 Hi everyone. Welcome to our second live event of the SCX Poll Series. Thank you so much for joining us today. I'm Miguel Rodríguez-Garfia, course lead for S1S Supply Team Fundamentals, which is part of the MITx MicroMasters program in supply team management program developed here in the Center for Transportation and Logistics at MIT in Boston. And remember that this part of a five course program and some of them are actually open by now for enrollment, so don't hesitate and check them out. We'll be posting the link in the chat group in case you guys are interested. And today we're going to be talking about one of the hardest topics in supply chain in the last couple of years, which is risk management. We've had war sadly, COVID, inflation, a lot's been going on recently in supply chains are actually at the core of all these huge disruptions. So we truly believe that you guys are going to find today's content really, really interesting. And as you can see, I'm not alone here. I'm happy to be co-hosting this live event with my colleague Paulo Sosa Jr, course lead for SC3X Supply Team Dynamics. So hi Paulo, how are you? Or you're muted Paulo. Thanks for that. So thank you Miguel. Hi, hi everyone. It's great to be here with you all. I hope everyone is excited to learn and discuss more about supply chain risk management. Today we are honored to have Jimmy Rose as our guest speaker. Jimmy is the Vice President of Global Strategic Sourcing at Temporously International with over 25 years of experience in sales, operations, engineering, new product development and sourcing. Jimmy holds a master degree from MIT in supply chain management and is also a MicroMasters alum, which means he succeeded in all of our MITX MicroMasters in supply chain management courses. So hi Jimmy, welcome back to the MicroMasters program. Thanks Paulo, nice to be here. We're happy to have you here. So Jimmy, before moving to your presentation, do you want to share a bit of your professional background with the audience so everyone can learn a bit more about you? Sure. So I think maybe interesting fun fact is that I really never intended to be in supply chain. I studied engineering, wound up working for a very small company, getting to do everything you could think of doing inside of running a business, managing factories, setting up distribution, managing import, export, Makila. When you start going down the list and over time what I figured out is I was doing all kinds of supply chain stuff. I just didn't even realize it, right? Really getting a broad experience across all the disciplines within supply chain. I came to a point where I wanted to change careers and I talked to a recruiter and they said, hey, you should go into strategic sourcing. We think people with your background are really good at strategic sourcing and I said, I don't even know what that is. So I got a job as an engineer and about a year and a half later, I was working for Tempur-Pedek and they said, hey, we think you'd be really good at strategic sourcing. And I said, I don't even know what that is. They said, don't worry, we think you'll be good at it. So the rest was history and now unfortunate enough to be leading our global strategic sourcing team, which in our case really is about supply chain because we own total cost of ownership, which means we have to think about the entire supply chain for not just what it costs to procure a product, but transport it, warehouse it, including the cost of quality and other inputs, right? For all the materials that go into our owned entities around the world. Super cool. Thank you so much for being here, Jimmy. It's a pleasure. Actually, what you just mentioned about owning the supply chain is going to be super interesting for S1X learners, S3X learners, of course, too, about how to relate all this with inventory management, managing transportation. It's going to be really cool. So I'm just going to speak briefly the agenda for today. So first, our guest speaker, Jimmy Rose, will give us the presentation that will last about 25, 30 minutes. And then during the presentation, we'll probably have some polls because we want you guys to be part of this event. We want you to interact as much as you can with us. So we encourage you to participate, of course. And at the end, after those 25 minutes or so, we're going to be actually asking questions to Jimmy. And those questions are going to come from you because you have the Q&A feature from Zoom available through the whole presentation. So you can just leave your questions there and then Paul and I will be picking some of those questions. Of course, probably not all of them because it's going to be hard. We have more than 200 and almost 50 participants, which is great. Thank you so much for being here. And as I said, we're going to be asking these questions to Jimmy at the end so you guys can have someone like him actually sharing his thoughts and his ideas with you. So without hesitation, it's an honor, again, to have you here, Jimmy. The screen is all yours. And whenever you want, you can start sharing it and we can kick it off. Okay. So a quick, just one minute on the title. So, you know, when Palo asked me for maybe some subjects I was interested in, you know, I always like to try to have fun. And, you know, when I thought about what's kind of fun is this kind of irony between supply chain risk management being front of mind and this constant bombardment, you kind of hear about people changing their strategies. Are you near soaring? Are you friend shoring? Are you inshoring? Are you all these kind of things? It's almost like an endless list. And in reality is that, you know, it's a lot more complicated than that. So I thought it'd be kind of interesting to talk about supply chain risk management and then kind of what's really happening in the world. So that being said, there's been a lot happening in the world. You think back over the last four or five years, even before COVID, the world of supply chain was already starting to have some issues that popped up really starting with protectionism. And, you know, that was already making us start to think about, you know, the strategies we had for managing our supply chains because, you know, even in countries that we considered friendly, we had things like steel and aluminum tariffs. And then we had, you know, what was a very visible trade war with China? And that really caused a lot of ripples. And you had to think about, okay, can my supply chain strategy accommodate this or do I need to change? Well, since then we've only had more, right? And Miguel mentioned some of this when he opened up, you know, we have a pandemic, we've had lots of natural disasters, we've had transportation issues, conflict, energy shortages, and don't forget cyber attacks, right? Real constant issues in our supply chain. So it's only natural, right, that that's now risk and supply chain reliability are right on the front of our minds, right? You know, to me, this is a big deal, because it really represents a change. If we kind of think back five or six years ago, it's not that we didn't recognize there were risks out there, but they weren't always tangible. And when people thought about the tradeoffs of what it would take to mitigate those risks, it was always very difficult to, or many times very difficult to justify the costs or the resources that you'd need to mitigate those risks. So, you know, this is a big change. We now, because we've realized a lot of these risks, we perceive risk differently. And now we're thinking about it, we're acting. And for a lot of us, people like myself have spent their entire career really working in a world where we've leveraged globalization to drive productivity and innovation. This is a big deal because in a world full of risks, maybe the world's not as big as it was just a few years ago, and maybe we've got limitations now and a lot more things we have to think about when we're building global supply chains. So, you know, when we think about all the risks that are out there, you know, really, there's a few things that you can do when you think about mitigating those risks. One is you can change your strategy. That's where kind of this idea of moving things around, friend-shoring, reshoring, off-shoring, insourcing, outsourcing, that's where they come into play. You can change your inventory strategies. Do you hold more raw materials, components, finish goods, things like that to mitigate reliability issues in your supply chain? Or do you increase your resources that you use to manage your supply chain? People, tools, to make sure that when you have a risk or a potential issue, you can immediately detect it and then mitigate it. So, this is where I want to start with the first poll question and really get a sense for the people out there. How are your companies mitigating or reacting to the supply chain risks you sense today? Are you changing your sourcing strategies? Are you changing your inventory policies? Are you increasing resources to manage your supply chains? Are you doing all of these things? Or are you just hoping things get better? Are we starting to get some results in yet? Yeah. Can you see the results, Jimmy? I cannot. Are they? Oh, here we go. Now I know how to see them. All right. Okay. Or maybe I don't. Oh, there they are. Okay. So, it looks like we've got quite a high percentage, 35% who say that you're updating your supply chain sourcing strategy. I can tell you from my experience, it's all of the above, including hoping things will get better. And the reason why is that, you know, for most of us, we have big, complicated supply chains and they have a variety of different types of products inside of them, components, raw materials, finished products. And there is no one strategy which can really mitigate all the risks for these different types of products. So you may be using a combination of all these things, but then doing them a little bit differently depending on what the commodity is, what your industry is. So when we think about supply chain risk, before you can mitigate risk, you really need to understand what those risks are. And that really starts with assessing supply chain risk. So here's a question that I'd like to ask now. How many of you were involved in doing supply chain risk assessments pre COVID? So think about 2018, 2017, were you actively mapping and assessing risks within your supply chains? So 72% said no. And I'll give you an interesting kind of insight that we learned, Paolo and I learned when we were together in class when there was an interview with one of the major soft drink companies in the world, and they had a shortage of aluminum cans, and they had a very nice graphic which kind of demonstrated the issue that they're just physically were not enough cans. And my question was, when did you create that analysis? And the answer was, when do you think? Meaning after the problem, not before the problem, right? So that's important, right? There are lots of different types of supply chain risk. And when you really dig into it, you know, you're looking at your facilities, your suppliers facilities, you're looking at unique capabilities, whether internally or externally in your supply chain, you're getting down into the financials and capacity of your suppliers, even looking upstream, maybe tier two, tier three, depending on the types of products that you have in your supply chain, you're looking at the modes of transportation, you're assessing geopolitical risks, cyber's been a big, a much bigger risk in the last few years than it was previously. There's a lot to do out there. But I generally try to simplify it down as we're assessing risks to really evaluating whether we have cost or supply risks, meaning cost, I can still get what I need, it just may cost me a little more, or supply, I'm going to physically not be able to get the products or components that I'm looking for. So that's the question that I'd like to also put out to everyone is, when you're looking at the risks you have today, are they cost risks or supply risks? Okay, a little bit more, about 60% looking at supply risks. The reason I bring this up is because when we think about a cost risk, you may treat that very differently than you treat a supply risk. Because the cost of mitigating that risk may be larger than the potential cost impacts of having to source something at a higher price or pay premium freight, something that temporarily impacts your cost. Whereas a supply risk could mean that you physically don't have it available, you can't produce or you can't supply your customers. In both cases, context is really important. You may be willing to accept either risk if they're on a portion of your products that aren't so important to your revenue or your profits. But in both cases, if they impact your revenue or your profits, you may not be able to tolerate either one. If you have a cost risk and you know you can pass it along to your customers, then maybe that's a risk that you don't have to spend too much time mitigating. If it's a supply risk and it impacts a large portion of your revenue and your earnings, well, you have to mitigate that, right? Because you're really thinking about the long-term success of your company and you can't have that type of risk to your ability to service your customers, generate revenue and profits. So here's where it gets interesting. What are people actually doing? For years, I've found this to be really hard to kind of decipher what our company is really doing when it comes to risk. You see a lot of headlines and here's a great example where I did a search on Bloomberg and the reality is I was able to find a headline for almost anything you could think of. I can find a headline for we're buying more from China. I can buy a headline that says we're bringing production back to the United States. I can find data that says we're increasing inventories. We can find data that are headlines and data that say, hey, it's complicated. It's hard to really move a lot of these things because they depend on big installed networks of infrastructure that you can't easily recreate in other places and it's going to take a lot of time. So the reality is there's no one answer and it is complicated and there's a lot going on out there. So I thought an interesting example would be one that's kind of close to what I do. I work in the mattress industry and the mattress industry traditionally had been a domestic industry with almost all the products produced in the US. Back in 2016, there started to be a surge of imports and those imports started to grow very quickly really on the back. Let's say a synergy with companies like Amazon where they were looking to source very inexpensive products which could be easily delivered to consumers. The producers in China and in other countries were able to meet this need and by the time we get to 2021, they consumed roughly 30% of the industry units. So massive change. It was obvious there were going to be anti-dumping cases which there were and even before there were findings released, it was obvious there were going to be anti-dumping duties on the major producers. So what happened? Well, as you would expect where there were anti-dumping duties, you quickly saw that the volumes from those countries decreased and almost a zero. In some cases, some of the big foreign producers built factories in the US but what really happened? What really happened was import mattress volumes didn't really go down. They just moved around and this was kind of an interesting example of how when you thought about what the real problem was, the problem was these producers still needed to provide very economical products to their customers. Their customers were already happy with longer lead times. They were happy with the quality. They just need to figure out how to meet those same customer requirements. What they really need to do is just find countries that weren't going to be impacted by the anti-dumping duties. And in some cases, they moved only a few miles. For example, from Serbia to Kosovo or maybe they moved a few hundred miles just to get away from the anti-dumping duties. Still meet their customer's needs, still able to be successful. But then something really interesting happened, which was COVID and these same producers now had a different problem. It wasn't anti-dumping duties. It was the fact that they depended on global supply chains and shipping became very unreliable and expensive. This presented a different problem, right? Now their question wasn't what's my cost. It was just physically making the product available in the marketplace. And when we looked at what happened here, is the marketplace of producers reacted differently? What we saw is they said we've got to mitigate our risk related to transportation, but we still need to meet our customer's needs from a standpoint of cost and the other factors. So what we saw was a huge growth in the amount of exports coming out of Mexico. Ironically, these new facilities that were built in the US were largely underutilized and not significant sources of products. What they really, they weren't important to meeting the market's needs. So really, when we looked at the risks that were that happened in these cases, one is not having market access because you've got these duties. You see people moving around to avoid those problems, but in the most efficient way possible. But then the second risk that was realized is we can't physically get our product transported to the marketplace. That had a different result of how they reacted. So there's a lot of factors that can influence how you adapt to mitigate supply chain risks. In some case, we talk about risk now in a certain context, but the reality is we've realized most of these risks over the last few years. We talk about the risk of not being able to get products transported. All these things have happened. So when you think about, well, what is really influencing how people react? Well, there's a lot of factors. Some that I would point out would be time, speed. How much time do you have to react? How much time does it take to react? If you need to make large investments that take a long time, well, that's going to be a pretty strategic process. If you're in an industry where you can move very quickly and you can move from one country to the other in a matter of months, well, that's not necessarily so strategic, right? What are the cost of switching? You know, sometimes it's expensive to change your strategy. And those costs outweigh your perception of what the risk is for not switching. Alternative sourcing options. Sometimes we take for granted that you actually can change the design of your supply chain, that there are other options. In some cases, they're very limited. You really don't have that many options. There also can be a question of, do you really own the supply chain or the products in it? You know, if you're buying products that really are owned by other people, they have the intellectual property to it, you may not have the ability to move those. It really may be someone else's decision whether they move it or not. And then I think the most important factor is ongoing competitiveness. You know, we live in a very competitive world and we have to make sure that we can meet our customers' needs and then we can also meet our needs and be successful. And that means, you know, a lot of times you get into a question of, is the cure worse than the disease, right? If it costs me more than, if mitigating the problem makes me not competitive, well then I can't be successful, right? So I think that's also a big question. So in thinking about this, we talk a lot in the context of moving something you have to somewhere else, potentially, to mitigate a risk, changing something. The question I've got for the community here is, can it make sense that you would actually be moving products or components out of a region, but also simultaneously into a region to mitigate risk, meaning I have one set of commodities or products that I want to make less of in one part of the world, but I'm taking other products and I'm moving them to that same part of the world to mitigate a different risk? While the audience is answering to the poll, I just want to remind everyone that you can post your questions using the Q&A feature, the Zoom Q&A feature. At the end of the session, Jim, you will be answering to some questions from the audience. All right, so a lot of people think like I do. It looks like 77% say yes. And this is actually the reality that I live in, right, is that for one set of commodities, we may believe that we'd like to produce more of that commodity close to the marketplace. In other commodities, where we may be overweight producing that product or commodity close to the marketplace, we may be looking to move part of it away. And the general idea is that we have risks everywhere and we're not likely to have the same risk impact all regions in the world simultaneously, although we just had COVID, which did. But it's not as likely that you would have some event impact all the regions simultaneously. So therefore, if I've impacted in one place, I can compensate for that in other parts of my supply chain. So to really end the presentation, what I'd like to do is give a quick overview case study. And there's a lot of irony here. This actually represents a commodity where we had done a tremendous amount of risk mitigation work and strategic work, but then we're presented with a situation that no one could have ever imagined. So I work for Tempur-Petek International. We produce beds. We're a very large producer of polyurethane phones. We depend on the chemical precursors to run our facilities. If we look back to the third quarter of 2020, you know, we really had an explosion in demand as people were buying a lot of home goods, including mattresses. But there was low inventory in North America because we'd had three hurricanes, Laura, Sally, and Delta. We were already being impacted at the end of the year by allocations. And then we had a true black swan event, the Texas Ice Storm, which put the entire industry in force majeure. We were already short inventories. You also have to remember people were driving less. So if you look all the way upstream, when you talk about at the refinery level, there was less refinery runs, right? So really the system was kind of starved all the way upstream. And then you've got your producers being shut down by the ice storm, right? To make things even more interesting, transportation problems. We went from a time when usually tanker truck deliveries, accessibility to drivers, railcars were extremely reliable, to a time where all of a sudden our lead times were increasing by the weeks and were extremely unreliable. And then we had two major hurricanes, two major hurricanes, Ida and Nicholas, which hit at the end of 2021 with Ida severely impacting about half of the polyurethane industry's infrastructure in North America. And this was really a tremendous mess as you had flooding, debris, power outages that were really stopping the entire industry. And don't forget, if you were thinking about bringing stuff in from overseas, ports were congested, transportation by container vessel was a nightmare at that time. So kind of a reality check. I mentioned we've done a lot of work in terms of putting together a risk mitigation strategy in advance of any of this happening. But the strategy really couldn't contemplate that you had 50% of U.S. capacity continuously disrupted for a year. The context of the industry is that there's only really a few, a really small number of big suppliers in the industry. And the capacity concentrations are only in a few places in the world. You've got the Gulf Coast, you've got Western Europe, you've got China and a few other places, but not that many global centers for producing polyurethane chemistry in any quantity. We had established relationships in Europe to feed our international business, but they were also on allocation and there were players in the industry that were unfortunately sure we couldn't even get everything we wanted for Europe. We did have capacity available from China and Korea, but again transportation was a problem. There also was this issue that we had put large tariffs on Chinese products, which had really caused a lot of people to lean out of that supply. So a lot of problems also had the issue that essentially with the products we make, we make them with a recipe. And there's a lot of ingredients in it. Maybe you've got 40 or more ingredients in it and you can't just leave one out or change one or else it's not the same product. So we've got this issue of a really difficult supply situation, a lot of work to bring on new supply, so a really difficult situation. So here we weren't as worried about cost, right? It was all about can we get product? You know our issue was our suppliers had facility continuity issues, even though we'd done a lot of work, if we looked throughout the portfolio we still had some single and sole sourced items and even when we had dual sourced items we found out that they might have been bottlenecked up at tier three looking up in the supply chain. So we thought we had independent supply but not really independent once we got far enough upstream. Transportation was an issue and country of origin was an issue. So what do we do? Well we did everything we could think of. I mean here was a great example of how you can really rally all the resources of your company to go mitigate a risk in order to support that you can get the best possible results for the company. In our case we had billions of dollars of revenue dependent on this supply and we had a record year, right? So what did we do to make sure that we could do that in the face of this fly? Well the first thing we did is we got resources and really resources did two things. The first thing they did is they created visibility. We had to be able to see where all the problems were at. We also had to have resources to execute because we needed to go build tools to help us manage this. We needed people to go get fine new sources. We needed to qualify new products. We also looked at in-source outsourced. There were some products which we in-sourced because we had a cost advantage on but they were consuming some of our critical supplies. We outsourced those products so we could make sure we could more effectively use the supply we could get. And then a really interesting one is we increased inventories. Now this may sound kind of strange when you think about being in your entire supply base, being in force majeure and you being on allocation. But the reality was is that because it was force majeure and allocation we didn't want to turn down anything. So even if we didn't need something at that moment we took those trucks or rail cars or whatever container it came into and we went out and got off-site storage and we stored it because we knew we two weeks from now or a month from now we might not be able to get it and we might need it. So we started building up storage and so that we'd have it available when we did need it. So if you think about the levers that we pulled we brought in offshore supply and an increasing amount. We changed our in-source outsourcing strategy. We increased our inventories a little outside of the scope of this issue. We increased also finished goods inventories in some cases to help buffer us. And then we put a lot of increased resources on the problem. People to manage the problem, people to do the work and then we created tools to help us do the work. Now for us we certainly don't have the same disruption today that we did a year ago but really we perceive that the ongoing risks in this category are much higher than they were if we dialed back three or four or five years ago. So we made some permanent changes to our sourcing strategies here. So now we manage a much more balanced supply chain to where the the ratio of products we bring from each region whether that's coming from China the US or Europe is now more balanced. Again the idea being that any particular event in one region is likely not to coincide with an event in another region so we can we can more easily pivot between supply. We increased our inventories and we did this based on updated segmentation and risk assessments and this has allowed us to have to mitigate small risks very effectively. I can say that even though supply is much better this year we have had a constant stream of small disruptions and the way we've mitigated them is inventory. We hold more inventory therefore we can absorb those issues without impacting our customers and without impacting our plant schedules. And then we made a permanent increase to the amount of resources that we put into managing this supply chain and in this case what we really did is we said we're going to take more ownership of transportation and we're going to manage that. We're going to take more ownership of having products staged around the country to supply our plants in inventory and we're going to manage that and then we're going to have more resources for now managing what's a bigger supplier base than what we had in the past. So with that I'll open it up to any questions. Thank you Jimmy for such an insightful presentation. We already have lots of questions here and contributions from the audience but before we jump into the questions I just want to highlight that as we have seen in Jimmy's presentation there are many challenges to be faced by supply chain professionals regarding supply chain risk management. Companies definitely need the right talent for that and this is why the MITx MicroMasters program in supply chain management offers specific content on risk management. In SA3x supply chain dynamics we have great lessons from Professor Yossi Shafi on risk management and enterprise resilience. So if you want to obscure yourself on this you can now enroll yourself in a future run of the course. Sean will be sharing the link in the chat box. All right so from this moment on Miguel and I will be selecting some questions to share with Jimmy and if someone wants to make a question please use the Q&A feature. So let's start with Benjamin Jerkin has a question in the face of declining margins how do you achieve internal support for risk mitigation initiatives that are not cost neutral and how long does it take if ever to see positive rise on risk mitigation efforts? Yeah so great question. A couple of things one of the things from a strategy standpoint that we try to look at is where does the supply chain need to be in the future? And a lot of times what that does is it helps us come up with risk mitigation opportunities that also have either productivity attached to them so actually we think this is going to be a better supply chain than we currently have so it now becomes part of the risk mitigation is also a cost advantage or it's cost neutral right but offers you know us that risk mitigation that we're looking for. In some cases it's absolutely a trade-off that we recognize that there is some cost associated with the action that we want to take and this is really where it becomes where it becomes difficult right because you've got to drive some some common alignment or understanding in the organization for what is the value of mitigating this risk and if the value of mitigating that risk is less than what it's going to cost that's going to be very difficult to do right. In the particular case I'm in we have a lot of products which are premium products right so the cost to the business of not being able to supply is really great. It's great in terms of revenue and earnings but also customer satisfaction so in that case we see an immediate return on investment right this we can justify spending or or investing to make sure that we are keeping our customers happy maintaining the revenue and the earnings. All right thank you so much Jimmy for sharing your expertise. I'm going to pick up another question from the audience we have a lot of questions so that's great I think you actually like brought to our learners and to our audience in general like a lot of excitement through the presentation so that's awesome and I'm actually going to put together a couple of them because there are way too many so we are going to try to address the main topics that people actually want to discuss and I picked one from Nara Hadi Rao I hope I said that right if not I'm sorry so and this person is asking how did you envision companies mapping supply chain risks and the reason is that there are so many different types of risks that you mentioned before Jimmy in terms of cyber attacks operational risk financial just so all those different aspects like how did you actually gain visibility in order to be able to control all of them and is this something that you do internally only from your team or do you have people from other departments actually helping out to be able to map all these risks. So so back in 2017 my boss at the time got the opportunity to be responsible for supply chain risk management and he was nice enough to make his opportunity my opportunity so so I got the opportunity to do exactly what you're saying and I'd really break it into two parts one let's say is the mechanics of it it is an actual mapping process right you're going to need to physically trace the flow of of your material products and materials upstream and then you're going to have to assess the risks you know in each arc and node right and those are different whether they're internal versus external so it is a physical mapping process and if your situation is like mine and you're you're mapping all of these arcs and nodes that you're not actually responsible for so in that case you have to go enlist the help and support of the people who are responsible for those arcs and nodes to help you do the mapping exercise so that's really the mechanics of it the other side of it I think is the harder part which is the actual getting the support from the organization you know the the reality is and I had it on one of the slides you're going to say inevitably we had a lot of risks you're going to find a lot of risks and you're going to have people who are going to communicate to you that they just have more important things to think about right why because they have a set of metrics which are very clear that they're being measured on and you're coming to them with something that's not always very clear right what is the probability that that risk will be realized it's hard to know right so in that case the mechanics of it are pretty straightforward you can you can read about it it is a physical mapping exercise each arc and nodes you're going to do an assessment gaining the support of those people at each arc arc and node being able to really then take those critical risks that you find and get the right amount of support around them to go have a plan to mitigate them that's the real difficult part one thing you have to keep in mind depending on the size of your company is that you know sometimes it it takes time right you know if you're in a in a large company you know it takes time to make things happen you may not be as nimble in how you're able to go address these risks but but the first thing is you have to find them right and then the process of really taking those risks quantifying them and then getting the support you need to go address them well not just address them but to prioritize them and address them that's where the real art is and where the real work is awesome thank you so much for sharing Paolo do you want to pick another question yeah let me take another one Pedro Costa is interested actually he's saying Jimmy this case study about this disruption the polyurethane supply chain was absolutely amazing um what were the lessons learned from the situation um you already shared some but if you could elaborate a little bit more Jimmy yeah I'd say number one it's the idea that the work is never done and and the reason I say that is because we have done a lot of work pre-covid before any of these disruptions to have a risk mitigation strategy but the reality is is that you know your portfolio of products your portfolio of suppliers it's not static it's always changing so even though you're out there mitigating risks new risks inevitably come on to the list right so you know if if I think about how you know I've tried to explain to our leadership right you can get in the habit of listing all the things you're doing and they go wow we're doing everything right so so obviously our risks are are mitigated well no the answers no right we're doing lots of things which are helping us but the reality is is that it's all there's always more to do right and if you look at kind of the example I've briefly hit on when I was given the case we got down to two key issues one was that we didn't realize that some of our dual sourcing efforts were actually bottlenecked upstream so even though we said we're getting this product from West Virginia and this one from South Carolina and this one from Louisiana they all depended on the same original source upstream so when that source was cut off all three suppliers uh couldn't supply we also had some really minor things and this is pretty common I think you're working through your priority list and there's some things that are at the at the bottom of the list where were some of the places we get we had the most trouble it was at the bottom of the list right because we had done a lot of work at the top of the list we had a lot of levers to pull to help to help get supply but down at the bottom of the list in that which were purposely deprioritized well okay we didn't have options right so that really put a lot of work that we need to do in a short amount of time so so again the work's never done because it's very difficult to get all the way through the list you've got to constantly be reevaluating and updating your risk assessment and and making sure that you understand truly understand the supply chain that's really really interesting it actually connects a little bit with another question from the audience and I'm gonna choose Dominic Vieira so this learner is asking about like the relationship with suppliers and how to advise them and how to actually like exchange information so it got me thinking and this is my kind of like my old question in terms of how these disruptions have affected supplier relationships have they actually strengthened or because you actually have a lot of stake and you need to ensure supply most of the times but at the same time you're also looking for many different suppliers to mitigate risks in terms of only having one for example so how is this supply relationship changed over the last few years due to these disruptions yes so uh so let me kind of give you the before and the after kind of dynamics um we would say that we had really strong supplier relationships before the disruptions and that that made us a customer of choice when the disruption happened you know even in a situation where you have allocations and force majeure you still find that that your suppliers can't will have the ability to give more support to the cusp to their customers of choice right and and that really helped us so then as we moved into disruption it's obvious to your suppliers that when they can't give you everything you need you have to find supply right so it's very hard for them to let's say have their feelings hurt when they recognize that they can't give you what you need to run your business so so that part's not so difficult to manage it does get difficult once supply normalizes right because now you have suppliers who may have have really done a lot for you in very difficult circumstances now supply is normalized and you've got to somehow reconcile this supply base that as you said Miguel you've gone out and got more suppliers because you needed supply you're going to have to do work to kind of reconcile all reconcile all this back to some kind of steady state you know taking into consideration that really everyone there in some way was helping you be successful right the old suppliers were helping you the new suppliers were helping you and that's quite a difficult piece of work there I don't I don't know that there's any easy answer for that other than uh we evaluate suppliers based on a balanced scoring system really evaluating their performance across key metrics and in the end we're going to come back to a strategy which is really focusing on those suppliers who have the highest performance levels yeah that makes total sense at the end of the day as you said there is no easy and answer to to these kind of disruptions and suppliers are also having a hard time usually restructuring their their customer base so really interesting to hear that from you Paulo you want to go with we have a lot of questions so I think we can do like maybe one two more really quick if Jimmy you're okay and Paulo you're okay with that because I think like our audience is really like engaged yeah we have more than 60 questions actually so maybe let's try one more um so Sushman is asking if you could provide an example for this theory you mentioned that you could move out of a region in one commodity but into the same region on a different commodity as part of risk mitigation resilience strategy so you explain that but um yeah the learner is asking if you could provide an example of that sure sure um I'll give you an example on let's say textiles and electromechanicals those are two commodity groups where there's a tremendous amount of production that's done in Southeast Asia for us looking back before the pandemic we had looked out and identified that we really had too much of our production of these items in Southeast Asia and you know in one sense we saw really these are two different these are both examples where we wanted to produce less in Asia but really different dynamics in textiles we set out a strategy to to move most of that production back to North America and it's taken about four and a half years but it was already in action before COVID it took time to build facilities but we found we could be really cost competitive so this really gave us the opportunity kind of in the example uh that I gave before to look out in the future and say where do we want this supply chain to be what should it look like and it's actually a cost advantage for us in the end when we look at the system electromechanicals is more difficult we looked out and said we'd really like to make more of this somewhere else as opposed to China but the reality is we have structural challenges that we're having to overcome uh one is the infrastructure to produce electronics it's hard to recreate the infrastructure that's in China and be competitive the cost of steel highly advantaged in China that's very hard to replicate outside of China so as we've been looking to move electromechanicals we have these structural barriers that are causing it to be a much slower transition and we expect it'll take us years to get part of that production out of China and have it be competitive if we moved it today we could maybe replicate the production but at a much higher cost that wouldn't allow us to be successful now here we are talking about moving stuff out of southeast asia when we look at chemicals we're moving it into southeast asia why because again we don't want to be completely tied to the us supply the us infrastructure for supply european infrastructures for supply has all of its own problems around energy around the energy crisis it's not necessarily advantaged versus the us capacity so what does that lead us korea and china right so in one case we're moving products out of southeast asia and another we're moving in so that we can mitigate two different risks right or different types of risks awesome amazing thank you so much for for everything and i think maybe we can have like a really quick question that jimmy like you can answer one or two minutes but i think there are a lot of people asking about this so i think it's really interesting to to wrap it up so people are asking about demand techniques and kind of like i don't know simulation and machine learning different uh like techniques that maybe you can use for and mitigating risk so i just wanted to ask you like really fast if you can share a little bit of the the risk models that that you use or is more qualitative in terms of how do you analyze all the data yes so um so i mentioned that we do mapping right so if you think about that what is the physical flow of all the materials the arcs and the nodes right so that's you know that is you know qualitative and quantitative we're looking at where and then what goes through those nodes um when we look at the risks associated with each of those nodes you know we are collecting both quantitative and qualitative data right so that's really a lot of surveying and research um so in that sense the tools aren't that sophisticated it's really about collecting the data and having visibility to it being able to complete the analysis so that you can then try to drive visibility to where the risks are um we do have third party uh information that we subscribe to in services so that we can look at financial risk and also look at uh risk around different geopolitical risks things like that um when you think about more sophisticated techniques we're actually trying to get some help from MIT around that because we've got a lot of work we've done around using segmentation approaches to to classify risk and the response to that risk but we're really looking to build some tools that will help us take a more sophisticated approach where we can actually quantify the time of recovery or let's say the the amount of time we're buying with each of the activities that we're doing so so that we have a much easier way to talk about what we spend on risk and what it what it actually buys for us let's say so uh so we're actually trying to raise our game a little bit with our tools but I would say the most important thing is you know tools to drive visibility visibility yeah key for everything all right yeah thank you so much for answering that last question uh so Paolo do you want to yeah I I just want to thank Jimmy um for spending almost one hour with us and with the audience the audience we have we still have more than 200 people connected with us right now and we still have more than 60 questions from the audience which is great right uh we are sorry we could not address all of them we have the time constrained here but Jimmy thank you so much it was such a great presentation and I'm pretty sure that the audience um also appreciates it is my pleasure and uh I I wish all of you great luck I can tell you the master the micromanager micro masters in supply chain uh you know was a fantastic experience for me as Paolo mentioned it actually led to me getting my masters in supply chain management from MIT and you know as Paolo knows I encourage all of our team to participate in the micro masters so uh you guys are doing great stuff best of luck thank you thank you thank you so much Jimmy and thank you so much everyone who decided to join us today we want to be really respectful for with everyone's time actually we're going to be right on time so that's great and yeah it's being a super insightful session and just before we say goodbye two quick things to remind to the audience first that there are still several SCS courses available and open for enrollment as Paolo mentioned before and of course that this live event here is not going to be the last one of this series we're still going to have one more by the end of the year so stay tuned because that's going to be also a really special one uh to to end the season and again thank you for joining thank you Paolo thank you Jimmy have a good week bye bye