The productivity and working capital savings that enabled Alcoa’s businesses to manage costs and cash despite the challenges of 2012 are outcomes of the Company-wide business systems grounded in regular performance reviews with clear metrics. This provides a means for the leaders of the separate businesses to benefit from proven processes, a sophisticated information technology infrastructure and corporate centers of excellence that set best-in-class standards for both quality and savings.
As a buyer of more than $18 billion annually of materials and services worldwide, Alcoa has major purchasing scale and a global footprint that is producing value in new ways. In 2012, we upgraded our procurement processes and business intelligence systems, providing us the foundation to accelerate our productivity efforts. For example, we recently recognized $48 million in savings by leveraging our Ma’aden-Alcoa joint venture and developed an integrated carbon strategy that will provide Alcoa over $100 million annually in reduced raw material costs.
To measure customer satisfaction and loyalty, Alcoa uses a process called Net Promoter Score (NPS). During 2012, our NPS score improved by 9.5% and 14 of our 24 business units now have higher scores than their direct competitors. A unique strength of Alcoa is our deep and enduring relationships – from the C-Level of our customers to the shop floor – with global leaders in aerospace, transportation, power generation and packaging. These relationships help Alcoa’s businesses to anticipate emerging customer needs and introduce to them the innovations and solutions to meet those needs and make our customers more competitive.
The strong organic growth of our businesses in 2012 is due in large measure to innovation that provides a major competitive advantage to Alcoa’s customers and businesses. Pulling experience from each of our markets, the Alcoa Technical Center (ATC) is our innovation cornerstone, developing the next generation of Alcoa products, processes and services. The ATC has become a busy forum for visits by customers seeking to draw on the benefits of our metals research and development of proprietary alloys, processes and finishing technologies. During 2012, ATC made major strides in a wide range of areas, from advancing jet engines to breakthrough aluminum die casting technology to using byproducts of our production process to safely clean waste water. Since appointing a new Chief Technology Officer from one of the Alcoa business units, we’ve dramatically accelerated commercial technology applications across all our business sectors and strengthened external licensing of technology to generate additional revenue for Alcoa.
In today’s world, where information circles the globe in nano-seconds, people are the only sustainable advantage. We are finding that Alcoa has become a magnet for top talent aspiring to join a high performance team. Ambitious professionals see a company with a can-do attitude and tremendous career opportunities, with mobility across diverse businesses and growth regions. Alcoans in plants and offices around the world are energized and motivated, as reflected in the 40% rise of our employee engagement scores in the past five years. Because strong leadership is key to maintaining a highly motivated and productive workforce, in 2012 we accelerated training for supervisors at all our global locations. We also expanded Alcoa Academy, our leadership learning school with a faculty of successful leaders from across the Company, by adding a program for emerging leaders to the existing executive and plant manager curriculum. Besides the cross-fertilization and best practice sharing that takes place in our training programs, we also are increasingly moving talent across business sectors through a disciplined succession planning process that ensures we have successors ready to move into our 300 most-critical positions.
