Purchasing And Supply Chain Management by Monczka, Handfield, Giunipero and Patterson (SaMeep104)-34

Putting the “ ROAR ” Back in CSX Purchasing
Fran Chinnici, a Penn State University engineering graduate, knows all about the Nit-
tany Lion “ roar ” from his days in State College (a.k.a. Happy Valley). When Chinnici was
named vice president of purchasing and materials at CSX Transportation just over three
years ago, he felt that a major change was needed to get his sourcing team on a new track.
Since his appointment to the job, he has put the purchasing function on the global track to
21st-century excellence.
CSX is one of four Class 1 Railroads in the United States. In 2007 the company had sales of
over $10 billion and earnings of $2.99/share. With a barrel of crude oil fl uctuating in the
$90 to $100 range and fuel prices at close to $3 a gallon, the railroads have become a favor-
ite of many shippers. The railroads ’ low cost-per-ton-mile allows them to compete very favor-
ably with other transportation modes.
Supporting this business growth and sustaining high levels of service, while controlling mate-
rials costs, posed major challenges for the CSX Purchasing and Materials Department. Meet-
ing the challenge was compounded by a changing supply base. Chinnici states that “ a
reduction in the number of railroads and the subsequent consolidation of purchases resulted
in a downsizing of our domestic supply base. ” With the growth in shipments experienced by
the U.S. Class 1 Railroads, the lack of domestic suppliers is a major concern. This is espe-
cially true considering that Chinnici and his team are responsible for $4 billion in pur-
chases. This money is spent on over 100,000 items necessary to keep 21,000 route miles of
track, about 100,000 freight cars, and over 4,300 locomotives moving freight to the thou-
sands of localities and customers served by CSX. “ Based on the demands of our operating en-
vironment, the shrinking supply base, and the need to continuously add value to the
company from a supply perspective, it was a no-brainer that we had to develop a more
global perspective, ” says Chinnici.
His goal was to raise the skill levels of his organization to meet the global as well as other
challenges required of a 21st-century supply function. Toward that end, he made it a require-
ment for all current employees and new hires to further develop their skill sets and attain
the status of Certi fi ed Purchasing Manager (C.P.M.). Leading by example, Chinnici attended
C.P.M. training along with his staff members and successfully passed the necessary exams.
He proudly displays his C.P.M. certi fi cate in his of fi ce overlooking Jacksonville ’ s growing sky-
line. “ Attending classes with my people was a way of visibly demonstrating my commitment
to raising our level of professionalism, ” he says, “ and the C.P.M. is just a start. ” After three
years he is proud to say that over 95% of his supply management professionals are C.P.M.