Logistics: Process and infrastructure

David Resetar, Vice President Automotive Americas of Hellmann Worldwide Logistics, has the key to helping the automotive industry in Mexico: “Technology and talented people.”

Resetar, speaking at Mexico Automotive Summit 2016, said the role of logistics service providers in the country is to minimize the impact the infrastructure challenges have on the automotive supply chain. Despite its numerous competitive advantages, Mexico faces several challenges. There is a shortage of finished vehicle terminal and ports and import processes are still very complex. “Mexico requires 11 documents to make an import while other countries only require 2 documents,” Resetar said, adding that Mexico faces disadvantages in terms of transport, port and rail infrastructure, as well as in payloads.

“What can a logistics provider do in this setting? Integrate a talented team that can minimize the negative impact of the infrastructure on the supply chain,” Resetar said in his presentation “Logistics: Process and infrastructure.” There are four conditions Hellmann’s has deemed as key challenges for logistics service providers: shortage of qualified labor, high logistics costs, undeveloped local supply chains and efficiency and transparency at border crossings and with imports.

For Resetar, having a shortage of qualified labor is one of the most pressing needs the industry faces. “Though there has been an increase in the number of technicians and engineers that every year graduate in the country, they lack the specialized knowledge that is needed in the industry.” Having people without the technical know-how creates a gap in the supply chain because they sometimes do not know how to manage hi-tech extended supply chains and control towers. “You cannot have people learn on the job.”

Another challenge is related to high logistics costs. “The country’s lanes and routes are not optimized, which makes transportation limited,” he said. In this setting, a logistics service provider cannot improve the conditions of the country’s routes but they can share best practices from other industries and help the company grow through continuous improvement programs. The use of root-cause analysis and historic data can generate a positive impact on a company’s operations.

An underdeveloped supply chain poses its own problems. “Not having enough local suppliers generates an extended supply chain that might even involve the home countries of OEMs and Tier 1 companies,” said Resetar. This creates a supply chain gap as transportation costs increase and companies become susceptible to world events, weather conditions, time zones and language barriers. Logistics service providers can play a major role with regional control towers and optimization and involvement with customer ordering.

Efficiency and transparency in border crossings and imports was the last challenge identified by Resetar. The lack of time-predictability in the import process leads to higher costs for importing and exporting because plants need to have additional reserve inventory in case of border setbacks. Logistic service providers can close the gap providing automated in-transit reports and digital shipping documents.

“Setbacks will always happen but it is our job as logistic providers to find ways of making operations run as smoothly as possible for our clients.”