The Greenbrier Companies’ Jack Isselmann and Norfolk Southern’s (NS) Doretha Smith shared the benefits of having a diverse supplier base on Day 2 of the 2023 Railway Interchange conference, which is being held through Oct. 4 in Indianapolis.
Their session, hosted by the Railway Supply Institute (RSI) and moderated by Debbie Taylor of Edna A. Rice Executive Recruiters, addressed supplier diversity programs. Traditionally, this has meant using suppliers that are at least 51% owned and operated by an underrepresented or underserved group, such as minorities, women or veterans. But how programs are set up can look quite different depending on the company.
Why consider launching such a program? Besides being “the right thing to do,” the panelists told attendees, it simply makes smart business sense.
“You can see the evidence of supplier diversity in the bottom line,” said Doretha Smith, who recently began leading diversity programming for NS following work at the Hartsfield-Jackson Atlanta International Airport. She pointed to a recent study that found “companies with diverse suppliers show a 133% greater return on procurement investment compared to companies without diverse suppliers.”
Greenbrier, which began its program in 2020, no longer focuses on just quality and on-time delivery. It now questions suppliers about their workforce, recruiting and employee retention efforts, and environmental initiatives, according to Jack Isselmann, Senior Vice President, External Affairs for the publicly traded railcar-manufacturing company.
Among the keys to developing a successful supplier diversity program:
- “Knowing your market, assessing supplier performance, and communicating to suppliers what your expectations are,” Smith told attendees. Tracking supplier data in a uniform way is also critical, Isselmann said.
- Having a company-wide commitment. “The point is not to just ‘check the box,’” according to Smith. There must be “intentionality as it relates to a fair and equitable” supplier selection process. Isselmann added that Greenbrier ties 20% of the upper level and executive incentive program not only to the supplier diversity program, but also to the overall diversity, equity and inclusion goals.
What are the obstacles to launching a supplier diversity program? “I would say the systems and tools and the processes and policies that have to be implemented,” Smith said. Employee buy-in can also be a challenge. “You have to understand that everyone is at a different level,” she noted. “It’s a matter of meeting them where they are and moving the needle.” Added Issellmann: “It’s like getting a campfire started. You may be at it for a while, but once you get it going, you can really get a roaring fire. That’s been our experience. I wouldn’t say we’re at the roaring fire stage but we’re beyond a few sparks.”