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7. Supply chains that our customers trust

As a leading producer of steel, our operations depend upon a vast supply chain. Our supply chain reflects who we are and is integral to the creation of our products. Furthermore, as a supplier to many industries ourselves, we recognize the importance of upholding strong supplier relationships and standards. As a vertically integrated business, our customers are dependent on the reliability of our internal supply chain to ensure they can meet their sustainability goals. 

Why is this important to us?

We take responsibility for actively managing our supply chain. By incorporating social, ethical and environmental considerations into our sourcing decisions, we are positively contributing to a responsible supply chain that benefits the sustainability of our company and the planet. 

The commercial imperative

What kind of challenges do we face?

We expect our suppliers to adhere to the same high standards of social, ethical and environmental performance that we require of ourselves. This includes meeting governmental supply chain regulations. Not only do we require this level of transparency ourselves, but our customers are also requesting higher levels of supply chain reporting and transparency. Due to the nature of our industry, we face the added challenge of drawing from a traditionally homogenous supplier base.   

What do we need to do?

We created a code for responsible sourcing in 2010 and continue to implement its principles into the standard purchasing form used with our suppliers. The USA procurement and supply chain team adheres to all global sourcing rules and regulations required by ArcelorMittal Group supply chain practices. We will continue to thoroughly vet new suppliers and strengthen our current supplier relationships. We also have the opportunity to further grow our supplier diversity program to incorporate more qualified and certified Minority and Women Business Enterprises (M&WBEs) into our procurement process. 

What is the potential to create value?

A responsible supply chain is more efficient, competitive and resilient. Our policies help us to reduce risk and ensure that we are following internal and external policies and regulations. By developing and expanding business relationships with M&WBEs, we are supporting the diversification of the industry through both financial support and expertise. This approach also creates a more diverse supplier base, which fosters increased competition and heightens performance.

2016 Highlights


ArcelorMittal USA spent $5.1 billion on its supply chain in 2016.

 

ArcelorMittal USA spent $205 million with Minority and Women Business Enterprises in 2016.

Case studies: Responsible supply chain

Moving 2.7 million tons of steel

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As one of the world’s leading suppliers of automotive steel, ArcelorMittal knows that every automotive supply chain is analyzed in great detail. Our customers need to know which operation in which mill makes the steel from which each of their parts is manufactured. Any change in where the part originates, whether it's the mill or an operation within the mill, requires the whole process of qualification and validation to be done again.

So imagine the intense planning and complex logistics that had to occur to enable our company to transfer 4,200 parts, or 2.7 million tons of steel, without affecting our customers or losing any business.

The strategy to transform the USA business began with the asset optimization plan, which is a large part of Action 2020 in the USA. Action 2020 is ArcelorMittal’s global strategy plan to deliver real structural improvements unique to our business. The goal is to generate Ebitda per ton of steel produced in excess of $85, and to increase shipments to 90 million tons by 2020. In 2015, our Ebitda per ton was $62, and we shipped just under 85 million tons of steel.

We wanted to make improvements that would better align our capabilities with our customers’ current and future needs. The 2014 acquisition of AM/NS Calvert in Alabama (a joint venture with Nippon Steel and Sumitomo Metals Company) was key. We realized that streamlining our assets and process flows would be the key to our transformation. In order to accomplish this, we first had to face the enormous and multifaceted challenge of moving nearly three million tons of steel production.  

Planning and mobilization for the parts transfer endeavor began in early 2015. Teams were created to address each of the stakeholders in the complex project, with customers top of mind. It was very important for the company to make this entire experience seamless for our customers.

The transfer teams were built out and brought up to speed, while further vetting of the original plan continued throughout the year. Customer communications, which were critical in this effort, were rolled out in November of 2015.

Leadership at the United Steelworkers union were made aware of our efforts to create a more sustainable company and were supportive. The new basic labor agreement, signed in 2016, allowed for the free transfer of parts within the ArcelorMittal facilities in the U.S. 

 In the first quarter of 2016, the No. 1 aluminizing line at ArcelorMittal Indiana Harbor was shut down, followed by 5GCL and the 84-inch hot strip mill. All of these activities were performed on time, with personnel relocated and steel production shifted to other ArcelorMittal facilities – all without losing a single customer.

The project would not have been possible without the close cooperation of our group of stakeholders:

commercial group
 corporate quality assurance and customer technical services
 information technology
 leadership team
 outside processing group
planning groups
plant operations
plant quality assurance
research and development

Our successful parts transfer project is a piece of our larger sustainability story. Global overcapacity, a flood of cheap imports and relatively flat demand for steel during 2013-2015 weakened our country’s steel industry and we had to take action. Our leadership at ArcelorMittal USA took a hard look at our operations and formulated the asset optimization plan that would help the company be more sustainable. 

The original footprint optimization plan is now nearly complete, with No. 2 steel producing shutting down in the first half of 2017. This means ArcelorMittal can use its existing assets more efficiently with no loss in total production or market share, creating a healthier, more sustainable company for the future.
GM awards ArcelorMittal with prestigious diversity supplier recognition

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Supplier diversity is a strategic business process for ArcelorMittal. The company is committed to developing and maintaining supplier relationships that provide a source of competitive advantage. Having a diversity program allows ArcelorMittal to provide an opportunity for minority and women-owned businesses to participate in the company’s procurement process.   

For the second, consecutive year, ArcelorMittal was recognized with a General Motors Supplier Diversity Award. ArcelorMittal received GM’s 2016 Top Diversity Performer Platinum Award at the Michigan Minority Procurement Conference in Detroit in May of 2016, after having been recognized with a silver award in 2015.

The award was presented for top diversity performance within General Motors tier one suppliers. The platinum award was given in recognition of those companies exceeding in performance to goal (over eight percent) and top diversity spend for 2015.

Just as ArcelorMittal is strengthened by the diversity of our workforce, our supply chain is strengthened by the inclusion of minority and women-owned businesses. We continue to work with General Motors and the other automotive customers to increase the participation of minority and women owned businesses as suppliers to ArcelorMittal.

Many companies, including automotive, are recognizing their suppliers who have established diversity supplier initiatives. In addition to GM, Ford, Fiat Chrysler, Nissan and Toyota, have strategic goals that must be met by suppliers if they want to do business with the automakers. 

ArcelorMittal USA has averaged more than $200 million in diversity spend with minority and women-owned business over the past two years. During this period the company has also doubled its diversity spend with qualified and certified diversity suppliers.

Some of the ArcelorMittal’s diversity supplier initiatives include:

Understanding our customers’ requirements and expectations
Analyzing and tracking pertinent metrics
Identifying and mentoring our current qualified/certified suppliers
Providing internal communications, education and awareness of diversity activities
Constant networking with the national certifying councils; NMSDC (National Minority Supplier Development Council and WBENC (Women’s Business Enterprise Council)
Participate in customer recommended trade shows, conventions and workshops

As the leading steelmaker in the world, ArcelorMittal aims to have the number one supplier diversity program in our industry. This award from GM indicates we are moving in the right direction.