Supply Chain Management
We seek out suppliers that represent our diverse communities and offer competitively priced products and services. We expect them to meet our requirements for HES performance, insurance coverage and financial viability.
We take extra steps to build strong relationships with our suppliers to help them improve their overall performance and maintain a stable workforce for Marathon Oil. We believe this is more sustainable for our company and the community.
Marathon Oil’s supplier relationships are governed by the Third-Party Services element of our Responsible Operations Management System (ROMS), Procurement and Contracting Policy, Anti-Corruption Compliance Policy, Code of Business Conduct, and our health, environmental and safety (HES) standards and policies.
Supply Chain Monitoring
Marathon Oil manages supply chain risk by stringently vetting suppliers and following specific processes to determine the appropriate type of commercial agreement for third-party goods and services. These agreements reference our Code of Business Conduct and all relevant standards and policies, which are available to suppliers on our internal supplier portal. Changes to standards and policies are communicated to ensure suppliers are aware of the changes and can act as needed to comply.
In keeping with our Code, Marathon Oil avoids doing business with suppliers that have a history of violating the law or applicable regulations, including those related to employment, the environment or safety. Additionally, we’re committed to ensuring that slavery and human trafficking don’t exist in our supply chain or in any part of our business.
To prevent bribery, our suppliers must comply with our Procurement and Contracting Policy and the Anti-Corruption Compliance Policy. Global Supply Chain is responsible for conducting all contracting and procurement activities in an objective, ethical manner in accordance with Marathon Oil’s policies, standards and applicable laws. Our Anti-Corruption Compliance Policy requires potential suppliers within specified higher-risk categories to successfully complete an added layer of due diligence and be approved by Marathon Oil’s Law function before engagement by Global Supply Chain.
Suppliers approved for use may be required to participate in Marathon Oil anti-bribery training and/or undergo an internal contracts and compliance audit. In addition, all suppliers are directed to report business ethics concerns to our Integrity Helpline.
Marathon Oil’s vendor compliance program consists of three layers of supplier monitoring and auditing to ensure invoices are accurate and align to negotiated and agreed upon contracts and pricing agreements.
- The first layer is a systematic compliance program that matches a supplier’s invoice with their executed rate schedule. In 2019, approximately 70% of our discretionary commercial spend was vetted to ensure compliance.
- Our secondary layer is a manual review of suppliers whose pricing is not already systematically complied. This may result in a more detailed audit if the findings warrant it.
- If needed, the final layer of compliance enforcement includes a detailed audit by a third-party audit firm.
We’re increasingly applying technology to improve efficiency for both Marathon Oil and our suppliers. For example, we developed an app that tracks produced water being hauled from company locations to approved disposal wells in the Permian Basin. The app schedules haulers, provides them the optimal route to follow and automatically converts the hauling ticket into an invoice, which eliminates the hauler’s need to send an invoice and leads to timely payment. We’ll continue to look for ways to improve our supplier relationships.
Additional HES Assessments for Safety-Sensitive Suppliers
Marathon Oil assesses and approves suppliers’ HES performance and capabilities before they can begin work at a company operations location. We develop management plans for safety-sensitive suppliers aligned with recognized industry HES practices such as those published by API and IOGP. These plans are based on the supplier’s potential to impact the safety of other workers, the public, environment or our facilities. Suppliers who provide personnel for safety-sensitive work in the U.S. must register with ISNetworld, a global online source to manage, evaluate and qualify suppliers based on Marathon Oil’s criteria.
Safety-sensitive suppliers are also required to complete our HES orientation and Life Critical Expectations course and will not be allowed on our work sites if they fail to do so. Our HES team conducts formal, structured safety leadership engagements with critical and new suppliers, as well as those with HES performance concerns. These engagements may include a review of the suppliers’ internal policies and procedures, and interviews with their leadership and field workforce to gauge their understanding of their employer’s policies and programs. This allows for corrective actions with deadlines and could lead to contract termination if safety and operational performance doesn’t improve.
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