthly waste disposal costs had risen from 85 million IDR ($5,300 USD) to 123 million IDR ($7,700 USD) — a figure projected to reach 160 million IDR ($10,000 USD) by end of 2025 as further regulatory increases took effect.
HDPE resin — the primary raw material — represented approximately 58% of the factory's total production cost. Global HDPE prices had risen by 22% between January 2023 and July 2024, and the purchasing team had been unable to secure equivalent price reductions from their existing suppliers. At the same time, competitive pressure from lower-cost manufacturers in Vietnam and Thailand meant that finished container prices could not be increased proportionally.
Management recognized that reducing the effective cost per kilogram of material input — by reintroducing production scrap as a blended virgin-recycle material — offered one of the most direct paths to margin recovery. However, the existing scrap handling process was entirely manual: operators collected reject containers by hand, stored them in a rented industrial skips, and sold the accumulated scrap to a local waste buyer at approximately 40% of the virgin resin cost — a significant value loss compared to what could be achieved with in-house reprocessing.
Following a technical evaluation in August 2024, the factory engaged ZILLION to design and install an in-house closed-loop recycling system that would process production scrap back into re-usable recycled granules suitable for reintroduction into the blow molding process.
The system comprised:
Unlike a simple scrap collection approach, the ZILLION system was designed as a continuous closed-loop: reject containers and flash are fed directly from the blow molding line into the ZL-PC500 crusher, where they are immediately granulated. The crushed material is conveyed by the ZLAL autoloader through a closed stainless-steel ducting system to a dedicated storage silo positioned adjacent to the virgin resin feed system. From the silo, the recycled material is metered back into the extruder's feed throat at a controlled ratio of up to 20% recycled to 80% virgin HDPE.
The ZL-60T cooling tower ensures that the crusher's hydraulic drive system maintains stable operating temperatures even during 8-hour continuous production shifts, preventing thermal degradation of the crushed material and maintaining consistent granule shape and size.
Installation was completed over 12 working days in September 2024, with the crusher and cooling tower mounted on a dedicated concrete pad adjacent to the production area. Ducting and silo installation required minimal structural modification. The local ZILLION distributor in Jakarta provided 5 days of on-site operator training covering safe feeding procedures, screen mesh replacement, hydraulic system maintenance, and cleaning protocols for material changeovers.
In the first full month of operation following commissioning (October 2024), the volume of material sent to external waste disposal fell from 28 tons to 3.5 tons — representing an 87% reduction in waste volume. This was achieved because the majority of production scrap (start-up rejects, flash, and off-spec parts from material changeovers) was now being processed through the crusher and reintroduced into the production stream rather than sent to landfill.
Monthly waste disposal costs fell from 123 million IDR ($7,700 USD) to 49 million IDR ($3,100 USD) — a reduction of 60%, representing annualized savings of approximately 888 million IDR ($55,500 USD).
With up to 20% of the extruder feed now comprising in-house recycled material — processed at an effective cost of approximately 30% of virgin resin — the factory's blended average material cost per kilogram fell by approximately 14% in the first three months of operation. After accounting for the additional electricity consumption of the crusher and cooling tower (incremental energy cost of approximately $420 USD per month), the net material cost saving averaged 25% compared to the pre-installation baseline.
The total additional cost of recycled material to the production cost was approximately $0.04 USD per kg of finished product — substantially below both the virgin resin cost and the previous external scrap sale value recovered.
Against total system investment (crusher, cooling tower, autoloader, installation, and commissioning) of approximately $24,500 USD, the factory achieved a simple payback period of 8 months based on combined waste disposal savings and material cost reduction. Beyond payback, the system generates ongoing net savings of approximately $4,600 USD per month.
| Metric | Before | After | Improvement |
|---|---|---|---|
| Monthly Waste Volume to Landfill | 28 tons | 3.5 tons | 87% reduction |
| Monthly Waste Disposal Cost | 123M IDR ($7,700) | 49M IDR ($3,100) | 60% reduction |
| Annualized Waste Disposal Savings | — | 888M IDR ($55,500) | Payback: 8 months |
| Blended Material Cost per kg | Baseline | -14% | Net 25% effective reduction |
| System Investment | — | $24,500 USD | — |
| Payback Period | — | 8 months | — |
| Monthly Ongoing Net Savings | — | $4,600 USD | — |
The factory's operations director cited four factors in the selection decision:
Based on the results of the Phase 1 system, the factory is evaluating expanding the closed-loop system in 2025. Planned Phase 2 upgrades include adding a second ZL-PC500 crusher to handle anticipated volume growth and provide redundancy, installing a metal detection and separation unit before the recycled material silo to ensure zero metallic contamination in the re-entry material stream, and extending the automated feeding system to serve the second blow molding line.
Operating a plastic manufacturing or packaging facility in Southeast Asia with high scrap rates? Contact the ZILLION engineering team for a free waste audit and a customized closed-loop recycling proposal tailored to your production volume and material types.
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