INTERVIEW WITH IBM’S
LOUIS R. FERRETTI
Five years ago, IBM went in search of
a tool to help it better assess the
vulnerabilities of its vast global pool
of suppliers. When the company
couldn’t find what it needed, Lou
Ferretti and his team built their own.
Assessing and
managing risk
BY PETER BRADLEY, EDITORIAL DIRECTOR
THE DC VELOCITY Q&A
thoughtleaders
AS SUPPLY CHAINS HAVE BECOME MORE GLOBAL,
the complexities of managing risk across vast and varied
physical and political geographies arguably have grown by
orders of magnitude. That’s a lesson that IBM, one of the
world’s largest technology companies, has taken to heart.
Beginning in 2009, the company undertook the task of
building a complex supply chain risk management tool,
now deployed globally, that provides managers with a way
to examine supply risk in a much more robust fashion than
ever before.
The team that developed the tool was headed by Louis R.
Ferretti, the project executive who leads global and strategic
programs within IBM’s Integrated Supply Chain business
unit and across its global supplier network on environmental compliance, supply chain social responsibility, conflict
minerals, business continuity planning, and sustainability
as well as risk management. He is also a member of IBM’s
corporate crisis management team.
Ferretti recently spoke to Editorial Director Peter Bradley
about the development and rollout of the supply chain risk
management tool.
Q Companies have been talking about risk management for a long time. What led IBM to develop a supply
chain risk tool?
A IBM, like others, has always assessed supply chain risk. Typically, we would look at whether our supplier was
a single or sole source supplier and whether there was a
financial risk associated with that supplier, and maybe we’d
look at some logistics aspects. That was the sum total of
what was done for our suppliers across the board.
But our supply chain has become global in nature. We
are sourcing in probably 80 countries, and we are sourcing
many times in countries where the risks are much higher.
So our senior leaders asked our [chief procurement officer]
what we were doing. Quickly, our CPO responded that we
would work to address supplier and supply chain risk in a
much broader, holistic fashion. We would cover political,
financial, economic, logistics, and climatic factors. Our
CPO listed probably a dozen factors that we would consider in a newer approach to risk. That was the mission that
was handed over to me in 2009.
