Leading without Bleeding: An Information Technology Case Study at Union Pacific Railroad

Article excerpt

INTRODUCTION

Union Pacific Corporation is one of North America's leading transportation, computer technology and logistics companies, with operations in all 50 United States, Canada and Mexico. With headquarters in Omaha, Nebraska, Union Pacific Corporation currently has over 52,000 employees, covers more than 36,000 miles of track in 23 states and has an annual payroll in excess of $3 billion. There are 1700 people in information technology alone with a budget of about $250 M. The company's web site at http://www.uprr.com provides a comprehensive corporate pi'ofile of the company.

Science Applications International Corporation is the nation's largest employee-owned research and engineering company, providing information technology and systems integration products and services to government and commercial customers. SAIC scientists and engineers work to solve complex technical problems in telecommunications, national security, health care, transportation, energy, the environment, and financial services. With annual revenues of $4.7 billion, SAIC and its subsidiaries have more than 38,000 employees at offices in more than 150 cities worldwide.

Intermodal units are critical for the sustained success of a railroad company and hence it is important to ensure that these units are in good working condition. As customers' demand more speedy and efficient transportation of goods, rail intermodal service--the movement of trailers or containers by rail and at least one other mode of transportation--is ideally suited to meet this demand. That is one of the reasons intermodal is the fastest growing segment of the railroad industry (my.uprr.com/pub/notes). Intermodal traffic has grown from 3 million trailers and containers in 1980 to 8.7 million in 1997 and accounts for more than 17 percent of rail revenues, second only to coal at 22 percent (www.aar.org). Intermodal transportation yields many powerful benefits (www.aar.org):

* Fuel efficiency. Rail intermodal service on average uses less than half as much fuel as highway transport to move the same shipment the same distance.

* Convenience and partnerships. Intermodal combines the door-to-door convenience of trucks with the long-haul economy of rail service. As a result, railroads, trucking companies and intermodal marketing companies are forming productive partnerships to combine the best of both modes.

* Improved air quality. Moving a ton of freight by rail instead of truck results in less than one-third the emissions into the air.

* Reduced traffic congestion. A single intermodal train can remove as many as 280 trucks from the highways.

* Innovative technology. Intermodal technology, such as double-stack trains (one container on top of another) permit one train with two crew members to remove up to 280 trucks from the highway, reduce pollution and save energy.

Railroad regulations require the inspection of all intermodal equipment (vans, containers, chassis) during yard entry and exit to ensure that damages to a unit are positively identified and charged to the responsible party ("Building the Systems ...," 1999). This is a very critical step if the railroad is to recover damage claims assessed by equipment owners and also to win disputes regarding the timing and extent of damage.

In January of 1995, during a strategic planning exercise at the company, it became clear that there was room for improvement in the way the company managed and maintained its intermodal units. Reengineering current intermodal operational process and practices would help the company be more responsive to customer needs while increasing its operational efficiencies and profits. Due to increased global competitiveness, customers expected their transportation companies to be agile and responsive. After considerable discussion among top and middle management, the company established the following primary goals for the reengineering effort of intermodal operations:

* Increase data accuracy

* Reduce transaction processing time

* Increase the rate of collections from damage claims

* Increase accuracy of the damage inspection

* Decrease number of yard personnel

As the reengineering team began to look closely at the intermodal operations, it became evident that two processes were big bottlenecks in achieving desired efficiencies. …