Discovering reverse auctions
Occidental Petroleum (known as Oxy) has been producing and drilling oil in Oman for over 30 years. As the largest independent oil producer in the country, Oxy recently introduced Sourcing Dojo to run reverse auctioning, following a recommendation from their team in Qatar.
Having previously used Spreadsheets to carry out their tendering process, the adoption of Sourcing Dojo was the first time the company had used reverse auctions to negotiate with their many suppliers.
Mohammed Al Rawahi and Marwan Al Touqi are Procurement Engineers at Oxy Oman, operating within the organisation’s Supply Chain department. It is their responsibility to ensure all teams across the division, have the equipment necessary to carry out their tasks.
Mohammed explains how the introduction of reverse auctioning was seen as an opportunity for Oxy to assess market prices and negotiate with a large pool of suppliers, all at once.
“We work with a large supplier base at Oxy and while this is great for negotiating, the tendering process is timely. We were looking for a solution to help us achieve the best market prices while cutting the time it takes to negotiate with all our suppliers.
“We were referred to Sourcing Dojo from the Oxy team in Qatar. They had used Sourcing Dojo prior when buying some of their equipment. Following their success, they let us know it was an excellent tool for reverse auctioning.”
Implementing the Solution
Oxy’s approach to running reverse auctions has been highly strategic. Since adopting the solution, Oxy have run some of the most competitive auctions we have seen at Sourcing Dojo. Their events have seen huge levels of interaction from suppliers, helping the team towards their goal of achieving the best market prices. Marwan explains how the tool has been used so far.
“At the moment, we have been focusing on running events for conventional items, such as pipes and fittings. This was a strategic decision because, for these types of items, we already have a large pool of vendors, so our events are likely to be highly competitive. The products aren’t bespoke, so our existing suppliers are able to produce these items quickly and with low risk.”
This approach to running reverse auctions has been hugely successful for the Oxy team. Mohammed elaborates on the benefits felt by the team and the impressive results they have been able to generate.
“In the events we’ve run so far, we’ve had a lot of suppliers participating. We have managed to achieve some very good savings. We have run around ten or eleven reverse auctions to date and we have managed to achieve good savings in all of them.
“We have found Sourcing Dojo very easy to use. It’s self-explanatory and this was a big benefit. We were expecting to make good savings in many of our requirements and this is what Sourcing Dojo has delivered. In some cases, we have found that Market Dojo has even exceeded our expectations.”
The competitive nature of events is also noted by Marwan, who highlights the time his team have saved using Sourcing Dojo.
“We have also found the tenders to be very competitive. The difference between vendors is usually big, but when using the reverse auctions the difference is very small, in some cases minimal. We have had no issues at all when running auctions and the software has been incredibly smooth.”
“Sourcing Dojo has helped us save a lot of time. We are able to obtain prices from all vendors at once and without Market Dojo, we would have to approach all vendors individually and negotiate. It has saved us a lot of time and effort during negotiations.”
The supplier experience
The adoption of Oxy’s suppliers was hugely important to the successful implementation of Sourcing Dojo. Having not run reverse auctions previously, Oxy were fortunate that the majority of their suppliers had taken part in similar events before. These previous experiences meant there was a general understanding of the auction process, but the Oxy team wanted to ensure all suppliers, new and old, were comfortable with the platform.
“To ensure the process was fully understood, we created some training videos for vendors, on how to navigate reverse auctions in Sourcing Dojo. We also usually call all vendors before any event, to make sure they know how to navigate through the system.”
Mohammed has been pleasantly surprised by the positive feedback from Oxy’s suppliers, who for the most part have found the tool incredibly easy to use.
“They have all said how easy the process is and that Sourcing Dojo is very simple to use. What our suppliers love about Sourcing Dojo is that they can see their rankings live during auctions. This previously wouldn’t have been the case, but now they can see where they are in the market.”
From his experience so far, he goes on to share the advice he would give to any organisation considering the implementation of an eSourcing platform.
“I would advise anyone who is looking for an eSourcing tool, to look for something that is simple and easy to use like Sourcing Dojo. Sourcing Dojo is very simple, very self-explanatory, I’d advise any vendor to use it.”
Please click here to learn more about Oxy Oman.