Audi is focusing on sustainability in the supply chain. What potential lies dormant there? What does that mean for suppliers? And what does it have to do with aluminum? We asked Alois Winkler, who is responsible for the “Responsible Supply Chain Strategy” at Audi.
How Audi is making the supply chain more sustainable
ALUMINIUM: Mr. Winkler, Audi is committed to a Responsible Supply Chain Strategy. What exactly is behind this? And why is the focus on the supply chain?
Alois Winkler: With electromobility, emissions no longer occur predominantly in the use phase – especially not if the cars are powered by green electricity. Emissions are therefore shifting into the supply chain. It is therefore clear where the lever should be applied: in a supply chain strategy that is as sustainable and responsible as possible.
Have you underestimated the optimization potential of the supply chain so far?
Winkler: No, we haven't. But the focus has changed. If you look at the entire life cycle of a vehicle in today's European market, the supply chain generates around 20 to 50 percent of CO2 emissions, depending on the drive concept. For electrified vehicles, this supply chain share is typically higher than for combustion vehicles because of the HV battery. If we do not reduce emissions up front, they form a backpack that the product has to carry to the end. And it is precisely this that needs to be reduced further. So ultimately, the leap into electromobility has meant that we have to ask and answer many questions again.
As part of the strategy, you have introduced a mandatory sustainability rating for suppliers. What is that all about?
Winkler: Yes, since 2019 our suppliers have been assessed on the basis of their sustainability performance. Only those who share our values and have anchored them accordingly can work with us. This so-called S rating is just as decisive for an award as the quality, development and logistics ratings.
And all suppliers can keep up with that?
Winkler: Our approach is certainly not to restrict the portfolio of suppliers. However, it can happen that some supplier companies cannot be considered for an award due to poor sustainability performance. We offer training to these suppliers – and also to all other interested suppliers. These can help them improve their sustainability performance. In 2020 alone, we trained more than 950 employees of supplier companies.
Alois Winkler joined Audi in 2011 in the Production Planning department, and in 2019 he joined Strategy Procurement, where he is responsible for the Audi CO2 program in the supply chain. Highlights of the program, which aims to decarbonize the supply chain, include the Aluminium Closed Loop, the usage of green energy and the increase of recycled materials.
So how are you approaching the decarbonization of your supply chain? And what role does aluminum play here?
Winkler: Our Audi CO2 program in the supply chain focuses primarily on three areas that account for the largest share of the vehicle in terms of emissions: Steel, aluminum and battery materials. Aluminum as a material has a long history at Audi and is one of the core competencies in the company, which is why we have also taken the lead in the Group here.
We have determined that the necessary measures can be broken down into three areas: closing loops, using secondary materials and using renewable energies.
Which cycle can you close in the case of aluminum?
Winkler: Specifically, it's about the cycle of our stamping waste. With the introduction of the aluminum closed loop, we can contractually ensure that these high-quality scraps are processed by our partners into equally high-quality parts. This means that no downcycling takes place and the energy generated is not lost. Last but not least, this also protects us against fluctuations and bottlenecks on the markets. The closed loop is an extremely valuable measure for us to drive decarbonization at Audi.
Audi is also a member of the Aluminum Stewardship Initiative. What are the ASI's goals?
Winkler: Audi has been a member of the ASI since 2013. Experts from Audi sit at the table when it comes to developing new standards and improving existing ones. Since the end of 2020, we have also been the first car manufacturer to be "Chain of Custody" certified. This certificate attests that Audi can comply with the material flow chain for aluminum produced as sustainably as possible in accordance with the ASI standard and transfer the correspondingly certified material into the aluminum closed loop with its suppliers. We are therefore successively increasing the proportion of sustainably produced material. And above all: The chain does not end with us.
"We have determined that the necessary measures can be broken down into three areas: closing loops, using secondary materials and using renewable energies."
A central pillar of the Responsible Supply Chain Strategy is innovation. Can you give examples here?
Winkler: In principle, we are always thinking about how we can take advantage of new technologies such as artificial intelligence or blockchain to further promote sustainability in the supply chain. At the corporate level, for example, we use AI from the Austrian start-up Prewave. This gives us a kind of sustainability radar that helps us to identify potential risks such as environmental pollution, corruption or human rights violations at an early stage and to be able to intervene.
And in the traditional technical area?
Winkler: A lot is happening here, too, especially in the area of aluminum. It is particularly important to us that innovation always takes place in close cooperation with suppliers. For example, we use a low-carbon aluminum that goes into our rims. For the Audi e-tron GT quattro and the Audi RS e-tron GT, we are sourcing 20-inch rims made of a CO₂-reduced aluminum as part of a pilot project. The supplier company uses a melting process developed in-house for this, which releases oxygen instead of carbon dioxide.
You mentioned renewable energies: Is there actually enough green electricity for climate-neutral production and emission-free operation of tens of millions of electric vehicles?
Winkler: In 2012, our Ingolstadt site was one of the first automotive plants to use only green electricity. And since 2020, this has applied to all our European sites. Today, this is also anchored in the specifications of our battery cell manufacturers. At the same time, we are ensuring generation – for example, we recently entered into a cooperation with RWE, which is expanding renewable energies for us. You see: We're not sucking the green power lake dry with our vehicles – but ensuring that at least as much is replenished.
Do all these efforts actually benefit you in B2C marketing as well?
Winkler: Yes, increasingly so. Whether we close an aluminum loop is not, of course, the first question a car buyer asks. But interest in sustainability is increasing significantly. People increasingly want to know: What kind of company am I actually buying from? Sustainability is therefore a central aspect of Audi's positioning as a sustainable company.
The interview was conducted by Bernhard Fragner.