Tag Archive for: Economies of Scale

Krakatau Steel (KS) is a steel manufacturer in Indonesia. As a steel manufacturer, KS has to operate efficiently by achieving the economies of scale. Plays in commodity, make KS has to deal with price fluctuation. In uptrend price, customers tend to place more order to maximize the profit. Customers tend to place less order in the downtrend price to minimize the risk of high price inventory. KS has domestic competitors like Gunung Raja Paksi, Gunawan Dian Jaya Steel, Java Pacific, and ArcelorMittal Nippon Steel. KS also has competitor from import like China, Japan and Korea. To fulfil production capacity constantly, KS has to collaborate with its custmers, understanding their needs and fulfil it with the product and service that delivered. There are several categories of customers in this industry, large fabricators, small fabricators, large resellers, small resellers, projects and retailers. Large fabricators and large resellers have a big portion in order placement. KS has to select large fabricators and large resellers to join with key account and distributor management. Then categorize it into strategic customers, star customers, status customers or streamline customers. KS has to collaborate with every category differently to be effective and efficient.