By Keeli Jernigan
At a time when the topic of international trade has become more prominent in the national discourse, it is worth looking at one of our nearest trading partners, Mexico, as an advantageous resource for Texas companies. Whether considering Mexico as a source of raw materials or as a manufacturing location, CEOs of companies from auto parts to technology — and the myriad of companies that serve them as suppliers — have discovered the benefits of “near-shoring” to optimize transportation and labor costs.
As an important example, Mexico offers greater proximity than Asia, whose goods and parts can be ocean bound for five to six weeks. For companies whose products are time sensitive — for example, parts for LED lighting that is constantly upgrading — cross-border trade with Mexico offers a competitive advantage.
At the same time, CEOs embarking on this strategy would do well to put key disciplines in place to protect themselves against unanticipated costs due to any number of factors from regulatory missteps to project inefficiencies. Knowledgeable suppliers can help by providing expertise in these and other areas such as quality control, security and efficient routing.
The following are key strategies CEOs can employ, themselves or in concert with cross-border suppliers. While these pertain to doing business in Mexico, they may also apply to manufacturing and logistics in other countries.
- Hire a trusted local team. There is no substitute for local eyes and ears in the region and community. Companies should assemble a team of experts to include local employment attorneys and CPAs who are credentialed and referred by businesses in the area. These people can ensure properly maintained regulatory compliance and community relations.
- Train offshore partners and staff in industry best practices. Staffers in the warehousing and logistics management must be trained and managed to produce the efficiency and quality corporations pride themselves on in the manufacturing process. It pays to include expert staffing as part of the supply chain.
When building warehouse facilities and transportation functions, companies can partner with U.S.-based, bilingual staffing companies with a presence in Mexico. They can help ensure accountability and maintain strong employee relations in the area.
- Secure an efficient transportation pipeline. Corporations shipping raw materials to Mexico and finished goods back to the U.S. must secure those assets at every step of the supply chain and transportation process. CEOs should map out a transportation and logistics plan that ensures security and efficiencies in shipping.
As with other business functions, it makes sense to hire a transportation expert who knows the dynamics of logistics and customs on both sides of the border. Insist on key certifications like the ISO 28000 for the highest standard available for supply chain security, and Custom Trade Partnership Against Terrorism (CTPAT) to ensure security at the border.
There are also tax considerations when crossing the border. Exporters can decrease or eliminate U.S. Federal taxes or duties if they go through a Foreign Trade Zone.
- Leverage technology to track corporate assets throughout the supply Visibility and transparency are key to maintaining cost and timing control. Companies need to know where their shipments are and what’s in their inventories in advance of a meeting or to meet a deadline. Today’s technology allows supply chain executives to track a delivery or inventory in real time and make that information available on a smartphone.
At the same time, request to have a person available by phone, any time of day or night, who can address service interruptions or shipping delays and implement a Plan B. Executives should be able to get all that information from a single source.
Cross-border business offers exciting opportunities to broaden resources and achieve greater profitability. With the right team of experts, CEOs can manage the risks and attain the rewards.
Keeli Jernigan is CEO and President of Trans-Expedite Inc., a global freight and logistics company providing end-to-end solutions for Fortune 500 corporations. Trans-Expedite is celebrating its 15 year anniversary. Trans-Expedite is headquartered in El Paso, with offices in Dallas, San Antonio, Houston and Austin, among others in the U.S. and Mexico.