John Suggs isn't looking for scapegoats

Ford Motor Credit Company's John Suggs, Immediate Past President of RMA's Southeast Michigan Chapter, is a Six Sigma Master Black Belt (1) in Credit, so improving processes and efficiencies for risk management is a topic he discusses with enthusiasm. And he has more and more opportunities to do so.

Suggs is often asked about Six Sigma, especially at RMA meetings. He explains that Six Sigma individuals are "conduits for change. We change the culture of the company to do things a better way, using leadership and other skills," he says. He has channeled these skills into his roles at the RMA chapter level, where he has served as president of the local chapter twice and as the 2004 Chapter Leaders Conference Chairperson. Part of his success at work and in volunteering is not using scapegoats to "fix" problems.

"Six Sigma shows us that problems are process driven, not people driven. If something does not work as it is supposed to at Ford Motor Credit, our team is there to fix it," says Suggs. One example is the scoring process used for every customer who applies for vehicle financing. A risk-based buy rate is assigned to the dealer according to the customer's ability to repay. Suggs says Ford Credit, with $175 billion in assets (mostly in retail vehicle financing), "relies heavily on robust risk assessment tools." Thus, as a member of Ford's Global Risk Management Department, Suggs is always looking for ways to improve the credit scorecards to make them better predictors.

A Competitive Edge

"Ford Motor Credit's perspective is somewhat different from banks'," says Suggs, a former banker who has been with Ford for three years. "Our primary goal is to buy a broad spread of business from our dealers. If we make mistakes in our risk management, our purpose for existing and our ability to make money are weakened."

There are differences in other respects as well. "Banks are able to borrow money from the federal government at cheaper rates. We cannot do that, and so our borrowing rate is much higher," he adds. "Our competitive edge lies in our ability to do a superior job in identifying risk in potential customers."

Better risk management leadership will become increasingly important to the entire retail banking industry. "Assuming risk-based pricing is the direction the industry continues to follow, many more institutions will need the ability to quantitatively differentiate between high- and low-risk customers. Providers will need to become more specialized in what they do, which means that banks and other financial institutions will need to move away from doing all types of banking for everybody."

RMA and Six Sigma have worked well in Suggs's life. He credits RMA with refining his leadership skills by providing the opportunity to work with many types of people and to "take the risk to manage people whose poisitions may be higher than mine. Thanks to RMA, I have learned how to run an organization and how to be a part of change," he says. Thanks to volunteers like John Suggs, RMA has been able to maintain its own competitive edge and to be a leader in risk management change.

Notes

(1) www.ssqi.com/six-sigma-products/MBB.html.

McGinn is a Ft. Washington, Pennsylvania-based freelance writer and desktop publisher specializing in financial and business topics.

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