2015 SUSTAINABILITY REPORT

sustainable transportation

COMMERCE

supply chain value

Norfolk Southern is committed to increasing the diversity of the railroad’s supplier base by engaging and contracting with minority and women-owned businesses.

Supply Chain Connections

Norfolk Southern is an important part of the U.S. freight transportation system’s business supply chain. The railroad helps U.S. businesses compete in the global marketplace, efficiently moving raw materials to manufacturers and finished goods to consumer markets. To operate, the company relies on a wide range of vendors and suppliers, including suppliers of such products as locomotives and rail cars; tools and machinery; safety supplies, such as work vests, gloves, earplugs, and glasses; and office supplies and equipment.

Diversity in the Supply Chain

For more than a decade, Norfolk Southern has had programs in place to increase the percentage of minority- and women-owned businesses that provide the railroad with office supplies and equipment.

“Engaging minority-owned businesses broadens our supply base and helps to ensure a level playing field for all suppliers. This creates competition and drives behaviors we want to see in suppliers, such as better service and lower total cost of ownership.”


Ben Chapman
assistant vice president sourcing

Many products that Norfolk Southern must purchase are supplied by long-standing rail industry companies in capital-intensive business markets that are difficult for smaller firms to enter into and compete. For example, the locomotive market is dominated by two large established manufacturers, and similar market conditions exist for suppliers of track materials and rail maintenance equipment.

Despite those challenges, Norfolk Southern has made strides in improving the diversity of our supply base, particularly for commodities such as office products and for services such as technology.

From 2011 through the end of 2014, Norfolk Southern nearly tripled the number of the railroad’s minority-, women-, and small-business suppliers, to 177 from 68. The dollar value of contracts with those firms nearly doubled, to $157 million from $80 million. Of the 177 diversified suppliers doing business with Norfolk Southern in 2014, 87 percent were women-owned and 13 percent were minority-owned, including businesses owned by African Americans (5 percent), Asian and Asian Pacific Americans (4 percent), Hispanic (2 percent) and Native Americans (2 percent).

Beyond Our Tracks: Sustainable Sourcing

While Norfolk Southern has been dedicated to sustainable business practices for years, the company recognizes that sustainability doesn’t stop at our tracks.

In 2014, the company’s sourcing group developed a formal Sourcing Sustainability Statement, making clear that supply-chain partners are expected to focus on reducing their own environmental footprints. As part of that initiative, the railroad developed a performance scorecard that includes assessing suppliers based on sustainable business practices.

The scorecard, still being refined in 2015, is sent to suppliers who make up the company’s top 10 to 15 spending areas across all departments. It evaluates suppliers on things such as whether they recycle, track waste reduction, have a sustainability plan, and comply with government environmental regulations.

The railroad’s large corporate suppliers and partners, such as GE Transportation, already are deeply engaged in sustainability initiatives. The scorecard is a way for Norfolk Southern to inform suppliers of the railroad’s interest in reducing environmental impacts across the value chain. The company has plans to recognize top suppliers in this area with an annual Supplier Sustainability Award.

“Price is only one component in evaluating the total cost of ownership of our supplier contracts,” said Ben Chapman, assistant vice president sourcing, who has overseen the effort. “As part of that cost analysis, it is becoming increasingly important to take into consideration the sustainability practices of our suppliers.”

“Our company is committed to minimizing our environmental footprint in our communities. We wanted to put a stake in the ground to say, ‘These are the ideals that we hold.’ It’s only natural that our supply chain should play into that as well.”


Ben Chapman
assistant vice president sourcing

A Green Supply Chain Partner

Inbound Logistics magazine, a leading publication for the transportation industry, named Norfolk Southern to its “75 Green Supply Chain Partners for 2014.”

The annual list profiles companies that demonstrate commitment to sustainable supply chain, logistics, and transportation practices, with four benchmarks: measurable green results, sustainability innovation, continuous improvement, and industry recognition.

The magazine highlighted Norfolk Southern’s “Trees and Trains” initiative to reforest 10,000 acres in the Mississippi Delta and the company’s investments to improve freight capacity and operating efficiencies, such as the 11-state Crescent Corridor project. The tree-planting initiative, which will generate more than 1 million tons of carbon-offset credits, was cited as an example of Norfolk Southern’s effort to achieve balance between the environment and business operations. The Crescent Corridor has the potential to divert long-haul freight from highway to more environmentally friendly rail and reduce greenhouse gases by 1.9 million tons annually when fully developed.