The Al Naboodah Group is one of the UAE’s most well-respected family company names, employing over 15,000 staff across 15 businesses.
Al Naboodah’s core business covers civil engineering, building and MEP, as well as a diverse portfolio of global brands in the transportation, travel, electrical, logistics, agriculture, fit-out and renewable energy arenas.
An introduction to eSourcing
As the head of Strategy and Project Management within the Al Naboodah Commercial Group, Pankaj Khadye is responsible for managing strategy process improvements and the group’s innovation portfolios.
In his role, Pankaj and his team overlook all functions within the business, including procurement, analysing where any improvements to processes can be made.
“In essence, we are a support function for all departments within Al Naboodah and our role is to learn the barriers our teams are facing and how we can improve and automate any necessary processes. We look at all functions within the group, whether that be Finance, Procurement or anything else, to see how we can improve each process.
“As part of our innovation process, we were looking at tools that can help us cut short procurement time and at the same time help us achieve some cost savings. This is where we came across some eAuction tools, that could help us in achieving the objectives that we had set out for.”
Despite having no previous working experience with eAuctions, the Al Naboodah team had a good idea of what they wanted to achieve within the procurement department and identified Market Dojo as one of three eSourcing tools of interest.
“Our requirement was pretty simple. We wanted a web-based tool so the implementation time would be shorter. We wanted somebody who could help us do POC’s, help us train our people, help us train our suppliers and Market Dojo really ticked all those boxes.
“We liked their approach and we really liked their tool. The POC we run was successful, so these things helped us identify and choose to work with Market Dojo.”
Spreadsheets, emails and long-standing suppliers
Before engaging with Market Dojo, Al Naboodah were restricted by the long manual processes, utilising emails and spreadsheets to complete their tendering.
Their central procurement team would send out quotes or RFP’s to three existing suppliers, who would then in turn email back their responses. Once all responses were received, comparisons would then be done on spreadsheets and presented to internal senior management for sign off and approval.
Pankaj explains how the organisation had previously relied on these long-standing relationships with suppliers for quotes, but now wanted to increase its supplier base to run more competitive eAuctions and, in turn, generate savings on purchases.
“Relying on quotations from long-time suppliers based on historic price levels did not provide our Procurement team with the most up-to-date prices based on current market conditions. We felt that opening up the process up to a wider supplier base would create a more competitive environment, and help us to achieve savings.”
Having set up with Market Dojo, Al Naboodah began running events in a number of categories, primarily running reverse auctions for spare part purchases, automotive equipment purchases and office supplies and stationery.
The results achieved to date have exceeded any previous expectations Pankaj and his team had going into the process.
“Market Dojo has undoubtedly helped bring transparency to the overall Procurement Process. From a cost-saving perspective, we weren’t expecting the savings we have now achieved through Market Dojo. We were probably thinking that the savings would be sub 10%, but it has greatly exceeded our expectations, helping us save on average between 15% to 20% on costs, based on our past purchases.
“In terms of a return on investment, it has been fantastic for us.”
Despite their incredible savings, identifying and working with new suppliers hasn’t all been plain sailing. The concept of eSourcing is still a relatively new phenomenon for many within the middle eastern region, with many suppliers having no previous experience of using eSourcing tools.
When we asked Pankaj what advice he would give to other procurement teams looking to adopt an eSourcing solution for the first time, he stressed the importance of training your suppliers before chasing savings.
“In terms of advice, we would say the uptake of your suppliers is absolutely key to success. We spent a considerable amount of time along with Market Dojo training our suppliers, so my advice is don’t rush into using a tool thinking of just savings. If you do enough training and hand-holding of suppliers through the process, successful implementation will be that much easier.”
A drastic change to a long-standing process can be overwhelming for anyone, so when approaching suppliers about engaging in a new method of doing business it is important to explain your reason for change, highlighting the benefits this will bring them as well as yourselves.
“It does take a little bit of time to convince suppliers. They will usually resist because they feel they are opening up and potentially giving up their margins. But in the long term, if you are able to convince them that this is going to give them more business over a longer period of time, we have seen suppliers coming through the process happy.
“From our perspective, we haven’t given suppliers any other options. If they want to do business with Al Naboodah, this is the only way they can submit their quotes. The fact that we have spent the time with our suppliers, hand-holding them through the process has helped them adapt.”
In addition to their results, we were keen to know how the Market Dojo team had performed and where Al Naboodah see their use of our solutions going in the near future.
“We’ve been very happy with the service we’ve received right from day one. From the time that I logged an enquiry with Market Dojo, their Account Managers have been brilliant. From a support perspective, we have no complaints at all, it has been absolutely brilliant.
“In terms of usage, as of now, we have used Market Dojo on select categories of Procurement products. We would like to increase the base further next year, as there are a lot of workshop items that are still being procured manually. We essentially wanted to go the easy route first, to show that the tool works and then next year, the plan is to get even more products onto the platform.”
Click here to visit Al Naboodah: https://www.alnaboodah.com/