Alcoa raises procurement savings target

17 March 2009

17 March 2009 | Martha McKenzie-Minifie

Alcoa, one of the world's largest metal producers, has boosted its procurement savings target to $2 billion (£1.42 billion) a year by 2010.

The company told Supply Management in January it would increase global sourcing and work more closely with suppliers in a bid to save $1.3 billion (£925 million) a year until 2011.

In a statement released yesterday it did not specify how the increased savings goal would be met but laid out a series of operational and financial steps to improve the company's cost structure and liquidity.

"By taking quick and decisive actions, Alcoa has been able to stay ahead of the evolving economic crisis," said Alcoa president and CEO Klaus Kleinfeld. "Today's actions better prepare us to manage through a prolonged downturn and position the company for the future."

In January, the US company said it was purchasing raw materials such as aluminium fluoride and energy from a "variety of non-traditional sources" as part of a plan to fight the economic downturn. Purchasing from countries such as China had saved Alcoa more than 20 per cent on all of the major commodities it needs for production, it said at the time.

The firm changed the specifications of the materials it purchases so it can become more flexible about its sourcing locations.

The company said it was also investing in vendors' facilities to help boost their output and had taken advantage of lower oil and gas prices by signing long-term energy supply deals.


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