An exciting new world is taking shape right now in Leuna, Germany, where UPM (United Paper Mills) is building the world’s first biorefinery to create the biochemicals industry of the future – based on wood.
Poised to be the chemical feedstock of the future, wood is one of the best alternatives to oil because, unlike fossil fuels, it’s renewable.
Producing chemicals from trees
“At Leuna, we’re taking the production of wood-based renewable biochemicals from idea to reality,” said Andreas Meggendorfer, director of supply chain and sourcing at UPM Biochemicals, at the recent LogiChem EU 2024 event in Rotterdam. He was present at the event with his supply chain counterpart Sonja Escherich. Together, the duo is responsible for sourcing, planning, and execution at UPM’s Biochemicals branch of the business.
UPM Biochemicals is part of the larger UPM operation, which operates 55 production plants that employ 16,600 people worldwide. The company manufactures renewable and recyclable products for use in packaging, labeling, construction, transportation, bioplastics, biomedical supplies, and much more.
Wood is a mixture of three natural polymers – cellulose, lignin, and hemicellulose – which can all be used in biofuels and bioproducts. UPM’s lignin-based Renewable Functional Fillers (RFF), for example, are a completely new, sustainable alternative to replace carbon black and precipitated silica, both used to reinforce rubber in tires, hoses, rubber floorings, and other rubber applications.
UPM’s renewable bio-monoethylene glycol (BioMEG) serves as a base material for various industrial products and consumer goods, such as PET bottles, packaging materials, polyester textiles, and engine and battery coolants. Its renewable bio-monopropylene glycol (BioMPG) is converted into cleaning agents, deicing fluids, fragrances, and cosmetics.
As these products can all be integrated into existing production and recycling processes, they enable the transformation of the chemicals value chain toward renewable circularity. UPM’s biochemicals are made from 100% responsibly sourced and certified hardwood and have a radically improved CO2 footprint compared to fossil-based alternatives.
Wood used to produce renewable biochemicals in the UPM biorefinery in Leuna is either certified by the Forest Stewardship Council or Programme for the Endorsement of Forest Certification. The wood is also taken from forests where biodiversity and natural ecosystems are preserved. All UPM’s wood is fully traceable, controlled, and covered by a verified third-party chain of custody, putting UPM in the pole position for compliance with the new EU Regulation on Deforestation-free products going into effect at the end of 2024.
Delivering across the value chain
Equally important is the fact that the team is managing the entire logistical process - from sourcing wood and managing the business process landscape to customer delivery - as an end-to-end integrated activity. This includes simplifying and automating processes such as paid to release, which confirms that freight charges for the cargo have been paid and the goods can be released on arrival. Any glitches in these logistical processes can hold up the entire chain of activities at the freight yard as trucks arrive and depart to unload supplies or pick up products.
“By digitalizing and harmonizing these processes, we’re laying the foundation for automation,” said Meggendorfer. “This includes real-time traceability, which helps us identify potential issues and take corrective action as needed.”
To help ensure the highest operational efficiency at the loading bays in the Leuna Biorefinery yard, UPM collaborated with its logistics service providers (LSPs) to develop a smooth process.
“We developed our smart gate operations strictly from the point of view of the truck driver,” Sonja Escherich, senior manager for supply chain planning and execution, explained. She was describing the process that includes automatic check-in based on a pre-license plate check before reaching the gate, a self-check-in terminal using cameras, barcode scanners at the loading station and finally, self-checkout at the end.
For results-driven integration of inbound to outbound logistics, the company relies on SAP S/4HANA, SAP Ariba solutions, and the SAP Transportation Management application.
Building a sustainable future
Construction on the UPM Biorefinery began in 2021 with an investment of €1.180 million. Production is expected to ramp up with more than 100 employees at the end of 2024 and a production volume of 220,000 tons per year, delivering its new range of beechwood-based bioproducts including RFF, BioMEG, and BioMPG.
The team was especially excited about the greenfield opportunity to design everything from scratch, especially its engagement strategy with the LSPs.
“We’re not here to talk about IT, but to tell a collaboration story,” said Meggendorfer at the conference. “We started out with a blank sheet of paper to set up a new business in a new location. We’re start-up driven, creating a new system for new products. Most importantly, we wanted new processes that are integrated, collaborative, and standardized so that we can expand on and extend to our own employees and our network of business partners.”
Is a future beyond fossil fuels truly possible? It certainly is when companies like UPM respond to the growth in consumer demand for more sustainable products that are made of responsibly sourced, renewable raw materials. It’s not just about responding to demand; it’s about collaborating with all stakeholders and involving all parties in the process. It’s only when everyone’s needs are considered that you get true, results-driven collaboration – as proven by the UPM Biochemicals team.
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