Union Pacific Leads Industry in Supplier Diversity Efforts

By Wes Hutcherson, general director-Strategic Sourcing

Wes Hutcherson speaks to crows | LR

Wes Hutcherson, general director-Strategic Sourcing, presents Union Pacific's supplier diversity story at the CREATE Conference in Chicago. The conference educates diverse suppliers about how to become a vendor for UP and other Class 1 railroads.

Each year, the Illinois Commerce Commission (ICC) invites all Class I’s to report on supplier diversity spend and discuss strategies on how they will increase diverse spending in the state. On hand for the event, as I listened to each railroad, it became clear why Union Pacific continues to be a leader in the supplier diversity space.

While many railroads have made great progress, our story is compelling.

Union Pacific was the first railroad to establish a supplier diversity program in 1982. Over the past four decades, we’ve reinforced our commitment to inclusive procurement by aiming to increase our diverse supplier spend each year. We’ve come a long way in 41 years, and we’re close to reaching world-class status.

Why are we so passionate about supplier diversity? Because at Union Pacific, diversity and inclusion are paramount to all our decisions, including with whom we choose to do business. Supplier diversity introduces new products, services and solutions that might otherwise be overlooked. It promotes innovation while driving price and service competition. In many cases, it’s an investment in the very communities in which we operate, promoting job creation at a local level. Supplier diversity is just good business, and I believe it makes us stronger as a company and a country.

When our program started, our focus was on engaging with small service vendors, Maintenance Repair Operations (MRO) and administrative suppliers. To tap into a broader, more diverse supplier base, we looked beyond the Mountain Plains Minority Diversity Supplier Council to councils throughout our 23-state footprint.

And we joined a number of organizations that put us in touch with other diverse suppliers, orgs like the Federation of Women Contractors, Disability:IN, and most recently, the National LGBT Chamber of Commerce (NGLCC). We also leveraged benchmarking by Railmarketplace, a joint program created by North America’s largest railroads to expand their supply chain base.

Wes Hutcherson Create Insights 2 | LR

Hutcherson, right, talks about future projects with Samuel Tuck, Information Engineering, at UP's CREATE booth.

But there’s more to it than just identifying diverse suppliers. We also must work with them and help them grow. This year, Union Pacific kicked off a new supplier development program called Strategic Growth Review (SGR), designed to audit supplier performance and identify growth opportunities. So far, we’ve conducted SGRs with four diverse suppliers, including Belger Cartage, Wyatt Resources, Zones, and American Integrated Services (AIS).

Union Pacific’s dedication to these efforts is clear. Our diversity spend has more than tripled since 2017, increasing to a record $813 million in 2022. And the number continues to grow. Our projected year-end diverse spend represents ~9.5% of our total supplier spend. Of that, nearly 73% was spent was with women-owned businesses, 10% with African American suppliers, and 5% each with Native American and veteran-owned businesses. Among the success stories is AIS, a Hispanic-owned firm and an industry leader in environmental construction services, Hightowers Petroleum, an African American-owned business that provides bulk fuel and fleet card services, Hal Hays Construction and Accessories Plus. They’re just a few of the nearly 400 diverse suppliers we work with.

We recognize the economic impact Supplier Diversity has on these communities, but it also means savings to the railroad through innovation, lower costs and competition. So far this year, we’ve saved nearly $30 million by awarding to diverse suppliers on competitive bids.

In the state of Illinois alone, Union Pacific continues to grow its diversity spend with several diverse suppliers, including Trinidad Construction, Emergent Safety Supply, International Filter Manufacturing, and Chuck Strayve Landscaping. Our spend in the state has grown to over $11 million in 2022 and projected to exceed $12M in 2023.  

We’re proud of these partnerships, but more than that, we know they give us an edge as we strive to realize our vision of safety, service and operational excellence.

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