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Mechanical Reliability & Productivity - Union Pacific

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Strategic Sourcing – Project OR<br />

Total Cost of Ownership (TCO)<br />

External Factors<br />

Rising Commodity Prices<br />

Increased Demand / Smaller<br />

Supplier Base<br />

Internal factors<br />

Total Cost of Ownership<br />

(TCO)<br />

Predictive Maintenance vs.<br />

Reactive<br />

Supplier Quality and<br />

Development<br />

Engine Lube Oil<br />

($Millions)<br />

$58<br />

Est. 2008<br />

pre- TCO<br />

-12%<br />

$51<br />

Est. 2008<br />

post- TCO<br />

14

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