I interviewed Ruy Martins who discussed Supply Chain Risk Management.
Can you provide a brief background of yourself?
So nice to talk to you, Dustin.It's a pleasure for me. I'm a professional with 20 years of experience in management and executive positions in big companies in Europe, Brazil, and the U.S. Also, I work with training, and I'm a consultant trainer and training manager for some big German consulting companies.
My first question regarding risk management, can you talk about what is the usual process of risk assessment?
Sure.Thinking about the timeline, first, usually, we start with planning the role, supplies that we have. So classifying those suppliers and regular suppliers, preferred suppliers, and also departments. So doing that, we can prioritize better the way we are going to organize their assessments. And another important point in the planning phase is create the risk assessment team, to organize a team, and to have people with different abilities, with different skills, to add value to the process.
After that, after having the map of the work, a very important point is when you're going to start, or what is the trigger for the process to start. So one important point is that we can have a regular schedule for their assessment for sure, but you can also have a trigger, like a natural disaster or an environmental issue, poor performance of the supply, but also a natural issue. So for [inaudible 0:02:33] for example, I made this process in India. We left it there for one month, evaluating Indian companies, and it was very important to first, for sure... By the way, the supply chain [inaudible 0:02:53] of the risk. So possibilities of shortage and the tier one and the tier two or three. And the possibilities that we can have some stops in our production line regarded to that, related to shortage of raw materials for the supply and so on.
Another very important aspect of the risk assessment is they also evaluate the financial stability, the actual points of the level of [inaudible 0:03:31] that they have, those kinds of things. The environmental points and how is the satisfaction of [inaudible 0:03:43]. So all this range of aspects of the company, we have to evaluate, but for sure, putting more [inaudible 0:03:50] in the supply chain [inaudible 0:03:54] risks.
After that, I think it's very important that also you have... One important point is to know what they are going to do [inaudible 0:04:12]. ... After the work, after the risk assessment, we do a kind of classification of the risks that we've found. So it's something like [inaudible 0:04:28] when we put in the X or Y, the [inaudible 0:04:37] probability level that is the multiply, we multiply the probability [inaudible 0:04:44]. So in doing that, we can identify what are the size of the risks, the most probable risks, and what is the [inaudible 0:04:55] and how they can [inaudible 0:04:57] about any kind of perception from the supply. So this is the X or Y.
In the [inaudible 0:05:06], we put something that we call the perceived impact [inaudible 0:05:11]. So it was the [inaudible 0:05:14] what can happen with the plan and what'sthe damage it can cause,and also, the reputation impact. So what a company like [inaudible 0:05:25] for example, here in Brazil, what a company in Germany like [inaudible 0:05:31], for example, that is a truck manufacture, can have impacted his image related to that. So multiply those two aspects. Have the X [inaudible 0:05:45] graph can show us how can we prioritize the actions after the risk assessment took place.
...supply chain risk so important?
Yes, I think this is the most important part of the risk assessment is to find what are the supply chain risks. So what are the risks of shortage, for example. So usually, we not only visit the tier one, but we also visit the tier two and three. What are the raw material providers for the tier one for that [inaudible 0:06:36] supplies. And what is the risk? What is the dependency, the financial and the supply chain dependency of the supplies, for this supply [inaudible 0:06:48] tier one and tier two and three. And so, what is the dependency of these supplies from other [inaudible 0:06:54], how much they depend on us, on the primary company?What's the person [inaudible 0:07:03] of the revenue that you're buying is, things like that. So it's an evaluation of the supply chain's stability.
My last question is where have you applied this and had success?
I applied it very much for [inaudible 0:07:29] takes care of their image too much because we are one of the only aircraft companies in the world that never had a fall of aircraft. So it's very important for us, and we depend a lot on parts and pieces from other countries to not stop the line. So it's a [inaudible 0:07:56] point. And I also train at some companies. I made some trainings for companies like [inaudible 0:08:04], companies like [inaudible 0:08:06] that are chip for German companies. And, on behalf of one of the [inaudible 0:08:13] for consulting companies. And I realize that those companies are very worried about their risks, not only natural disaster but they also, now, [inaudible 0:08:27] the supply chain risks. So they'll stop lines, and they're putting a lot of [inaudible 0:08:32] and a lot of money to reduce those risks.
Thanks for sharing today on the topic of supply chain risk management.
Thank you, Dustin, for the invite. It was a pleasure for me.
Great. Thank you.
About Ruy Martins
Head of Supply Chain Management and Facilities at ITW