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Mexico - 2005
Greening of the Supply Chain
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Reducing Alcoa’s consumption of resources is a key sustainability goal, and this “green” practice cascaded into the company’s supply chain through an innovative pilot program conducted in Mexico in conjunction with the World Environment Center (WEC).
Alcoa has always been involved in clean production and waste minimization programs in its 16 AFL Automotive plants in that country since the company first began operations there in 1982. Discussions with government officials and WEC indicated that small- to medium-sized businesses in Mexico needed assistance in reducing their emissions and consumption of resources. Alcoa agreed to partner with WEC to pilot a program with its supplier base that was funded by the U.S. Agency for International Development.
“WEC is very proud to be associated with Alcoa, which has demonstrated the vision and leadership that it takes to produce products sustainably,” said Alan Gagnet, director of technical programs for WEC. “What’s unique about this project is that a customer was asking suppliers to make changes for the good of the environment but helped them do so in a way that was more profitable for the suppliers. What impressed me was that Alcoa was working to go beyond compliance in its own facilities and recognized that it wouldn’t reach its own high standards without involving its suppliers in creative ways.”
The first step in the “Greening of the Supply Chain Project” was identifying which of the 1,000-plus AFL suppliers in Mexico could meet the program’s two basic requirements: small- to medium-sized company that wasn’t a multinational; and the business had some type of environmental impact.
Twelve targeted suppliers volunteered to participate in the pilot program, attending a two-day training session designed by WEC and hosted by AFL. Topics included general environmental awareness and how to identify processes that had environmental impacts and evaluate which had clean production and energy efficiency opportunities. The supplier then performed a self-audit to develop a draft in-house action plan of potential process improvements.
Approximately six weeks after the training, a WEC technical assistance consultant visited each participating plant to review progress on items discussed in the training session and help finalize the process improvement action plan. This step also ensured that the suppliers took ownership of the process and had not overlooked important opportunities for improvement that should be included in the action plan submitted to AFL.
The action plan included descriptions of projects the supplier would undertake, who was accountable, deadlines, and the projected financial and environmental benefits of implementing the action plan. The projects typically involved minimizing waste, reducing water and energy consumption, reducing emissions, and eliminating spills.
“Although the focus of these projects was environmental, the reality was that they brought in lean manufacturing,” said Larry Cannon, environment, health, and safety director for AFL Automotive. “It’s all about making the manufacturing processes better, and most of these suppliers will see not only reductions in environmental impacts but significant reductions in cost as well.”
Some results from the pilot phase of the program, which ended in May 2005, included the following:
- A large food processing and service company undertook a water conservation initiative at one facility that will save almost 10 million gallons of water and approximately $40,000 per year.
- By fixing leaks and taking advantage of more favorable rate programs, a forestry company that manufactures wooden pallets dropped electricity consumption by 28% and saved about $6,000 per year.
- A large transportation group built a machine to filter, clean and recycle anti-freeze, eliminating a toxic waste stream, reducing anti-freeze consumption by up to 25%, and saving around $30,000 annually.
- A food processing company switched from ambient to hot water to clean machines, saving almost 800,000 gallons of water per year, reducing the amount of detergents used, and cutting the water bill by more than $5,000 annually.
“The pleasant surprise with this project was that the participating companies made so many good changes with minimal assistance and investment, and all indications are that they will continue to do more,” said Gagnet. “We have already implemented similarly successful projects in Brazil and will begin a project in China later this year. We also hope to replicate these successes at additional AFL sites as well as other companies throughout the world.”
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