Our business model
Rexam is a global manufacturer of beverage cans, the vast majority of which are made of aluminium. We make a broad range of can sizes for products such as carbonated soft drinks, beer, energy drinks and other drinks categories.
We make approximately 62bn cans a year at 55 plants in five continents. We are part of a supply chain that stretches from ore mining to the consumption of beverages from cans (and their recycling) by the consumer. Within that chain, we have direct control over the manufacture of beverage cans and ends and the financial, human and intellectual capital to make this viable. Our business model (below) is underpinned by clear and consistently applied frameworks for enterprise risk management, including governance and sustainable development.
The core manufacturing skills around converting sheet metal into beverage cans lie at the heart of our Company. That is where we create the vast majority of our value and generate sustainable competitive advantage. We assume the risk of converting aluminium ingot into coil and of investing in assets to convert metal sheet into cans for our customers. Over time, we expect a reward commensurate with this risk. Key to our success and to creating value, therefore, is ensuring a high utilisation of our asset base and our ability to convert aluminium/steel sheet into finished beverage cans and ends at the lowest delivered cost, and as sustainably as possible. We focus on operational excellence using six sigma and lean principles across our operations and processes to reduce cost and material usage (especially aluminium), all the while ensuring the safety and wellbeing of our people.
Our aim is to be a key strategic partner for most of our major suppliers who include aluminium, energy, chemical, machinery and freight companies. Aluminium represents almost 50% of our annual cost base: some £2bn annually. We source our metal from well established global aluminium suppliers. We have largely derisked the procurement of aluminium ingot with pass through clauses in customer contracts or long term supply agreements backed by appropriate hedging. We work closely with all our suppliers to co-develop innovative processes and products. With aluminium, for example, we expect to benefit from developments in aluminium sheet manufacture to help reduce our material usage. With capital equipment suppliers we expect to take advantage of the advances that they make in can making technology to enhance the work we are already doing in this area.
Fundamental to our success is the establishment of strong and lasting relationships with our customers to ensure that we are the preferred can supplier. Total lowest cost over time is a crucial element of our offering as is our ability to combine our insights, resources and experience to understand our customers’ markets and to provide innovative solutions to their needs. Our customer base is increasingly consolidated and while beverage can making is regional, the larger customers are moving to global procurement models. We are pursuing a key account strategy, including global management of our core global customers, to further align ourselves with them. The location of our can making plants relative to customers’ filling locations is important in minimising logistics and freight costs to ensure low cost supply.
People and capabilities
We have a highly skilled and motivated workforce, most of whom work in plants, and we develop our people to build a winning organisation and to the requirements of our industry. The complexity of our business is growing with the proliferation of different can sizes and finishes, and shorter product runs. The ability to deliver at low cost in such an environment will become a prime capability. Innovation in products and processes, and our close understanding of the trends affecting our customers, are also critical differentiating factors in shaping our future, as is our constant support and promotion of the beverage can as a viable and sustainable alternative to other drinks packaging.