Risk analysis of the supply

chain of a tools manufacturer

in Puebla, Mexico
Patricia Cano‐Olivos | Ricardo Hernández‐Zitlalpopoca | Diana
Sánchez‐Partida | Santiago‐Omar Caballero‐Morales | José‐Luis
Martínez‐Flores
-1|About me
Professional Background:
❑ Bachelor of Applied Science – BASc Auditing and Management Control. ESPOL
Polytechnic University, Ecuador (2011)
❑ Master of Science in Transportation Planning and Engineering. University of
Southampton, United Kingdom (2016)
❑ Master of Information Technology Management. European University of the
Atlantic, Spain (2023)
Alfredo Armijos De La Cruz
Professional Experience:
❑ Chief Operating Officer & Co-founder of Aristeia Corporation (2018 - Present)
❑ MBA & MPM Program Director, ESPAE School of Business (2016 - Present)
❑ PMI-RMP Instructor, Project Management Institute (2020 - Present)
❑ Project Risk Consultant, Palisade Corporation (2017 - 2021)

Certifications:
❑ PMI: Project Management (PMP), Risk Management (RMP), Business Analysis (PBA), Agile Practitioner (ACP)
❑ ASCM: SCOR-Professional (SCOR-P), Logistics, Transportation and Distribution (CLTD)
❑ Certiprof: Lean Six Sigma Green Belt (LSSGBPC), Big Data (BDPC), Blockchain (BCPC)
❑ MHI: Certified Outbound Logistics (COL)
❑ PMO-GA: Project Management Office Practitioner (PMO-CP)
0|Abstract
• Risk management has taken considerable importance
in the supply chain. Much research has been focused
on this area to improve quality and competitiveness
within organizations.
• This paper is focused on the identification, analysis,
and evaluation of risks associated to
materials/purchasing departments through the failure
mode and effect analysis (FMEA) and analytic
hierarchy process (AHP). This integrated analysis led
to prioritize the potential risks that generate
downtime and financially impact of the supply chain.
Having a unique supply source was identified as the
main risk, and restriction on the contract's length was
determined to be a suitable solving approach.
• The identified risks should also be quantified
considering the negative effects on cost, time, and
quality‐functionality to provide immediate or
long‐term solutions.
1|Introduction
The present work considers the failure mode and effects analysis
(FMEA) to identify and assess potential risks in the materials
department of a tool manufacturer located in the City of Puebla,
Mexico.

The studied areas were the following:

1. Purchasing. Direct and indirect material

▪ Suppliers
▪ Processes
2. Logistics and International Commerce
▪ Suppliers
▪ Processes
3. Consumer Service
▪ Internal System Failures
▪ Lack of Communication
 Plan
2|Literature Review
Plan Plan
Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source

Return Return Return Return Return Return

Return Return
Enable Enable
Enable
Suppliers’ Customers’
Supplier Supplier Your Organization Customer Customer

Visibility and Coordinated

Quantification Risk
Internal or External of Risk Management Internal or External

Formal Risk Supply Chain

Management Best Practices Designed for
Risk

Supply Chain Risk Management

3|Methodology
This work analyses and evaluates the risks of the materials department of a tool manufacturer through qualitative and
quantitative methods. This led to define the following methodological steps:

1. Process diagram for the materials department.

2. Brainstorming to identify potential risks according to the
process diagram.
3. Support the brainstorm with a cause-and-effect diagram.
4. Implement FMEA for the analysis of risks:
• Detection–Probability Failure.
• Evaluation of criteria and sub‐selection criteria with
AHP.
• Incorporation of the Risk Priority Number (RPN) in the
AHP to prioritise risk (this represents the outcome of
the present work).
4|Current Status
Step 1. Process diagram for the Step 2. Identification of potential risks Step 3. Support the generation of
materials department ideas for the identification of risks

Step 4. Implementation of FMEA for the risk analysis

5|Results
6|Conclusions
▪ The way to identify risks is not straightforward because each
company has its own characteristics.
Planificar
▪ Every participant in the focus group has different backgrounds
which adds complexity to the agreements.

▪ The identified risks should also be quantified considering the

Controlar Identificar damages in cost, time, and quality‐functionality to improve their
classification.

▪ The classification of risks can provide immediate or long‐term

solutions when immediate actions cannot be taken.

▪ Thus, the knowledge of the risks can allow being alert to

Implementar Analizar promptly implement the most ap‐ propriate contingency plan

▪ Supply chains are as strong as its weakest link.

7|Future research
▪ Development of SCRM model in order to integrate input
variables, transfer functions and output variables that are
relevant for the tool manufacturer. Sense
▪ Application of MAMCA techniques in order to consider
complexity to the agreements and different backgrounds for
estimating severity, occurrence and likelihood of detection.

▪ Deployment of Monte Carlo Simulation with the aim of

performing quantitative risk analysis (QRA) in the SCRM Respond Collaborate
process or model and review post-mitigation strategies

▪ Incorporation of a correlation matrix for identified SC risks for

assessing the whole effect in the output variables in the
SCRM model.
Optimize
▪ Analysis of the adoption of the Digital Capabilities Model
(DCM) for Supply Networks endorsed by the Association for
Supply Chain Management (ASCM) to be released in 2030.
8|References
ASCM (2022). Digital Capabilities Model (DCM). Association for Supply Management (ASCM). Retrieved August 3, 2022,
from https://www.ascm.org/corporate-transformation/dcm/
Cano-Olivos, P., Hernández-Zitlalpopoca, R., Sánchez-Partida, D., Caballero-Morales, S. O., & Martínez-Flores, J. L. (2019).
Risk analysis of the supply chain of a tools manufacturer in Puebla, Mexico. Journal of Contingencies and Crisis
Management, 27(4), 406–413. https://doi.org/10.1111/1468-5973.12258
Heckmann, I. (2016). Towards supply chain risk analytics: Fundamentals, simulation, optimization. Towards Supply Chain
Risk Analytics: Fundamentals, Simulation, Optimization, 1–411. https://doi.org/10.1007/978-3-658-14870-6/COVER
Hulett, D. T. (2011). Integrated cost-schedule risk analysis. Gower. Routledge Taylor & Francis Group. Retrieved August 3,
2022, from https://www.routledge.com/Integrated-Cost-Schedule-Risk-Analysis/Hulett/p/book/9780566091667
Macharis, C., Turcksin, L., & Lebeau, K. (2012). Multi actor multi criteria analysis (MAMCA) as a tool to support
sustainable decisions: State of use. Decision Support Systems, 54(1), 610–620.
https://doi.org/10.1016/J.DSS.2012.08.008
Rinaldi, M., Murino, T., Gebennini, E., Morea, D., & Bottani, E. (2022). A literature review on quantitative models for
supply chain risk management: Can they be applied to pandemic disruptions? Computers & Industrial Engineering,
170, 108329. https://doi.org/10.1016/J.CIE.2022.108329