UPHOLDING GOVERNANCE

SUPPLY CHAIN

Our Best For All® strategy extends beyond our operations to improving sustainability throughout our supply chain.

We focus on resilience, supplier diversity and ongoing supply chain management to ensure the long-term success of our business, while minimizing risks and uncovering opportunities. We want our suppliers to join us in creating a sustainable future with steel.

A resilient and reliable supply chain is essential to our customer-centric approach of providing steel products that are innovative and energy- and cost-efficient. Our processes have helped us overcome multiple recent challenges starting with the pandemic and followed by supply chain disruptions and inflationary pressures.

The majority of our supply base is regional, which provides us with logistical, environmental and economic benefits. Maximizing a regionally based supply chain enables our suppliers to quickly service our plants. Furthermore, we are able to leverage national agreements for cost advantages.

In 2021, we developed a new supply chain risk management approach to identify, prioritize and mitigate risks and minimize the potential for disruption. Since implementation of this approach, our swift approval process and mitigation response enabled us to reduce critical risks. In 2023 we placed additional emphasis on identifying secondary suppliers for the most important risk materials in our supply chain.

For specific high-risk events that could halt production, we developed and implemented a rapid notification process to alert key stakeholders including the Senior Vice President of Raw Materials and Sustainable Resources.

In 2023, we made use of the EcoVadis platform to further assess supplier risk. We onboarded our suppliers to the platform and completed the risk assessment process. USSK also started its EcoVadis onboarding process in 2023 and plans to further engage suppliers in 2024.

COMMODITY RISK SCORING

We continue to use a scoring system of one to three for criticality, impact severity and risk event likelihood. The composite score identifies the critical risk events to strategically mitigate. The strategies implemented in 2022 resulted in little to no disruption throughout 2023, and we will continue to utilize this approach moving forward.

Key approaches to our mitigation strategies include:

- Increasing inventories to add a time buffer for supply chain delays

- Diversifying sourcing regions and ports of entry for selected raw materials, especially in response to extreme weather events

- Enhancing supplier contracts to include Key Performance Indicators for higher inventory levels and clear communication, as well as notification requirements to trigger utilization of alternative suppliers when inventory dropped below predetermined levels

- Planning contingencies for force majeure events. By applying a holistic lens to our mitigation strategies, we minimized the event likelihood scores for our high-risk commodities

Among the key commodities our risk-mitigation efforts addressed in 2023 were liquid hydrogen and alloys used in our processing lines; ferroalloys used in our Basic Oxygen Process (BOP); and amine used to separate silica from iron ore.

SUPPLY CHAIN DIVERSITY

U. S. Steel's Supplier Diversity mission drives innovation and supports our communities. In 2023, we achieved $453 million in diverse spend, surpassing expectations through dedicated resources and strategic initiatives. Learn about our plans to further expand our diverse supplier base and impact in 2024.

READ ABOUT U. S. STEEL's SUPPLIER DIVERSITY MISSION