Cost Leadership Strategy

Kelompok 5 Muhammad Yanuar H 29112640Muhammad Baqir 29112641Untung Suhartanto 29112654Rudy Setiadi 29112645Anom Yudha 29112621

Overall Mining Activities

Cost driver :-Exploration drilling processOpportunity to reduce cost :- Desk study & geological mapping before drilling

Cost driver :- Top soil loading & hauling process Opportunity to reduce cost :-Direct spreading- Fixed boundary plan

Cost driver :-Blasting material cost (import)Opportunity to reduce cost :-Buy from local supplier Linkage to overburden removal productivity

Cost Driver, Opportunity to reduce cost and Activity linkage

Cost driver :- Fuel & tyre consumption- Equipment maintenanceOpportunity to reduce cost :- Optimize match factor & cycle time- Road maintenance- Stockpile management- Build overland conveyor- Non OEM partsLinkage to coal mine & coal crushed productivity

Cost driver :- Fuel consumption (genset)- Equipment maintenanceOpportunity to reduce cost :- Build own electric generation- Maintenance & operation management Linkage to coal shipment

Cost Driver, Opportunity to reduce cost and Activity linkage

Cost driver :- Fuel & tyre consumption- Equipment maintenanceOpportunity to reduce cost :- Optimize match factor & cycle time- Road maintenance- Stockpile management- Build overland conveyor- Non OEM partsLinkage to rehab target

Cost driver :- Pond construction cost- Water treatment costOpportunity to reduce cost :- Water management- Final pit design linkage to environmental & external cost

Cost driver :- Nursery costOpportunity to reduce cost :-Using local fertilizerlinkage to environmental

Cost Driver, Opportunity to reduce cost and Activity linkage

Relative important to total cost of product and how to implement cost leadership

• Overburden blasting– Buy blasting material from local supplier

• Overburden removal & coal mining- Optimize match factor & cycle time- Road maintenance- Stockpile management for coal- Build overland conveyor for coal hauling- Use non OEM parts

Differentiation

Inbound logistic - Wide range coal

quality - High coal reserve

Operation: - Coal

blending/processing - Coal washing plan.- KPC as object vital nasional (obvitnas)- High capacity of

production

Outbond logistic :- Overland conveyor

coal - Near to port

- High capacity of ship loader

Marketing and sales:- Sales contract

- Geoghrapical position (near to main market)

- Wide market segmentation

- Good quality assurance (independent coal

surveyor)

Service: - Customer technical

support (coal technology)- Zero coal

contaminant

KPC value chain

Inbound logistic - Matching with

power plan spec.

Operation: - Continuity of

coal supply

Outbond logistic :

- On time coal delivery

Marketing and sales:

- Sales contract - Geographical

position (near to main market

- Good quality assurance

Service: - Customer

technical support (coal technology)

Customer value chain

The most promising differentiation for the firm-Continuity of coal supply - quality assurance

Linkages between the value chain of KPC and customer: - Continuity of coal supply: geographical, sales contract,

high coal reserve, high production capacity. - Quality assurance: coal specification, zero coal

contaminant, independent coal surveyor.