United States - 2012
Global Casthouse Initiative Reduces Costs by US$42 Million in First Year
To improve the profitability of its casthouses, Alcoa tapped into its internal network of casting experts to develop and implement a global initiative that achieved more than US$42 million in savings within the first year.
Alcoa operates 41 casthouses that serve its global production operations. These facilities, where molten metal is cast into ingots of various metallurgies, shapes, and sizes, are cost- and energy-intensive operations.
A financial review of the casthouses revealed a wide range of performance that was not explained by variations in product mix or locations. The company’s casting experts also tended to focus on their own group’s operations and were not known by the other groups.
In 2011, a global Casthouse Connection team began evaluating ways to improve the profitability in the casthouses. The work centered on six major areas:
- Standardize performance metrics: To provide a common basis for benchmarking and financial gap analysis, the team established seven key performance metrics that would be measured at each of the casthouses. These included reject rate, energy consumption, and labor productivity.
- Set common benchmarks: The team grouped the casthouses by technology and product mix and set financial targets for each based on the top three performers.
- Standardize financial reporting: To clearly show financial performance trends at each casthouse, the team developed a standardized financial report that includes profit and loss reporting.
- Share best practices: Casthouses began sharing information and best practices to extend the company’s internal expertise across the entire network.
- Identify revenue opportunities: Profitability workshops helped uncover opportunities to generate additional revenue, such as transforming commodity casthouse products into value-added ones.
- Sustain the effort: To ensure efforts to reduce costs, increase profitability, and drive growth continued, the team established the Casthouse Center of Excellence.
Within the first year of the initiative, casthouse costs decreased by more than US$42 million.