Christine Breves is chief procurement officer for Alcoa's Global Business Services. Pittsburgh-based Alcoa is the world's largest producer of primary and fabricated aluminum, serving aerospace, automotive, building and construction and other markets. Breves obtained her current position in December 2004. As such, she is responsible for the company's worldwide procurement of goods and services, including many primary raw materials, resins, commercial metals and indirect materials and services. She joined Alcoa as director of procurement in 1998, following Alcoa's acquisition of Alumax Inc., an aluminum producer, where she had held a series of management position over an 18-year period. She was previously employed by Exxon Chemical and Raybestos Manhattan.

Breves was educated at the College of Charleston, and holds an MBA degree from The Citadel. A Certified Purchasing Manager, she serves on the national board of directors of the Institute of Supply Management, is a member of the Purchasing Round Table and of the Purchasing Strategy Council, and is on the Management Advisory Board of Purchasing Magazine.

WTM: You've been with Alcoa seven years; what are the most substantial things accomplished in that time.

Breves: First, we've demonstrated the value that a well-managed procurement and supply chain organization can deliver to the organization - both in supporting where the business is heading and in delivering substantial savings over that period.

WTM: And where is the emphasis today?

Breves: We're acting to help grow the top line as well as improve the bottom line by cutting costs. In today's world, for example, there's shortages of materials, unprecedented variations in pricing. We're trying to make sure that we understand what kinds of and quantities of materials the businesses are going to need, and then being proactive -- going out and securing them instead of just reacting to the market. Some of the metals - not aluminum, but some of the other metals - have been in extremely short supply in the last year. That could have impacted our ability to compete for business, if we hadn't acted to secure long term contracts to make those metals available.

WTM: How does this tie to global sourcing?

Breves: It ties to our efforts, in the past six years, to aggregate the spend and managing the spend on a global basis. Previously, buying was done by each business or each region or even down to each plant. Now we're taking a much more comprehensive spend management approach -- we're restructuring the whole organization by the way - because we've seen the value a well-managed procurement and supply organization can drive.

WTM: What is the restructuring you mentioned?

Breves: Our Executive Council made the commitment to what we are calling a transformation to world class procurement, to be achieved over 2005 and 2006. We're reorganizing the entire procurement organization on a global basis. We have over 300 manufacturing sites around the world, and we're reorganizing the whole structure into a new global best practice structure with all of our spend will be organized into global commodity councils.

WTM: What's the function of the commodity councils?

Breves: Councils have been created in ten spend areas. Each council has the authority for all this spend, regardless of where it sits. Each council has an executive sponsor -- a group president or at least a business unit president - who focuses on removing barriers to going out and really going after total cost of ownership, not just price. That executive is charged with making sure the strategies have adequate rigor, and long-term focus, not just short-term actions.

WTM: How necessary to this effort is high-level support?

Breves: I think it's absolutely essential. Change won't happen otherwise. The current restructuring of our global organization into our best practice global model would not happen without the support of our executive council and certainly not the support of our CEO. He has really been the one who has believed that by doing this right we can drive a lot of value for our business in a lot of areas: grow our top line, reduce our costs and reduce working capital.

WTM: What is key to getting an organization to act globally? Is there resistance to be overcome?

Breves: We've been multiregional for a few years. But being multiregional is different from being global. Part of the reason for our structure change is that moving into a global structure facilitates acting globally. That's why these commodity management councils are important. You have global strategy sourcing teams that have regional and cross-functional representation. You have strategic sourcing teams with engineering representatives, production operations, and, in many cases, environmental people. And you have financial representative to independently verify the savings that are being driven. If you want to focus on the total cost of ownership, I don't think there's any substitute for being cross-functional.

WTM: How does this effort tie to your supplier base?

Breves: That also begins at the top. The council sponsors I mentioned are responsible for establishing more executive relationships with our supply base.

WTM: I understand that Alcoa is working with its suppliers on 'value creation.' What is that?

Breves: It depends on the nature of the supply relationship. Not all suppliers are strategic. But for the ones that are, we want to have more integrated relationships. We want our strategic suppliers better integrated in terms of electronic connection; we also want a stronger connection in product development. For example, if they supply technology support, we want them to understand our business better so they can do a better job of providing that support.

WTM: For example?

Breves: Take the case of a resin supplier. Suppliers make decisions about where to put their discretionary R&D money. We want them to devote a share of that money to developing what they supply to us, so they can be more focused on us and help us develop more products. That's an additional way of tying together of the supply chain.

WTM: Does it cut both ways? Do you bring expertise to them?

Breves: We have the Alcoa Business System - it's a lean manufacturing approach similar to the Toyota manufacturing system. We haven't done as much with this and I'd like to do in the future, but we work with suppliers to implement this production system in their business.

WTM: Can you give me an example of this collaboration?

Breves: PPG is a good example. They're a coating supplier to us. We've had real success integrating with them; we've reduced the cycle time and the inventory carried between our two companies.

WTM: For people working in the field, are the skill sets needed changing?

Breves: Yes, I think absolutely. Skill sets have absolutely changed from where they were ten years ago. Today, people have to understand strategic sourcing - what you do to implement a strategic sourcing process. People have to understand, not just outsourcing, but globally competitive sourcing: how to search for suppliers that are going to bring a new competitiveness to what you are buying. How to search in places like China, Eastern Europe, wherever. Knowledge of outsourcing is a natural part of the strategic sourcing process.

They have to understand how to work with cross-functional teams - if you're going to drive down the total cost of ownership, you have work effectively with cross-functional teams. They need an 'e' orientation - we're very digitized at Alcoa; we want to connect electronically with our supply base. There are data mining requirements -- with over 300 manufacturing sites, you have to have the data mining skills it takes to make information out of the mass of data. Another skill is financial acumen - in today's supply chain there's no substitute for financial skills.

WTM: Going back to skill sets, is 'attitude' a skill?

Breves: I think it's more than attitude. You have to be open to being global. But there is knowledge and experience that goes with being effective globally. People have to have cultural awareness in leading a global team. You have to understand that the way people are in Brazil may be very different from the way they are in Europe, which may be different from Australia or here in the U.S.

WTM: How do people get that cultural experience?

Breves: I think you learn it from participating on teams. Some people get it through a foreign assignment, but those are expensive, so we have to look for people to get that global awareness in the course of their work.

WTM: What metrics are you using?

Breves: If it's important, we measure it. As you would expect, we have a lot of different metrics around savings. We have metrics on efficiency; metrics on total process cost; metrics on quality. We measure rework -- that's an important part, for Alcoa Business Systems to understand the waste that is in the process.

WTM: Has the emphasis on supply chain led to different metrics?

Breves: Metrics have definitely changed - more are value metrics rather than just cost metrics. Cost is important, but that's not why procurement exists. Procurement exists to drive value for the business. So you a lot more metrics around savings, savings v. the market. We look at value metrics like: What is procurement contributing to improve working capital? What has procurement done to grow the top line?

Sidebar: Alcoa Turns its International Organization into a Global Organization

Alcoa is one of the best known of American corporate names; a $23 billion company whose over 300 manufacturing sites are spread through 37 countries worldwide. But a central task for Alcoa, as for many other firms, is turning an international organization into a global one--that is, one capable of acting not as a collection of dispersed parts but as a single, coherent undertaking around the globe.

Supply chain improvement rests at the center of this effort. Indeed, Alcoa's efforts over the past half dozen years parallel steps many company attempting this same transition have been making.

A first step was cost reduction. Beginning in 1998, Alcoa squeezed better than $2 billion in savings out of its supply chain through such things as leveraged sourcing. A second step--known as the Alcoa Mall--is an automated ordering and payment process that allows employees to do 'point and click' ordering of 700,000 items purchased in bulk. The buy was already leveraged; delivery and electronic funds transfer already in place.

A current emphasis is on gaining institutional control of all of Alcoa's external purchasing. As recently as 2002, about 35 percent of Alcoa's North American purchasing was done at the plant level. Now, purchasing is increasingly performed by commodity councils--44 separate bodies, each with executive buy-in, each charged with global acquisition of specified commodities or services. Alcoa's expectations for these councils goes beyond the immediate cost savings of leveraged purchasing, the company also hopes to gain a clearer view of its own operations--to become, that is, an organization transparent to itself. That, company officials hope, will help give Alcoa a clear view on a global marketplace.