ArcelorMittal's global procurement team aims to ensure we deliver the best possible service and value to our internal customers. In order to do this, the team follows a procurement model that employs the principles of 'total cost of ownership'.
We use an approach to procurement that involves the development of category-specific strategies, in line with the structure of specific markets. The structure has three levels: global procurement, regional procurement and local procurement.
Global procurement includes all categories where suppliers are operating on a global level – for example, major mining companies. The regional procurement level is for products and services that are typically provided by regional suppliers, while the local procurement level uses global or regional contracts or sources from local partners.
Our procurement team covers all the products and services needed by our plants, including raw materials, industrial services, industrial equipment, spares and maintenance, as well as capital expenditure items, energy and logistics.
ArcelorMittal's centralised procurement team provides services such as development of our long-term sourcing strategies and the optimisation of our various sourcing processes. The team also provides the tools that underpin an efficient and best-in-class supply chain, as well as robust industry benchmarking and workshops that encourage knowledge sharing and collaboration.
In doing so, ArcelorMittal seeks to benefit from economies of scale in a number of ways. For example, establishing long-term relationships with suppliers, pooling knowledge of the market and deploying specialised technical knowledge – especially in the acquisition of industrial services and plant equipment and facilities. This enables ArcelorMittal to achieve a balanced supply portfolio and to diversify the sourcing risk, as well as enjoy the benefits of having a number of sources of raw materials.
During 2007, we launched a global and integrated 'total cost of ownership' project that builds on previous expertise from a number of sites. This project was successful in changing the business approach from a decision-making process based on unit price to one based on total cost of ownership, with the goal of lowering the total cost of production through minimisation of waste, improved input material recovery rates and higher rates of recycling. The methodology has now become a company-wide way of carrying out procurement activities.
Continuous improvement is key to ensuring operational excellence and cost reduction. Our main actions and initiatives in continuous improvement include: leveraging our scale by carrying out variable cost benchmarking and cost variance analysis around the group; regularly challenging our main key performance indicators (KPIs) for improvement; and making sure we use best-in-class processes. Together, these methods have enabled us to reduce variable costs.
With our production cuts, our focus on working capital reduction and the volatility in the economic environment, supply chain and procurement planning presents a real challenge. Using our scale and global reach, our strategy for responding to this challenge is fivefold.
- Use the 'total cost of ownership' methodology;
- Maximise our captive resources (iron ore, coal, coke) and use low-cost country sourcing;
- Use a portfolio approach for sourcing and flexible contracting;
- Manage energy needs through long-term, cost-based projects;
- Drive the transformation roadmap across the group to become the best-in-class procurement team.
Our approach to procurement
Global procurement team structure
General procurement conditions
The current ArcelorMittal general procurement conditions in all major languages and sourcing categories, are available to download below
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Industrial Services
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Capital Purchases
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Contract for Capital Purchases
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These conditions form part of all our contractual relationships with our suppliers and are tailored to each major sourcing category, such as products, industrial services and capital purchases.
The revised contractual conditions include provisions related to safety, intellectual property and penalties-damages, as well as now widely used clauses dealing with prevention of fraud and corruption as well as business ethics and sustainability areas. These conditions were developed for use throughout ArcelorMittal and are vetted by our legal teams as well as the group procurement management committee.
You may contact your usual buyer at ArcelorMittal for details or specific concerns.