Identifying Supply Chain Pyramid-Base Lifts SummitMon, 09/01/2014 - 16:32
Norbert Schweitzer, Director General of EuroImportadora, has spotted many peculiarities in the Mexican market. A key one is the significance of the bus segment as a result of the limited alternative transportation options. “Every brand that comes to Mexico has to learn about the market. The most important thing is to understand the market by listening to people about what is going on in the industry. Being a leader elsewhere or having a well-known brand does not guarantee success in Mexico. Products for this market need to be specialized and meet local requirements,” explains Schweitzer. “Mexico has many different types of customers but they are all looking for good service, good products, and solutions to their problems.”
EuroImportadora offers integral aftermarket solutions for commercial vehicles in Latin America, including spare parts for transmissions, engines, brakes, and clutches. It specializes in buses and trucks of European brands such as Mercedes-Benz, MAN, Scania, and Volvo. Schweitzer states that the company is not only focused on being a spare parts distributor, but also on providing additional services to its customers. “We also test parts and follow-up on the parts we have sold. After all, a little mistake in the manufacturing of a product can result in damage to a bus.” Should such a situation arise, EuroImportadora has elected to guarantee payment of the damaged spare part for associated labor costs, which it believes sets it apart from its competition. “There are many elements that can be analyzed in order to ensure better performance and consumption. That is what we do, providing our clients with far more than just selling a part,” says Schweitzer. Aware that quality is needed at every link of the supply chain, EuroImportadora ensures that its suppliers also meet the requisite standards. Schweitzer explains that he worked out a complicated network of suppliers, tracking who supplied which parts to which OEMs. Once he established who the likes of Volvo, Scania, and MAN trusted at which tier of the supply chain, EuroImportadora knew who to approach. “We try to find the end of the chain, which is not always easy, but once we find them it is easy to approach them. Once we have the products, we start testing them and we can quickly assess which ones can hold their own in the marketplace and be the fast movers,” explains Schweitzer. Given the range of spare parts that EuroImportadora provides across Latin America, this supervision of the supply chain and ferreting out of the right components requires constant oversight across different parts of the vehicle.
Apart from being a reliable distributor for the bus segment, EuroImportadora is also looking to diversify its market. The first strategy is to supply maintenance contracts, which are used heavily in Europe and provide a full lease service for which customers pay a fixed amount for three to five years before beginning to pay for spare parts by the kilometer. So, if a bus drives 10,000km a month in its first year, the company will pay between US$0.28-0.33 a kilometer for a maintenance contract. The price includes not only parts, but also the use of mechanics and labor force, meaning that the companies do not have to take care of anything apart from paying for the maintenance. The concept was brought to Mexico by Scania, which brought it from Brazil, where maintenance contracts have been used in the bus market for 15 years. Schweitzer explains that these types of contracts are very interesting once companies are clear about the real costs being incurred. EuroImportadora will be offering maintenance contracts in Mexico by the end of 2014, with Schweitzer saying that “our clients want to have a good service at a fixed cost, allowing them to plan ahead. Our customers’ business is to transport people; they do not want to have to repair their buses themselves. For the moment, they do so since they do not have a choice, but we provide a choice that takes this off their hands and costs them less money, so they are naturally interested,” states Schweitzer.
The second diversification strategy is the branding of the commercial side of EuroImportadora: Bus Express, a bus parts company targeting small and medium-sized customers. The company has already opened shops in Mexico City, Guadalajara, and Puebla, soon to be joined by outlets in Cancun and Monterrey. “There is a lot of work to do first because we have to know which products will be needed for every site. To do so, we have to identify which buses are used in each site so we can place the spare parts where they fit the best,” states Schweitzer, who personally analyzed the cities to help Bus Express have the right information to get its inventory and logistics strategies up and running. The division is quite clear. Bus Express targets customers with between one and 450 units, whilst EuroImportadora takes care of the bigger customers to which it sells parts directly. “This double exposure benefits EuroImportadora at a time when the increasing cost of buses along with new tax regulations in Mexico means companies need to maximize their services. Our experience in terms of finding where the market is going and what products are needed will help EuroImportadora as it seeks to grow beyond Mexico and enter Panama, Ecuador, and Colombia,” says Schweitzer.