Alcoa Sticks With a System of Success

Alcoa Flexible Packaging, in a short five years, has proved itself a successful converter, due in no small part to a solid business operating philosophy and commitment to the industry.

by Kate Sharon

Associate Editor

ALCOA MIGHT BE better known as one of the world's leading producers of primary aluminum, fabricated aluminum, and alumina, but it's also a top North American-based flexible packaging converter.

Alcoa Flexible Packaging was born in May 2000 when Alcoa and Reynolds Metals Co. finalized the acquisition of a flexible packaging company that had been in business since the 1920s. Since then, Alcoa Flexible Packaging has been providing converted foil and non-foil flexible packaging materials to key consumer product markets, including pharmaceutical and healthcare, food and beverage, and tobacco, as well as industrial markets.

With nine flexible packaging plants around the globe, Alcoa provides high-quality rotogravure printing on films, foils, and paper. In addition, Alcoa Flexible Packaging manufactures specialty cartons and printed film shrink sleeves, as well as printed, coated, and laminated rollstock for overwraps, blister backing, lidding, and pouching. Finally, Alcoa Flexible Packaging provides custom thermoformed packaging using a broad range of quality films. While Alcoa also produces engineered products, flat-rolled products, primary metals, alumina, and chemicals and more, its packaging and consumer segment—of which Alcoa Flexible Packaging is one operating business unit—made up 25.5 percent of the company's $23.5 billion in revenues last year.

Core values create success

Alcoa Flexible Packaging, as a business of Alcoa, runs on seven core values that are the basis for the company's operating philosophy. Integrity; environment, health and safety; customer; excellence; people; profitability; and accountability are the core values that, ultimately, make the company successful, said Victoria Welch, manager, marketing communications and community relations.

"Alcoa has a clear vision of who we are and the direction we are moving," Welch said. "Alcoa aspires to be the best company in the world. We adhere to core values that make Alcoa the world class leader in the markets it participates. The core values of Alcoa provide the basis for our customers to feel very comfortable in knowing and understanding the viability and long-term stability in having Alcoa as a vendor and partner."

Furthermore, Alcoa focuses on the customer and their needs. From connecting to the customer's organization to understand and satisfy packaging needs, to the company's commitment to creating solutions to packaging challenges, and to Alcoa's vertically integrated capabilities to produce film, plastic sheet, foil, graphics development, and image carriers, the company is prepared to offer everything the customer could ask for.

The Alcoa Business System

Prospects for the future of flexible packaging are very good. According to a study released last October, called "Paper vs. Plastic in Packaging to 2008," by The Freedonia Group, plastic materials used in packaging are projected to increase 3.1 percent annually through 2008. It's expected that plastic will continue to take business away from paper and will account for nearly 50 percent of packaging demand by 2008.

Even with a solid foundation for excellence and the ability to satisfy customers, the company faces the same market pressures other flexible packaging converters are battling, Welch said. But Alcoa has a system in place to help negate the affect of rising costs and changing markets.

"As with all packaging converters, recent increases in raw material costs continue to be an issue, particularly when customers continually seek cost reductions," she said. "However, through the Alcoa Business System (ABS), an integrated set of systems and tools that provide the means to eliminate waste, reduce inventories, cut costs, and accelerate response times, we have been able to reduce the impact of rising costs.

"ABS promotes a 'pull' system where Alcoa businesses produce for use, not for inventory. Through ABS, we can produce what the customer wants, when it's wanted, at maximum quality, yet with minimum levels of waste and cost. In addition, Alcoa partners with our supply base to offer low-cost solutions to our customers relative to market conditions."

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