Alcoa Drives Global Sourcing Initiatives

Company recognized as leader in global competitive sourcing in recent report by Aberdeen Group

Sunnyvale, CA — July 18, 2005 — Market research firm Aberdeen Group said it has recognized Alcoa Inc., the world's leading producer of aluminum, for achieving significant cost savings through its global sourcing program. Alcoa's program is supported by a combination of Ariba QuickSource, strategic spend category assessments and sourcing operations services.

In a new report titled, "Low-Cost Country Sourcing [LCCS] Success Strategies," Aberdeen Group examined the opportunities and risks associated with sourcing goods from low-cost suppliers. It cites Alcoa as an example of how these efforts can positively impact global supply chains.

In 2004, Alcoa began an initiative to explore the cost savings that could be achieved by working with suppliers from anywhere in the world as part of its global sourcing program. The company has set a company-wide savings goal of $1.2 billion over three years and to generate cost savings in excess of 30 percent through its activities in this area.

To drive these activities, Alcoa has been using Ariba's global network of sourcing specialists and Ariba QuickSource to communicate with its global supply base, including providing feedback to suppliers about the quality and competitiveness of their bids, and to drive savings across a wide range of commodities and services.

"As Aberdeen's research results prove, enterprises that source more than one-fifth of their total spend via LCCS enjoy a much higher percentage of cost savings," said Kevin Fitzgerald, vice president of Supply Management Research, Aberdeen. "As global supply markets mature, leading suppliers' capabilities quickly rise, and sourcing of new spend categories may be feasible."

For more information on low-cost country sourcing, see the article "The Analyst Corner: Sourcing" in the April/May 2005 issue of Supply & Demand Chain Executive.

To learn more about Alcoa's global program and its use of Ariba spend management tools, visit http://www.aberdeen.com/link/sponsor.asp?spid=30410027&cid=1941 for a copy of the full Aberdeen report.

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