UP: Supplier diversity, a smart community investment
Although Union Pacific was the first Class I railroad to implement a supplier diversity program nearly 40 years ago, the company had not spent much time in recent years to raise awareness to identify and integrate new suppliers. In 2020, we placed a new emphasis on making our supplier diversity program world-class.
You might be wondering what exactly is a diverse supplier. Although definitions vary, UP recognizes that various suppliers are any business majority-owned by an individual within the following classifications:
- Minorities (African American, Asian American, Latin American, Native American).
- Veteran or disabled veteran.
- Government designations (HUBZone, Small Disadvantaged Business, Disadvantaged Business Enterprise, 8(a) Business).
But an equally important question: why seek supplier diversity?
The benefits are many. Supplier diversity introduces new products, services and solutions that might otherwise be overlooked. It is an effective way to promote innovation while stimulating price and service competition. In many cases, this is an investment in the very communities in which we operate, supporting local job creation.
Simply put, supplier diversity is just plain good business, and we believe diversity makes us stronger as a company and as a country.
In 2020, UP spent $423 million with 275 diverse vendors, a 29% increase from 2019.
- Of this spending, $347 million (82%) was for women-owned businesses
- UP spent just $11 million (2.5%) with Latino-owned businesses and $4 million (1%) with Black-owned businesses.
- Our largest supplier in 2020 was Automotive Resources Inc. (ARI), a woman-owned company that supports UP’s fleet of vehicles ($217 million).
The data showed that UP has the opportunity to expand its supplier base, especially with Black and Latino-owned businesses. We reviewed potential growth areas and set an ambitious goal to increase our total spend from diverse suppliers by an additional 25% to nearly $530 million in 2021.
Since July, we have signed contracts with two new major suppliers:
- Hightowers Oil Co., a black-owned business that earned our fuel credit card spending of about $50 million a year.
- Macro-Z-Technology Co., a Latino-owned construction company that recently won construction work on UP’s Sanderson Subdivision in Texas worth about $5 million.
Through July, UP has worked with a total of 12 new diverse suppliers. It’s a great start, but to reach our 25% goal, we recognize that every UP employee needs to lend a hand. It means being prepared to do business with companies we haven’t worked with in the past. Onboarding new suppliers and familiarizing them with our processes and procedures is challenging, but with the support of the UP team, new suppliers can adapt quickly.
This also requires a commitment from suppliers, who have been keen to take up the challenge. As Hillary Hack, Rail and Civil Division Manager for Macro-Z-Technologies, told us, “We’re ready to meet and exceed your expectations, and we’ll work as hard as we can to make it happen. »
By using diverse suppliers, UP’s spend can better reflect the communities we all live and work in and strengthen our supply chain.
This story originally appeared on the Inside Track section of the Union Pacific website.