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Given that the nature of the procurement
function requires engagement with both internal and external
stakeholders, Alcan's procurement teams were among the first
to integrate sustainability into their day-to-day business
decisions. A key feature in the procurement approach is the
Total Value Opportunity concept, or TVO™, they have pioneered.
Through TVO™, procurement is capturing value and addressing
environmental, social and other business issues in the supply
chain, at the time of purchase, in use and at end-of-life.
This drive for procurement excellence continued in early 2005
with the launch of Procurement Value teams in 10 specific
categories:
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Consulting services (Global) |
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Maintenance services (North America) |
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Alloys and metals (Global) |
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Road transportation (North America) |
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Natural gas (Global) |
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Calcined coke (Global) |
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Packing materials (Europe) |
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Waste treatment and environment (Global) |
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Spare parts and industrial supplies (Europe) |
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Refractories (Global) |
The estimated potential savings of the procurement value
projects is some $90 million, an improvement of almost
10% on an estimated total annual expenditure of approximately
$1 billion.
Examples of Procurement engagement efforts with suppliers
are found in the External
engagement section.
Supplier Engagement
Working with suppliers is an important aspect of preserving
the sustainability value chain. For instance, a strategy is
in place in the Primary Metal group to maximize value with
suppliers and contractors. The aim is to encourage the development
of mutually beneficial relationships with preferred suppliers
who "buy in" to Alcan's value-based approach and
are clearly committed to helping achieve Alcan's governing
objective and address EHS challenges.
With less emphasis on traditional procurement or "purchasing"
practices, a multidisciplinary approach is favoured that provides
a coordinated interface between suppliers and the end users
of products and services in the group.
To promote this approach, supplier events were held during
2004, including one in the U.K. with more than 100 executives
and technical managers of major Alcan suppliers participating,
and one in Montreal, Canada where 130 representatives participated.
Suppliers were sensitized to Alcan's governing objective and
EHS challenges, and they were also encouraged to propose ideas
to add value in whatever manner possible. A website was launched
for suppliers to contribute ideas for value improvements and
more than 135 suppliers have already registered.
Maximizing value with suppliers at Alcan is more than trying
to get the best product for the best price. Rather, it is
about sustaining value by working closely with suppliers to
develop cost-effective solutions while also participating
in ongoing reviews of products and processes to help drive
continuous evolution of the supply chain.
For example, at Alcan's corporate office in Paris, a project
was launched to reduce waste paper. This began with employee
involvement to separate waste paper to increase the amount
recycled and reduce collection and sorting costs in the process.
Employees were evaluated on their participation, which will
be taken into consideration at their annual performance review.
The project quickly evolved to include an examination of usage
and an evaluation of alternatives.
With the procurement team's involvement, significant additional
savings were achieved through changes to sourcing processes,
which included switching to online quotations and e-commerce
auctions. E-sourcing resulted in saving some 30,000 sheets
of paper, the switch to on-line requisitions and invoicing
conserved an additional 48,000 sheets, and it is estimated
that suppliers saved some 96,000 sheets in their own operations.
Another example of Alcan's procurement excellence is at its
ISAL smelter in Iceland where a new system for handling
aluminum fluoride has achieved real sustainable improvements
in lowering costs, eliminating industrial waste, reducing
the amount of steel required for containers, and reducing
workforce exposure to dust.
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