Mitigate Risks in your Manufacturing and Supply Chain Footprint

In the intricate fabric of the global economy, "nearshoring" has emerged as a pivotal force, particularly within the trade dynamics between the United States and Mexico. The onset of the pandemic catapulted this concept into prominence, fueling an increasing interest in shifting production to Mexico, especially amid escalating trade constraints imposed by the United States on China.

As the United States progressively pivots its trade reliance from China towards Mexico, a compelling scenario unfolds. Despite escalating labor expenses in Mexico, the country maintains a cost advantage in production compared to the United States. This trend is notably conspicuous in the automotive sector, where substantial growth is anticipated in Asia, closely followed by Mexico within the upcoming 5-10 years.

At Mexico Business Summit 2023, Héctor Soto, Senior SCM and Operations International Consultant, Seraph Consulting, outlines critical challenges encountered in production transfer and the burgeoning nearshoring landscape in Mexico. These challenges encompass shortages of skilled labor, leadership dilemmas amid rapid growth, and cultural and procedural hurdles.

To tackle these hurdles, Soto advocates for strategic solutions. For leadership challenges, he suggests implementing decision-making tools, data analytics, and standardized work protocols. Addressing labor concerns involves workshops, Kaizen events, on-the-job training, and upgraded employee benefits. To mitigate cultural and procedural impediments, suggestions include employee feedback systems and a concentrated approach on fundamental tools and process refinements.

Soto introduced the MOVE methodology at Seraph, comprising four distinct phases: Align, Plan, Execute, and Close. These phases cater to strategic planning, task breakdowns, implementation management, and comprehensive project closure, delineating a structured pathway for successful production transfer. “The MOVE methodology encapsulates the essence of preparation, detailed planning, execution, and reflective closure. This comprehensive approach enables learning from experiences and continuous refinement,” he says.

Amid the burgeoning nearshoring trend post-COVID-19, the redirection of the United States' focus from China to Mexico signals a significant shift in trade dynamics. Despite increasing labor expenses in Mexico, the allure of growth potential, particularly in sectors like the automotive industry, prevails in both Asia and Mexico. Nevertheless, persisting challenges in skilled labor scarcity and rapid growth-related issues demand robust strategies involving leadership tools, workforce enhancements, and procedural fine-tuning to harness this economic transformation to its fullest potential.

"The key challenges lie in fostering clear communication from the start, establishing transparent expectations upfront, and engaging honestly with our younger workforce, discussing deliverables and addressing questions openly. Regular daily reviews of project status ensure everyone remains involved. Success demands more than technical skills; soft skills play a crucial role in our endeavors," adds Soto.