Establishing supply chains our customers trust
Posted on 27.07.15 by
Stakeholders and customers need confidence that their suppliers behave ethically, and work towards upholding robust environmental and social standards. Such demands mean suppliers must actively and effectively manage their supply chains on an ongoing basis. But, with a supply chain that involves thousands of firms – and with around $59 billion in spending every year – this is both a challenge and an important opportunity for our company.
Companies as large as ours are expected to take responsibility for their supply chains – and not just in terms of their own behaviour. That’s why ensuring supply chains our customers can trust is a key focus for our recently-unveiled 2014 sustainability report, which outlines what our company must achieve for steel to be recognised as one of the world’s most sustainable materials.
What’s more, there is now increased pressure from governments and other stakeholders to ensure supply chains are responsibly managed. We are seeing an increase in certification schemes, voluntary standards and product labelling – and a growing momentum towards global standards in the steel and mining industries.
At ArcelorMittal, we are working hard to better understand our supply chain, in order to understand where the risks and opportunities lie. A group of internal experts across a range of functions – from sales and purchasing, to mining and government affairs – recently came together to understand trends in our customers’ requirements, and how we will work with our customers and suppliers to meet and exceed these needs.
We know that the customers purchasing our steel want to know about the sustainability standards we apply within our own operations, but also within our supply chain. As a result, we are mapping our supply chain to identify sustainability hotspots, and are developing a roadmap for managing identified risks, while undertaking “deep dives” into specific areas to create change.
Our tin supply chain is a great example of how we are working with our customers and suppliers in this way.
Image: Belt carrying Tin Ore
Our company, along with our customers and many NGOs, have expressed our concerns regarding the sustainability practices of tin mining in some areas of Indonesia. In 2015, we joined the multi-stakeholder sustainable tin initiative, hosted by the Dutch sustainable trade initiative, IDH, to understand how we can work with the Indonesian tin mining industry to support the development of more responsible mining practises.
Crucially, this approach focuses on empowering the Indonesian tin industry to develop a roadmap for itself. Why is this important? Because it will result in a more stable supply chain for us, as a stakeholder, while bringing sustainable economic benefits to the country.
We have already learned a lot from this initiative. Firstly, looking at our supply chain in more depth has allowed us to better understand the issues, finding an approach that most effectively creates change. Secondly, we learnt that joining a multi-stakeholder initiative helps us to create a more powerful solution that has the commitment of all relevant stakeholders across the value chain.
But our work here isn’t over. We want to take a leading position in developing supply chains our customers trust, and we are developing a roadmap of what this will require over the next 5-10 years. Importantly though, we know that we can only do this in partnership with our customers and suppliers.
By Alan Knight, general manager, corporate responsibility, ArcelorMittal
Want to know more?
> Learn more about our road ahead by reading ArcelorMittal’s 2014 sustainability report
> Learn more about supply chains that our customers trust
> Catch-up on other posts in this series:
Our role in helping create a lower-carbon future
Products that create sustainable infrastructure
Pioneering products for sustainable lifestyles
Steel: the sustainability challenge
Safe, healthy, quality lives for our people and neighbours
Photo credits: Trevor Leyenhorst, Flickr; Wapster, Flickr