WHO'S WHO / October 2019

Improving Indonesia’s Human Resources Through Better Sanitation

By Albert W. Nonto

Hanafi Atmadiredja, president director of Surya Toto Indonesia, said the company was involved in an initiative to create a better sanitation, both in homes and in public spaces across the archipelago. He said better sanitation was an important part of the government’s push to improve the country’s health care system. And although sanitary systems in the country have improved over the past decade, with many homes, even in remote areas, now being equipped with basic systems, there was still plenty of room for improvement. Quoting a 2017 World Health Organization report, he said Indonesia could still do a lot to improve sanitation, as only 45 percent of its population currently has access to standardized and safe waste management systems.

Hanafi pointed out that many aspects still had to improve, from water supply and waste treatment systems to greater public awareness. Toilets are only a small part of the sanitation system. Most homes and buildings in Indonesia currently still use individual septic tanks, while only few are connected to integrated and sophisticated waste management systems. “Waste management is important, as this determines the effectiveness of the entire sanitation system. Better waste management prevents the spread of disease-causing bacteria,” he said.

Hanafi is also keen to see the installation of public toilets in poorly managed areas. And as more people have access to public toilets, the company launched awareness campaigns to encourage more responsible use. It therefore supports an ongoing campaign by the Indonesian Toilet Association (ATI) to promote clean and hygienic toilets in public areas. He echoed a message by ATI chairwoman Naning Adiwoso, who urged people and organizations, such as airport operators, to maintain and improve the quality of public toilets to prevent the spread of disease and help improve Indonesia’s image abroad.

Continuous R&D

Surya Toto Indonesia has been partnering with the Japan-based Toto Corporation since 1976. Hanafy said research and development played an important role in the company’s success. The Toto Corporation spends about $100 million per year on research and development of new products to suit the needs of a new generation of customers and implement new inventions, such as electric toilets and the use of nanotechnology in sanitary products. “Maybe the research findings may not yet have practical applications in existing product lines, but Toto always believed that someday, as time passes and customers increase their purchasing power, they will be able to afford such products,” he said.

In the Indonesian market, research and development activities have been focused on marketing, to find strategies to capture a larger slice of the market with more affordable products. Indonesia’s rising middle class has also translated into increased sales for the company, as consumers raise their living standards. For instance, when the company entered the Indonesian market in 1976, the price of a toilet used to be equal to about 10 months’ wages of an average worker, but as the company improved efficiency and capacity at its production plants, including with the deployment of automation, prices started to come down.

Ongoing research also resulted in more efficient water usage, reducing the average volume needed to flush a toilet to 4.5 liters from about 10 liters previously. “We also understand that most Indonesian customers are price conscious and rarely pay attention to water consumption, but we are confident that 60 percent of our products are very efficient in terms of water consumption,” Hanafi said.

He said the company now controls more than 60 percent of the local market and that it has an annual production capacity of about 240,000 toilets. The remainder of the market is shared by smaller players, including companies that import products from China, Malaysia and Vietnam. “Our market share shows that the company has implemented the right strategy so far,” Hanafi said.

Surya Toto Indonesia continues to adopt the latest technologies, including robots, in its production processes, while also improving the skills of its workers. Hanafi said the company supports the government’s push for implementation of the latest technologies in the country’s industries, but said human skills remained essential in the entire production process, as some tasks can currently only be performed by people. From a broader perspective, the manufacturing sector employs more low-skilled workers than high-technology companies.

The company’s long presence in Indonesia has seen it become the market leader. “We are fortunate, because the company has been here for quite long and we have a deep understanding of the needs of our customers and the latest trends. This helps the company adapt to changes in the market. For example, when the high-end property market, at which most of our premium products were targeted, started to slow down, we adjusted our focus to low- and middle-income customers, which continue to increase every year. “As 70 percent of our product are destined for the domestic retail market, the the company still makes good business, despite a 10 percent slump in sales this year,” Hanafi said. The company is currently working with more than 2,000 business partners, mainly retailers, across the country to keep its business stable. The Toto Corporation, meanwhile, also allows Surya Toto Indonesia to sell its products in the international market.

This makes Hanafi optimistic about the company’s future. He said the pie is still big and that the company already has eight plants producing sanitaryware, fittings and kitchen furniture. Surya Toto Indonesia has large production facilities in Tangerang, Banten, and Surabaya, East Java. It plans to build a new plant every two years to cope with the growing demand outside Java, including in Indonesia’s new capital, which will be developed in East Kalimantan soon. “Indonesia’s archipelagic nature results in logistical challenges for the company, so we plan to open plants closer to our customers to keep distribution costs down,” he said.

Passion and Hard Work

Hanafi took over the leadership of the company in 2013, having served as marketing director since 2009. He has come up with a plan to maintain the company’s position as market leader, while developing additional businesses related to its main undertaking. As its sanitaryware sales continue to grow, it is targeting increased sales of bathroom fittings, accessories and high-end products in the premium market, including upmarket hotels. His goal is to continue growing the company’s revenue and market share, while also embracing technology and sustainability. To adapt to changing trends in the market, the company is also collaborating with local and international designers to update its products and keep them innovative.

Hanafi said his father, Mardjoeki Atmadiredja, was his business mentor, who had taught him to be passionate about what he does, the value of hard work and the importance of maintaining relationships with business partners and customers. The family has had close ties with the company’s Japanese partners for more than 43 years. Mardjoeki started the business selling sanitaryware to businesses in Jakarta 50 years ago and established its first production facility in 1976, in cooperation with the Toto Corporation.

While marketing is essential for sales, a steady supply of high-grade raw material is important to making good quality products. Hanafi said approximately 50 percent of the materials used in the company’s products are still imported, mainly due to a shortage of materials at home. “The materials used for making sanitaryware, such as kaolin, are not widely available, as most miners concentrate on coal or gold, which are more valuable,” he said. He added that strong supervision was required in the production process, especially when it comes to selecting materials and mixing the more than 30 minerals to ensure quality products.

Almost 90 percent of the company’s products are made in Indonesia, but the remainder, mainly for the high-end market, are still imported from Japan. However, the premium market has been stagnant for nearly a year, mainly due to political uncertainty before and immediately after the April simultaneous legislative and presidential elections.

Hanafi said human resources are key to the company’s survival. This includes adapting the leadership style to better accommodate millennials. “Giving them the freedom to express themselves makes them more productive,” he said, adding that millennial workers require a significantly different approach compared with those from previous generations. He said about 70 percent of the staff at the company›s head office are millennials, while those working in the production plants are generally older. “We maintain favorable human resources policies to ensure that our 4,500 workers want to stay with us, and this is proven by our low staff turnover,” he said.