Advantages of nearshoring in Mexico

The supply risks have increased, not only due to the increase in inflation, but also due to the commercial tension between China and the United States, in addition to the problems caused by the pandemic and the conflict between Russia and Ukraine, for which companies seek the way to reduce this problem, in this sense, nearshoring  begins to gain strength as the solution to risks and cost overruns in supply chains.

According to information from the United States Census Bureau , until June of this year, trade between the northern neighbor and Mexico had US exports of more than 40.3 billion dollars and imports of 30 billion dollars.

Faced with the dilemma of rethinking their logistics , organizations are adopting this trend, in which they establish their manufacturing , assembly or supply processes processes in a place closer to their headquarters, thereby reducing the risk of operational interruptions and dependency from countries like China. 

Rafael Vásquez, regional vice president of Value Services Coupa , commented that it is anticipated that the greatest opportunities for the relocation of companies will be in the automotive sector . According to data from the Mexican Association of Private Industrial Parks  , the opening of 25 industrial parks is expected in the next 12 months, which represents an investment of 25,000 million dollars.

This opens a great window of opportunity for national companies. The Inter-American Development Bank (IDB) estimates that the relocation of manufacturing centers represents an opportunity of 35,000 million dollars in new exports for Mexico. In addition, the country has competitive advantages that make it attractive for commercial exchange: 

• Geographic proximity  to the United States; This is a factor that has not been overlooked by North American importers who have already begun to look for suppliers in this territory. 
• The T-MEC, the trade agreement between the two countries, which offers attractive tariff benefits for companies from both countries.
• The low cost of labor  paid in Mexico, which compared to those in the places of origin of the big brands and in the main world markets, represents a significant reduction in operational terms.

Technology: The Help You Need

In turn, while nearshoring becomes more important, companies that want to take advantage of this trend must be prepared, with technology and software, that allows them to be ready and optimized to face the challenge of serving the US market. 

How to do it? With digital tools with which they can unify the design of their supply chain and planning processes, such as purchases, payments and treasury; all in a single business spend management platform .

The creation of distribution models continues to be a factor that will define the success or failure of a supply chain , which is why it is important to rely on simulators that analyze different variables, in order to identify the best route to transport merchandise. 

"The more and better you plan and execute your delivery routes, you will gain the trust of your customers, in addition to saving fuel, vehicle use and other expenses related to the operation of your distribution fleet."

Nothing would be complete without the human factor; For this reason, it is essential that you also invest in the constant and updated training  of your collaborators, since the better training they have, the better results they will obtain from the technological tools that are available. 

Thus, technology and the human side are factors that will help you maximize your opportunities to be part of an efficient   relocation of the companies' manufacturing centers. With all this, nearshoring is seen as a respite for the country's economy and its companies for the coming years.