Five Keys to Success

Mexico’s automotive supply chain must be integrated, willing to take risks and invest but at the same time build confidence and dialogue with OEMs, according to a panel of experts during Mexico Automotive Summit 2017 at the Sheraton Maria Isabel hotel in Mexico City on Thursday.

Martín Rosales, President and Managing Director of Goodyear Mexico, believes the Mexican industry is at a crucial moment where it must become more integrated to become more efficient. “We are at a turning point,” he said. “We are seeing the revolution of electric and autonomous vehicles that not only need an integrated supply chain, but also integration from their conception.”

Rosales was joined on the panel by Rafael Funes, Executive Chairman of LOVIS and President of LOVIS Mexico and Alejandro Marines, Director General of GEFCO Mexico. Moderator Manuel Nieblas, Partner and Manufacturing Industry Leader at Deloitte Mexico, mirrored this sentiment. “When we measure how the industry has evolved over the years, it is clear that the traditional supply chain has to evolve too,” he said.

The supply chain is an integral gear in the automotive industry, according to Rosales. He said that all actors in the sector have a stake in the development of other players in the supply chain since all companies depend on each other. For example, if a client were to put a rush on a certain component, it would be impossible to fulfil this order without a good logistics company. “We all have a vested interest in helping other parts of the supply chain,” he said.

Marines, of logistics company GEFCO agreed with Rosales. “Logistics is extremely complicated, with a variety of factors to consider, such as security, coordination and timescales,” he said. “Logistics companies need to be fully integrated with the supply chain to avoid delays and ensure components are delivered on time.”

Funes agreed on the need for integration, but he said that a more pertinent issue is the lack of trust among companies. He said relationships across the supply chain should be built on trust, as lack of communication and confidence comes with a hefty price tag. Without trust, he said, the industry cannot evolve as there is no room for risk and innovation. “We need to imagine what nobody else has imagined and imagine what nobody has ever done,” he said. “We need to change our vision to stay ahead of the pack. For this, we need disruption, creativity and investment.”

Marines also agreed that there is a lack of trust that can jeopardize efficiency, but suggested that one solution may be to build long-term relationships. “In logistics, without trust, information and communication, mistakes happen and the job is not done well,” he said. “That changes if a supplier enters a project from the beginning and builds a good level of trust.”

Nieblas agreed that Mexican companies do not take enough risks, especially with younger generations demanding more innovation. According to Funes, in the age of Amazon, younger generations expect immediacy in everything. “Immediacy is a recurring topic in mobility and models such as Amazon’s are disruptive,” he says. “But disruption is not evolution. This means creating a whole new business based on what we know.”

Marines believes these new demands call for greater levels of investment, and companies risk being left behind if they do not anticipate these changing needs. “Now is the time to invest,” he said. “The industry is experiencing a revolution, and those who do not invest will fall behind.”