Sustainable partnership is a mutually developing and beneficial partnership. KPC’s efforts to achieve effective, efficient, and sustainable Good Mining Practice implementation can only be successful with supports from all elements of our supply chain. Therefore, we keep carrying out a harmonious, fair, transparent, and mutual relationship with every business partner in order to achieve a sustainable supply chain.
KPC’s business partners are categorized into 2 groups, which are goods suppliers (suppliers) and service suppliers (contractors in mining or other services). Their team works and supports helped us go through various challenges and industrial dynamics. Keeping sustainable, transparent, fair, and mutual partnership with every business partner has always been KPC’s commitment.
Good Mining Practice in Building Partnership
With a strong partnership, goods and services procurement related to KPC’s operational activities is able to be conducted well, resulting in accomplishment of one good mining practice aspect which is effective, efficient, and competitive production cost.Apart from resulting in competitive production cost, we also realize the importance of involving domestic suppliers, especially local suppliers. We put our efforts on conducting goods and services procurement from domestic suppliers. We believe that purchasing domestic goods and service will help increase national economy. Therefore, it can be stated that we have implemented social aspects in good mining practice, particularly aspects in partnership.
In choosing suppliers, we conduct prequalification for every supplier candidate. It is conducted in order to ensure that candidates already fulfill all the requirements issued by KPC, which covers administrative, technical, environment management, safety and health, labor practice, and human rights.
Fair and transparent goods and services procurement process needs to be conducted by KPC. In order to achieve it, we invite several contractors and suppliers to participate in selection and evaluation process. With this process, we expect to maintain credibility, properness, fairness, and trust of our suppliers. Selection and evaluation process were held based on our Standard Operation Procedures (SOP) which is organized by Supply Department. If, in case of urgency, end-users may directly appoint suppliers/contractors by submitting Waive To Tender Document that has been approved by KPC authorized management.
In order to achieve effectiveness of good mining practice in partnership, KPC commits to maintain a mutual relationship with our partners by doing some approaches as followed.
1. Involving and supporting local and national suppliers
2. Monitoring suppliers’ activities and performance by using Contract and Contractor Management System (CMS) and Human Resource Audit
3. Code of Conduct and Business Ethic Guidelines and General Terms for Contract Agreement
4. Various communication and discussion forums.
Involving and Supporting Local and National Suppliers
Involving and supporting local and national suppliers is KPC’s commitment to develop local communities’ potencies, help them increase their welfare and skills by providing chances to be partners, trainings, and several two-way discussion forums. In order to fulfill our commitment, we conduct various efforts in involving and supporting local and national suppliers. Two programs held are assisted suppliers and purchasing migration.
Supplier Contractor and Contract Management System (SCMS) and Human Resource Audit
In monitoring and ensuring all contractors’ effectiveness in performance, KPC has a role and is responsible to observe suppliers’ and contractors’ commercial, technical, as well as occupational safety and health risks.
We always hold safety talk regularly to socialize SCMS and occupational accident prevention methods as our support to suppliers and contractors in improving occupational safety performance at all existing projects.
In addition, SCMS states about requirement related to human rights protection, which includes work agreement of every contractors’ employee, the registration of contractors’ employee in State Insurance for Workers, statement of minimum employee salary and their components.
Code of Conduct and Business Ethic Guidelines and General Terms for Contract Agreement
KPC commits to continuously nurture and uphold the principle of trust to all suppliers. Code of Conduct and Business Ethic Guidelines and General Terms for Contract Agreement was established in order to support our commitment. All KPC’s suppliers are mandatory of signing the Code of Conduct and Business Ethic Guidelines and General Terms for Contract Agreement, including human rights clause, which is signed by highest management level of the Company and related employees. Until 2013, all of our suppliers have signed the Code of Conduct and Business Ethic Guidelines and General Terms for Contract Agreement.
Communication and Discussion Forum
In order to maintain and strengthen the harmonious relationship between KPC and suppliers, we have established some communication and discussion forum.
Supplier Communication Meeting
Every two years, KPC routinely holds Supplier Communication Meeting which aims to explore and get feedback from the suppliers. This activity is also a medium for KPC to provide information about the company progress, including the short and long-term action plan of the company to all contractors and suppliers. We also provide Supplier Award for the suppliers (suppliers and contractors) that have good performance.
Supplier visit aims to discuss the aspects of service level and performance, and serves as a means to ensure more effective supply chain, as well as to maintain good communication with our business partners.
Supplier Safety Meeting
It aims to increase the awareness of business partners, both contractors and suppliers, which have access to KPC sites under SCD custodianship, on the importance of OHS culture. In this occasion, KPC also actively engages its business partners to give their inputs regarding the OHS programs conducted by KPC at mining operational areas.
Since 2012, KPC initiated the Supplier Award event held every two years in conjunction with the activities of Supplier Communication Meeting. Supplier Award is an appreciation event for our business partners for their very good support, cooperation, and performance. The aspects assessed in this event is the performance of suppliers and contractors, including but not limited to the performance of the delivery or performance of the provision, the accuracy in the provision of goods or services, the total expenditure, the technical evaluation, commercial evaluation, and communication.