The Oman skyline, where OQ is based © Photo by Tibor Bognar via GettyImages
The Oman skyline, where OQ is based © Photo by Tibor Bognar via GettyImages

Why OQ cut the number of suppliers by more than half

Will Green is news editor of Supply Management
27 September 2022

Oman-based energy company OQ has described how its “Vendor Cleansing Project” cut its suppliers by more than half from 24,000 to 10,000.

In its 2021 Sustainability Report OQ said the work resulted in better supplier information, improved vendor management and more timely payments.

“At the beginning of OQ’s integration journey, OQ started with 24,000 registered vendors and managed to reduce the total number to 10,000, as part of one ERP Project Vendor Master Cleansing strategy,” said the report. 

“By the end of 2021, 87% of the 10,000 vendors’ details were updated, resulting in the improved accuracy of vendor management and the enhanced efficiency and timeliness of vendor payment.”

The move was part of a number of initiatives to streamline procurement processes, which included rolling out barcoding across warehouses for better efficiency and incorporating health, safety and environmental criteria into tendering processes.

“Tenderers are now required to perform an HSE risk assessment and prepare a preliminary project or contract HSE plan to demonstrate their understanding of the HSE specifications and requirements,” said the report.

OQ said its spend on local goods, services and SMEs in-country increased by more than 30% year-on-year to hit $931m. Total procurement spend was $1.358bn.

In 2021 OQ awarded 147 tenders worth $165m to SMEs, up 54% on 2020.

The company said in-country value (ICV) initiatives included adding minimum requirements to contracts covering the recruitment and training of Omani graduates, the local sourcing of goods and services by subcontractors, and funding for R&D.

“Through ICV, we strive to cultivate local businesses in order to maximise value retained through all procurement spend,” said the report.

“The programme has demonstrated the benefits of creating successful local partnerships in the business. It also increases their competitiveness, drives industry collaboration, and brings innovation to Oman through research and development. The synergy driven by the ICV programme has delivered greater levels of prosperity for the country, the local business community and OQ.”

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