Best Supplier Development Initiative
Dragon Oil Holding LLC
Headquartered in Dubai, Dragon Oil is an independent international oil and gas exploration, development and production company, part-owned (54 per cent) by the Emirates National Oil Company (ENOC). It won the gong for assessing, auditing and developing some of its key vendors and bringing about improvements, including financial benefits. Umapathy Jeevarathinam, team leader, strategic group purchasing department, said of its Vendor Assessment Programme: “It’s vital stakeholders – including suppliers – understand business process and customer requirements. We value collaborative relationships and took steps to improve supplier performance.” The team carried our assessments including 40 vendor audits to evaluate supplier performance and share notes for improvement. It also worked to develop all its suppliers with 75 organisations benefitting.
Dragon Oil believes and always works on creating and delivering sustainable value for its stakeholders. As the suppliers are one of the important stakeholders in the business and their role in line with the Dragon Oil business process is vital to be successful. It is essential that the stakeholders in the business understand the business process and customer requirements to deliver the best results.
Since Dragon Oil understands the value of collaborative relationship with its suppliers, the following steps have been initiated to improve their performance to the desired level in order to ensure the mutual benefits. As implementing best practices the following initiatives were taken up for practice.
Dragon Oil created a vendor assessment programme to evaluate the supplier performance and shares with the suppliers who need improvement.
- Identified the potential suppliers and Conducted vendor audit for 40 suppliers and issued observation report to improve the performance
- Realized the suppliers performance after the visit, even by qualifying themselves with ISO certification etc.
This helped Dragon Oil to identify the critical vendors to be improved on their efficiency in terms of the measurable in the program. Based on this a vendor audit is being conducted on the following criteria,
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1 |
Customer Satisfaction criteria |
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2 |
Quality system practices and records |
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3 |
Business system practices |
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4 |
EHS & Risk management compliances |
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5 |
Purchasing and sub-supplier management |
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6 |
Inventory control and House-keeping procedures |
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7 |
Process walk and continuous development observation |
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8 |
General points observations |
These VDPs were conducted at Dragon Oil – ENOC Premises in UAE as well as in our operational area in Turkmenistan. To make the suppliers comfortable, even a Russian version of the presentation was conducted. By this exercise we conducted development program for 75 vendors in 2014 and enriched the experience of the Suppliers.
It is highly essential to understand the customer voice as equal to listen the supplier concerns. On addressing this and bringing mutual benefit to the organizations involved in the purchasing transactions, Dragon Oil conducted training programs to ensure supplier’s understanding of the purchasing processes including the code of conduct and ethics to be followed.
The above continuous improvement initiatives with the supplier brought an awareness and significant improvement on their performance is realized as soft benefit.
These vendor development initiatives brought the following benefits to the organisation.
- Achieved category management by identifying the vendor’s potential.
- It created an awareness with the vendor base to understand the needs and supply.
- Value has been created by the vendors to realize the importance of quality and equipped them to get qualified by achieving certifications like ISO9001, 14001 and OHSAS 18001.
This initiatives brought a greater movement with the supplier and improved their competitiveness by which the organisation benefited on financials.
