Gede Nugrah Ambara, PT Kaltim Prima Coal - Integrated improvement initiatives and strategic decisions during the challenging situation of low coal prices

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Integrated Improvement Initiatives and

Strategic decisions during the challenging

situation of low coal prices

Presented by : Gede Ngurah Ambara*

Mgr Business Performance Improvement – KPC

Novotel Hotel Balikpapan, Indonesia

2-3 September 2014

*e-mail : [email protected]

ph : +62 (549) 52 1501

Kalimantan Coal Market

• Overview of PT Kaltim Prima Coal Operation

• Challenging time : main driving factors for changes

• Stretching work-load (production) to reduce cost

• Improving Overall Effectiveness of Equipment

• Improve operators and mechanic discipline

• Sustainability of improvement initiatives

• Future Challenge of continuous improvement

The Outline Summary

mailto:[email protected]

1 1

PT Kaltim Prima Coal Vision

Indonesia’s leading coal producer for global needs

delivering optimum values to all stakeholders

Missions

Fostering a culture that considers health, safety

and environment in everything we do, maintaining

good corporate governance and promoting good

corporate citizenship, providing an environment

for learning to achieve excellence and improve

livelihood, Optimizing value for all stakeholders,

and carrying out best practice in management

and operations to deliver consistent high quality

product and performance

2

Location and Project Summary

3

Sangatta Coal Deposit

Sangatta coal deposit occurrs in Balikpapan formation, within

Kutai Basin during Miocene age : located 20 km from the coast,

uncontaminated organic deposits with low ash and sulphur. The

deposit was subjected by a geological intrusion called Pinang

Dome. These pressures and temperature elevated the coal to

higher rank than its age would normally suggest.

Coal occurs in nine principal seams to the west of the Pinang Dome with thicknesses vary from

0.5 to 15 meters, with most in the range 2.4 to 6.5 meters. Seam dips normally varies between

3° and 20°. The overburden consist of incompetent mudstones, siltstones and sandstones.

4

Exploration , Drilling & Geotechnical Monitoring

5 5

Soil Handling, Drill Blast, OB Removal & Coal Mining

6 6

KPC Fleets and Production

Mobile-Heavy Equipment are 974 machines. KPC Daily production:

Explosives usage : 487 tonnes AN , Fuel consumption : 1,200,000 litres ,

Overburden removal : 1,450,000 bcm , Coal mined : 135,000 tonnes

Trucks Units CapacityLiebherr T282 31 360 tonnes

Hitachi EH 4500/5000 129 282 tonnes

Caterpillar 789 94 185 tonnes


Komatsu HD785 52 100 tonnes


Shovels Units Capacity

Liebherr R9800 3 45 m3

Liebherr 996 18 32 to 33 m3

Hitachi EX3600 11 23 to 24 m3

Hitachi EX 3500 6 22 m3

Hitachi EX 2500 4 15 – 16 m3

Liebherr 984C 4 5 – 8 m3

7

CPP Stockpiles

8 stock piles (Prima.Pinang & Melawan Brand)

Total capacity > 300 kt 7

8

13 Km Dual OLC with speed 8.68 m/s

capacity Max 9,000 tonnes per hour

8

Overland Conveyor

9 9

Coal Transport & Loading Facilities (Sangatta)

KPC has complete facilities to provide full coal mining and transportation solutions

Coal Transportation

to Loading Port

13 km Overland Conveyor

Average capacity : 4,200 tph

Coal delivered in approximately

25 minutes

Port Stockpile

Total Stockpile capacity of 2.5 Mt

Stacker capacity of 4,200 tph

Reclaim capacity of 7,500 –

9,000 tph

Ship Loading

Private International Port

2 km Jetty

17.2 m draft deep water berth at low tide

Load vessels up to 220,000 dwt.

Loading rate of 7,500 tph with one (1) leg and up to 9,000 tph for 2 ship loading

10 10 10

Port Stockpile

7,500 tph for 1 Ship Loader

9,000 tph for 2 Ship Loaders

The facility can handle cape Size

Ship (vessel) up to 200 kt with

approx 20-25 hours

11 11

Coal Trans-shipment Facilities

Tanjung Bara Barge Loading

New 1000 tph facility commissioned

Barges loaded to vessel at Tanjung Bara

anchorage

1 km sailing distance from barge to vessel

Lubuk Tutung Barge Loading

2000 tph facility (1000 tph ROM crushing)

Barges loaded to vessel at Lubuk Tutung

anchorage or at FTS

Floating Transfer Station (FTS)

1000 tph floating loading facility

Load up to Capesize vessels

Stationed at Lubuk Tutung (Bengalon)

11

12

Challenging time : main driving factors for changes

Recent Years and Current Situation

KPC has been smoothly moved from 8 to 12 hours/shift roster toward end of year 2012. By doing this KPC

has hindered the requirement to get additional man-power requirement of more than 800 operators.

Meanwhile the expansion project continues, KPC and the other coal mined companies has been heavily

impacted by continual decrease of coal price which due to prolonged economic crisis hit Europe, and

slowing down of China and India economic which limits their coal import demand, and Excess coal supply

from North America. During one year by the end of year 2013, KPC Coal Average Selling Price has dropped

more than 12 USD.

The uncertainty of when the coal price will back to normal continues even until nowdays, with main work

force of 5000 employees, and in total of 23,000 including contractors, KPC faced dilemmatic situation,

rather than doing rationalization of employees, KPC has started to implement several strategic decisions

some of the main ones are :

• Substantially reduce the production by standing down 10 big diggers and more than hundreds of trucks.

• Started a new project of Improvement synergizing two main divisions : mining operation division (MOD)

and Mining Support Division (MSD) to focus on increasing the overall effectiveness of equipment (OEE)

• Deliberately sending the excess operators to a semi-military training to improve their discipline, moral

and work attitudes

• Develop additional work forces to focus on sustaining improvement initiatives at MOD and MSD.

13

Reduce Production: parking up some of the main equipment

Deliberately Parked-up equipment (reducing work-load)

Year 2012 has been the peak of overburden removal production of KPC Pits, after that KPC has deliberately

reduce the overburden production by means of parking-up about 10 big diggers and hundred of trucks.

But in the same time the coal mined has been increasing, by means of reducing the strip ratio. The overall

strip ratio (SR) in year 2012 was 11.7, subsequently reducing to 9.8 by the end of year 2014. The

overburden cost removal constitute about 80% of total mining cost, by doing this strategy, KPC has been

significantly lowering the unit cost of production ($/tonnes).

This parking up strategy has been subsequently implemented since early days of year 2013 and continues

until current time. To support the smoothness of this strategy, KPC management are ensuring that :

•A specific guide-lines/procedures of Park-up are being closely implemented and monitored

•Procedure to re-activate any machine to be followed up carefully

•A Roster/schedule of parking-up the machines is updated regularly to suit to recent/current dynamic

situation of coal mining activities, i.e : a significant change on overburden cycle-time which affect to

increasing number of waiting on trucks or trucks queue times.

•Integrate the park-up and re-activate the fleet with other procedures which may be impacted to, for

instances the SOP of Match Factor which relate to Fuel Efficiency project

14

Reduce Production: parking up some of the main equipment

15

Liebherr T282 – 360 T = 32 Units

New Project : Improving Overall Effectiveness of Equipment (OEE)

Improving Overall Effectiveness of Equipment (OEE)

Through careful study, and benchmarking to similar companies, initiated on early year 2012 and with the

help with external consultant, it was found that KPC assets have not yet sweated , the overall effectiveness

of equipment which were overall availability, usage and utilization were still relatively low compared to

world best practice. Further study also revealed that within digger-truck systems, the diggers capacities

were in excess, while the trucks performances were the bottle-neck which needed to be enhanced .

Since mid of year 2012, a new project called Membara Project was established. This project aimed at

improving overall effectiveness of equipment (OEE) particularly it was first focusing on improving the OEE

of overburden trucks. During first pass off Membara Project, the improvement initiatives to improve the

OEE were focused at two main division i.e. : Mining Operation Division (MOD) which has work force over

3000 personnel, and Mining Support Division which maintain the mining fleet which supported by about

1100 personnel. In MOD, Membara Project was focusing at improving OB trucks utilization on the biggest

pit at that time, i.e. : Pit Bintang, while at MSD the focus was how to improve the physical availability of OB

trucks. At the end of year 2012, in MSD, after completing the project on OB trucks, the initiatives were then

rolled out to Improving Big Diggers and Support Equipment (dozer, grader) availability.

The first pass of Membara Project completed on mid of 2013, which then continued to 2nd pass which focus

on Cycle Time Project and Improvement on Drill and Blast.

The challenge for Membara Projects which are typical for other improvement initiatives is how to make all

improvement initiatives sustained not only during project but keep continues in the future until the life of

mine.

16


Frame-work of Membara Project

Mindsets

and

capabilities

(MC)

Management

infrastructure

(MI)

Management

infrastructure maturity

"The formal structures, processes and systems

through which human and organizational

resources are managed and optimized to

achieve shared goals"

▪ Performance management

▪ Organization design

▪ Continuous improvement infrastructure

▪ Effective review mechanisms

Technical systems maturity

"The most efficient way

physical assets and

resources are configured and

optimized to create value

and minimize losses"

▪ OEE improvement

– Reducing lost time of

un-critical activities

– Improving Physical

Availability (PA) of

trucks

▪ Fleet dispatch

▪ Truck cycle time

management

▪ Maintenance planning

and execution Mindsets and capabilities

maturity

"The way people think, feel and conduct themselves in the

workplace, both individually and collectively“

▪ Management training

▪ Frontline engagement

▪ Effective feedback

Membara framework” focuses on

implementing new initiatives and

ensuring their sustainability, to

achieve its goal

Notes: Improving OEE in

previous term is relatively

similar to improving overall

utilization of the equipment, i.e.

Utilization (KPC) = PA x Usage

17


The Goal of OEE Improvement

A goal of attaining 63% OEE

with a stretch plan of 69%

OEE

All ops delays

System delays

Noncritical

delays

Critical delays

Available

time

BM2

PM1

Total

85

65

Current OEE Potential future

89

71

Avail

ab

ilit

y

Uti

lizati

on

57 63

Availability %

Utilization %

OEE %

1 Planned maintenance

2 Breakdown maintenance

Improvements

Improve availability

from 85% to 89%

▪ Improve MTTR

▪ Improve MTBF

▪ Defect

elimination

▪ Better

comunication

with MOD

Improve utilization

from 65% to 71%

▪ Improved shift

change

▪ Reduce no

operator

▪ Reduce meal

and pray delays

▪ Reduce time for

recovery after

rains

▪ Improve haul

roads

Improved availability

and efficiency resulting in

▪ Improved OEE of 63%

(stretch target 69%)

MC

MI

18


Membara Project improvement process at MOD-MSD

Involving many line teams

and create official SOP

documents; these can

change after better insight

from implementation

Intensive Field Observation

and involving line teams in

refining concept of initiatives

… and lock changes by

creating official SOPs and

Change Management

documents

Also involving all neccesary

stake holders : MOD-MSD

staff, Dispatch, Contractors,

and OEMs

Multiple iterations on the SOP

document were conducted

with all stakeholders to

ensure buy-in

19

Improving OB Truck OEE : the Initiatives development

After multiple idea

generation session in

MSD, MOD and dispatch

a KPC Membara

operating model evolved

and new initiatives were

defined

Category

Manag-

ement

Infrastruct

ure

▪ Robust performance management system introduced that includes appropriate incentive systems and

performance dialogues

▪ Refined organization structure that is aligned towards goal of the organization

▪ Setup a Membara PMO team that will drive continuous improvement at KPC

Mindset &

capabilities

▪ Frontline engagement program to create awareness and generate momentum

▪ Capability building curriculum targeted for Membara change managers and initiative champions

▪ Specific technical training programs for operators, supervisors and mechanics

Reduced repair diagnostics time: ▪ Clear SOP on truck repair for operators ▪ Introduce new diagnosticians team ▪ Contractor management

Reduced repair preparation time: ▪ Portable in-car toolbox ▪ Mini ware-houses in pits ▪ In-pit hose fabricator

Reduced repair complete confirmation time

Reduced repair time: ▪ SMED for priority ideas

Defect elimination initiatives

New equipment strategy

Reduced repair response time: ▪ Staggered shifts for MSD

Improved workmanship

Technical

systems

Improved hauling: ▪ Improved road maintenance ▪ Improved road construction and design

Improved loading: ▪ Refined loading SOPs and methods ▪ Defining optimal loading factors ▪ Matching shovel to truck body sizes

Improved dumping practices: ▪ Refine dumping SOPs

Improved shift change practices ▪ Newly defined shift change process and SOP

Reduction in time for meal and pray

Improved recovery from stops practices

Optimal interfaces between departments: ▪ MOD - MSD

Improve dispatch process and equipment configuration

Improve end to end mine planning and execution process

Make long term strategic mine plan assumptions robust

Planning and dispatch (Mine planning and Mine optimiza-tion)

Equipment availability (MSD- Haul trucks) Equipment utilization (MOD) A C B

20


Improving Utilization of MOD OB trucks

Part of OB Truck’s OEE Improvement at Mining Operation Division Areas is how to improve the utilization

of these Trucks. During Membara Projects and continues to recent time and to be sustained in the future,

there are 4 main areas focus of improving the utilization, that are :

1.Shift Change process

2.Meal and Pray Delay

3.Wet Road Delays (Quick Start-up /Recovery after Rain : QSuar)

4.No Operator Delay

5.Improving Hauling (to reduce cycle time)

These four main improvement initiatives at Mining Operation Division within Membara Project are known

as “Ready MOD” Project

Meal Pray

Shift Change

No Operator

Recovery from rain

Improve Hauling

21

Improving Shift Change Process

Impact Solution Situation

Baseline

Mar 2013

▪ High shift change delay

pre-implementation due

to:

– Operators take long

time in muster area

– Operators take long

to handover at shift

change area

4.2

J

11.9

HT

17.4

BIG

6.9

1. Minimize operator time in muster area

▪ Operators spend minimal time in

muster area due to fingerprinting and

upfront unit assignment

2. Clear truck assignment

▪ Unit status and operator assignment

updated before start of shift and

displayed in muster area

3. Increase supervisor control in muster

area and shift change area

▪ Supervisors are assigned to monitor

muster area and shift change area

▪ Clear responsibility to ensure operators

get into trucks quickly

4. Hot handovers

▪ Hot handover procedure implemented

for safe and efficient hand-over of

trucks from one operator to the next

▪ initiatives implemented across all 3 pits

▪ Time lost reduced by 50% - 80%, equals to

0.25% to 1% of OEE

4.6 4.2

J HT

2.5

BIG

3.4

Initiatives Prioritization matrix

f Schedule PPE distribution

h Set up board to display truck location and

operator assignment in the muster area

i clear guidelines & target time for equip. handover

c Install siren in the muster area for efficiently

b Re-inforce supervisor authority

j Assign supervisor during shift change

a Remove benches from the muster area

d Effective safety briefing in manhaul/ muster area

e Develop & follow stdard format for safety briefing

g Clear assignment of transport for each panel

k Build shift change bays to accommodate trucks

l Build additional shift change area close to panels

m Road patrol to ensure trucks not slow down

Im-

pact

Ease of implementation

a

d

e

b c h

i j

f

m

g

k l

22


Shift Change : Remove Benches & Reinforce Supervisors Authority

Muster area processes

▪ Benches in the muster area have been removed

so that the operators moved quickly

▪ Supervisor uniform and equipment reflects the

authority and role he should have

▪ Yellow PPE and different colored safety helmet

mark the supervisor as different and gives him

additional authority responsibility (e.g., army rank)

▪ Communication device is a must in order to be

able to provide real time answers to problems

▪ Light lamp allows supervisor to direct vehicles

into the shift change area during the night

▪ PPE distribution is scheduled once a fortnight or

every week in order to prevent inefficient process

▪ Efficient attendance recording using fingerprint

(applies only in selected pits)

Removing benches and reinforcing supervisors’ authority help expediting process in muster area

23


Improving Meal Pray Process

Impact

33.3

PitJ HT

46.2

35.9

10.3

BIG PitJ

37.3

26.2

11.0

HT

22.9

14.4

8.5

BIG

27.1

17.7

9.4

1. Staggered Meal and Pray

breaks

Optimal schedule with

staggered breaks with each

back-up operator covering

more trucks than previously

2. Shadow crew enforcement

Shadow crew is enforced

working according to shift

and new working hours from

6 to 6 to improve shift change

3. Back-up allocation and

visibility

Operators from breakdown

units utilized as back-ups and

allocated optimally

4. Revised roles and responsi-

bilities

Specially created pondok

supervisors manage back-up

process in the pondok

supported by dispatch

5. Hot handovers

Hot handover procedure

implemented for safe and

efficient handover of trucks

from one operator to the next

Solution Situation

Apr-Jun1 Sep- Feb2

▪ High meal pray delay

observed pre-

implementation due to

unregulated break time and

poor back-up allocation

1 Baseline period, but lower Meal pray delay is recorded due to 3 shifts in Bintang and Hatari

2 Actual pre-implmentation performance after migration to 2 shifts for Bintang and Hatari

3 Only from Apr 15th , after implementation

4 Only from Apr 20th when implementation is finished

33.3

14.2

PitJ4

8.7

5.5

HT3

13.9

8.8

5.1

BIG

13.7

7.9

5.8

Apr 2013

Pray

Meal

▪ Meal Pray Initiative was

implemented across all 3

pits in Mar – Apr 2013

▪ Good impact from the

initiative has been seen

with the delay reduced to

below budget figures in

all 3 pits

24 24

H:\Personal\Harold Ong\Indonesia\PGN\IPO\Legal DD Presentation.ppt - May 20 2003 - 23:24 /24

Staggered Meal pray using a floating back-up system

Key design decisions in staggering meal and pray breaks

Principles Benefits

▪ 5-6 configuration can

meet the constraint on

spread of break variation

▪ possible to implement

this configuration for all

trucks at a 3.72 manning

ratio

Details of implementation

▪ 1 back-up operator

deployed for every 5

trucks for maximum

coverage at available

manning ratio within

acceptable break window

3 Break

schedule

▪ Saving in time lost due to

pray delay. For

example,in the day shift,

in addition to meal, the 2

breaks cover Dzuhur and

Ashar prayers

▪ Cycle time loss due to

additional travel to

pondok are reduced

▪ Optimal schedule with

staggered breaks are

implemented

– 2 x 30 mins during

day shift

– 1 x 1 hr during the

night shift

▪ Savingcycle time due to

reduction in handovers

▪ Equal working hours for

all operators

▪ All operators man one

equipment after the other

as back-ups instead of

using designated back-

up operators

Floating

back-up

system 2

5:6

configura-

tion 1

New pondok supervisor roles have been

created to provide additional manpower

for managing Meal pray process

25 25

H:\Personal\Harold Ong\Indonesia\PGN\IPO\Legal DD Presentation.ppt - May 20 2003 - 23:24 /25

Advantages of fixed back-up system

Advantages of floating back-up system Problem of operators

refusing to man trucks in

poor condition can be

avoided

Complexity of kimper

management can be

reduced by designating

mutli-kimpered operators

as back-up

Easy to implement as its

close to current practice

Feeling of equipment

ownership by primary

operators, potentially

reducing maintenance

issues

Elimination of cycle time

loss due to back-ups

returning after each break

slot to pondok (~ 5

mins/truck)

Potential opportunity of

identifying operators who

don’t maintain trucks in

good condition as they

can be reported by others

Staggered Meal pray (continue)

Due to the saving in

cycle time, floating

system for back-ups

is preferred over the

fixed system

Meal Pray Delay : min/avail.unit/shift

26


Improving Physical Availability component initiatives

Diagnostics time

Repair time

Confirmation

time

Response time

Preparation time

Planning

improvements

Opportunity

maintenance

Equipment

strategy

Increase

MTBF

Increase

Physical

Availability

of Trucks

Reduce

MTTR

Focus area Components

Defect

elimination

1

2

1a

1b

1c

1d

1e

2a

2b

2c

2d

9 areas of focus for

Improving Physical

Availability of OB

Trucks

▪ We can break down

Physical Availability

into 9 components

▪ To ensure

comprehensiveness,

we should generate

initiatives around all

these components

PA = 1 – (MTTR/MTBF)

27


Reduce Response Time (Improve MTTR of OB Trucks)

Ideas implemented to reduce staff

unproductivity during shift

changeover

After, we have reduced this unproductive

time by up to 25%

New shift change process Before, mechanics don’t work for a

full 65 minutes after shift change

Total 65

Prayer 24

PPE preparation 5

Other discussions 6

Discussion and

job distribution 7

Daily PA update 2

Fatigue Control 2

Safety talk 5

Travel time from

workshop 14

44

5

Total

Discussion and

job distribution

2 PPE preparation

Daily PA update 2

Fatigue Control 2

Safety Talk 4

Prayer 15

Travel time from

workshop 14

All discussions done outdoors,

reducing unnecessary activities

(removal of shoes, irrelevant

discussions)

21 mins reduction in

mechanics

unproductivity

Staggered

praying from

the start

28


Improve Shift Change and no labor-mechanic available

Prayer rooms set up at Maintenance Inpit Bases to

reduce time needed to start-up during over shift period

▪ Up to 15

minutes is

wasted every

beginning of

shift due to

praying in

batches

▪ Small prayer

rooms are

bottleneck

for faster

start-up time

▪ Prayer rooms are ready and in use

▪ Total of 2 prayer rooms are

prepared: at In-Pit Maintenance

bases

New SOP for truck repair location has significantly

reduced “no labour available” category in our MTTR

much easier now to

supervise my mechanics -

Supervisor

We have better access

to parts and support

equipment

44

66

(Aug – Sept)

-33%

Baseline

(Apr – June)

“No labour available” Inpit

Maintenance Bintang New SOP for truck

repair location was

implemented

▪ Truck operators

now know that

they always

need to go to pit

base except for:

– Engine

problems

– Brake

problems

– Steering

problems

– Safety belt

▪ Previously, truck

operators are

unsure if

operating the

truck will make

condition worse

“ now we are easier

finding the trucks”

29


Improve Repair Time (MTTR) : SMED analysis

Description

Video-taking

and baselining

Duration

1-3 days

3-4 weeks total

Video analysis

and creation of

new

procedures

3-4 days

Trial of new

procedures 1-3 days

Evaluation of

trial 3-4 days

Creating new

service sheets

and standard

jobs

2 days

▪ Video taking following each of the mechanics on duty

▪ Categorization of tasks and baselining total time

required for the job

▪ Analysis of video based on externalization,

parallelization, tweaking sequences, and removing

internal waste

▪ Identification of new tools and support equipments

needed

▪ Mechanics training for new processes

▪ Live trial of new processes on the ground (videotaped)

▪ Re-evaluation of trial, refinement of time taken based on

second observation

▪ Re-evaluation of new tools and support equipments

needed

▪ Standardization of new processes and documentation

in standard jobs and service sheets

30


Improve Repair Time (MTTR) : SMED example Result Ideas and new tools – CAT 789 250 hours service

▪ Impact 1/2”

▪ Compressor

▪ Trolley

▪ Oil filter with bottle samples

▪ Compartment

▪ 2 ladders with air filter platform

▪ Stocks of nipples & hoses

▪ Double punch

▪ Operator chair

▪ 20 m air hose

Additional tools and facilities needed

Inform operator beforehand, mechanic to drive to end of pit

base with operator waiting 2

Merge electrical, steering and AETA checks 5

Do both air filter replacement in parallel (2 ladders, 2

mechanics) 6

Oil condition to be checked in parallel 7

Ideas

Create inventory for top 10 defective parts 10

Mechanics to do light checks while parking to bay 4

Mechanics to do steering check while driving to bay 8

Create space in ladder to keep old air filter 9

Use slide hammer to increase oil flow 11

Prepare a trolley and keep it close to truck ready with filter oil 13

Put aside old air filter only after the truck has left 12

Trolley should contain empty bottles for engine oil sample 14

Just before parking we should lift the body up, inspect, and

then park instead of doing at the end 3

1 Ask technicians to handover truck at the entrance of pit base

Process/

sequenc-

ing

tweaks

Paralleli-

zation

Better

support

tools

Externali-

zation

Air filter already

placed on top of the

customized ladder

New container and

better oil draining

tool

31


The Result of Improvement of OB Trucks OEE

The OEE of OB Trucks has been steadily improving from the base-line of about 55%, in current days it is

now more than 65%. Since the completed project of Membara Phase-2 (May-13), for about one year, an

accumulative total cost saving of about 48 million dollars has been generated coming from the

improvement of the OEE of Overburden Trucks at KPC

32


Improve Operators & Mechanic Discipline through PKU

Starting early month of year 2013 until the end of year, more than 2400 operators, mechanic and supervisors

were being sent to “ military training program” called PKU program at the Army training center at Cilodong,

West Java. This programs aims at improving their “moral”, discipline and team-work which induce to

better effectiveness and efficiency of work. This Training program were subsequently scheduled into 8

batches . On each batch, they were about 300 employees participated. The period of training was about 3

weeks.

KPC used the momentum/opportunity of overflow

operators during parking of many equipment by

subsequently sending the work forces to this military

training program

33


Semi Military Training (PKU) Results

Untung Suhartanto : A Refueling Superintendent, used to smoke a lots (addicted to

it), after PKU program he smoke no more, after he dicipline himself during 3 weeks

military training at Cilodong

Many operators testified that their discipline at works and team work has increased

significantly after PKU program

How to Sustaining KPU result ?

1. A mandatory for each supervisor to conduct “apel siaga” of their subordinates

(operators/mechanic) at the scheduled roster

2. Conduct a survey feed back from the alumni of PKU

3. Sport Competition among PKU alumni held regularly

4. Conduct a Workshop for Supervisors regarding the PKU result and benefit

5. Always endorsing at every occasion for all workforces to implement the 7 Values of the

company : Excellence, Integrity, Transparency, Agility, Empowerment, Team Work & Care

More operators and mechanic were eventually quitted to smoke, furthermore KPC

management has been endorsing and proclaiming that by early of year 2015, all KPC

work sites, not only in the office building but also outside at mining site, at workshop

and the vicinity, on the work areas no body is allowed to smoke.

34


Sustainability of Improvement : Develop new structure

Sustainability is a classical issue facing by every improvement initiatives, in order to sustain the process and results

of improvement initiatives, KPC executives deliberately has developed new structure on MOD and MSD which

called Continuous Improvement (CI) Lead and CI-specialist. Structurally these CI-Lead and CI Specialist are

reported to GM MOD and MSD, but horizontally they are on close coordination with existing Business Performance

Improvement Division (BPID) which has been established since 2008.

Additionally to strengthen the culture of improvement in the company, the COO of KPC since Q4 2013, has been

given a strong direction that for any promotion from supervisor level to higher position (superintendent), beside that

the candidate should be seconded first at Safety Division, he or she should also be seconded at BPID to be directly

assigned to project improvement tasks within at least 6 months.

35


Continuous Improvement (CI) Academy Projects

BATCH-1 : Nov 2013 - May 2014

CI Academy Divisi Asal Mentor-Co Mentor Project Task Potential Saving ( million dollars)

1 Sumarjono MOD -MO Anwar-Ambara Queuing Project 0.22 Iswanto MOD- HT Anwar-Deni Improve Shift Change (additonal load during s.change) Intangible

3 Denastry MOD-BIG Anwar-Ambara Improve Payload T282 1.6

4 M Yanuar Hidayat CPHD Ambara-U.Suhartanto Improve Payload EH4500 3.0

5 Zulfikar S MOD-PitJ Anwar-Ambara Fuel Efficiency Project Part -4 3.6

6 Bachtiar Hidayat MSD Chairal S- U.Suhartanto OB truck (planning isiatif, inpit hose fab.) + SMK Intangible

7 Sahirul Alim MSD Ilham S-Marzel P.Excavator , support equipment, Defect Elimination of

Cat789&EH4500Intangible

Total Projects 8.4

BATCH-1 : August 2014 - Feb 2015

CI Academy Divisi Asal Mentor Project Task

1 Adi Setyo Utomo MSD Untung S Mews Performance Improvement

2 Raymond Lasor Bosar Ritonga MSD Untung S WO Closure and Labor Costing

3 Irwansyah MSD Untung S Land Cruisher PA Improvement

4 Muhammad Kurniawan MOD Ramli Denas + Anwar Improve Productivity of R9800

5 Hermanto MOD Deni apriadi + Anwar Improved produksi MS Rehab

6 Galuh Boyo Munanto HSES Kris Pranoto+Ambara Water Quality Improvement

7 Wahyu Wardana HSES Kris Pranoto+Ambara Rehabilitation Quality Improvement

36


Future Challenges

Will take time to achieve a real Culture of Continuous Improvement

Long term goal of

continues improvement is

how to make improvement

become day-to-day practice

of doing business of every

individual in the company

END of Presentation

News & Politics

Gede Nugrah Ambara, PT Kaltim Prima Coal - Integrated improvement initiatives and strategic decisions during the challenging situation of low coal prices