Alejandro Marines
Director General
GEFCO México
Manuel Diaz, Seko Logistics
Manuel Díaz
Director General
Seko Logistics
Esahw Juárez, ALP Logistics
Esahw Juárez
ALP Logistics
View from the Top

Specialized Logistics Supporting the Automotive Supply Chain

By Alejandro Salas | Mon, 07/13/2020 - 05:00

The automotive industry’s just-in-time (JIT) and just-in-sequence (JIS) logistics require not only specialized platforms but also companies with sufficient expertise and capabilities. “Unlike other industries, automotive companies need our services because they often are managed under a constant sense of urgency,” says Esahw Juárez, COO of ALP Logistics.

Proximity to the US, free trade agreements and a qualified labor force have positioned Mexico as an automotive manufacturing hub, which consequently has attracted a significant number of logistics companies. “Mexico’s proximity to the US and the relevance of its exports offer major business opportunities for logistics suppliers working across the entire supply chain,” says Alejandro Marines, Director General of GEFCO México. “Logistics is growing in importance for automotive companies, but solid services depend on the good performance of all players in the chain,” says Marines. For Edgardo Hamon, Country Manager of Dachser Mexico, the key is to understand logistics in the automotive industry as an integrated process. Manuel Díaz, Director General of Seko Logistics, agrees that the most important goal is to turn supply chains into value chains by integrating logistics services into an end-to-end solution that offers several advantages. “First, potential mistakes are eliminated as fewer transactions are needed because all processes are carried out in-house. It also reduces our clients’ inventories and costs and ensures complete visibility of all shipments.”

Achieving visibility in the automotive supply chain can be a tricky subject, however, especially when companies lack the requisite technology. “Companies need to visualize their stock in real time and doing that by hand is impossible. The issue is that people think technology is expensive and yes, it is. The secret is to find a way to make expensive technology accessible to Tier 1, Tier 2, Tier 3 and Tier 4 companies. If a company is looking to ensure JIS supply, it should not buy a software but a visibility service,” says Saúl Haro, President and CEO of Macrolynk.

The use of data translates into better service and monetary savings, says Juárez. “When managed properly, data translates into an excellent logistics service. If mismanaged, it will have negative consequences for the client.” For that matter, the use of CRMs becomes critical. “Having an adaptable CRM system is essential for operations to be more efficient,” says Juárez.

In addition to visibility and constant tracking, catering to specific niches allows not only an increase in service quality but provides and opportunity  to stand out in a heavily competitive market. Juan Lam, Mexico Sales Director of ULINE, says the company has managed to stand out by providing solutions that cater to the specific packaging needs of automotive companies, depending on the parts they produce. “Common boxes may not be suitable to ship heavy metal components as these parts may suffer wear or damage. Hence the importance of offering resistant, more robust corrugated cardboard boxes that protect these components from damage during handling and transportation,” says Lam. “Having quality materials in stock in Mexico is an advantage for auto parts companies that may need unique materials to package and ship their components. Moreover, being able to deliver shipping supplies overnight is a great feature for automotive companies that need to package and ship their parts on time,” he says.

The renegotiation of the NAFTA agreement generated its fair share of uncertainty for the Mexican automotive industry and its business partners. However, USMCA’s ratification and its future implementation have provided breathing space for the industry and a new range of possibilities. “As a result of USMCA, Mexican companies will more easily integrate into regional supply chains and Asian manufacturing companies will need to set up shop in Mexico to meet the new rules of origin, benefiting the supply chain. In terms of growth opportunities, increased trade volume between Mexico and the US and Canada will detonate demand for international logistics services,” says Díaz.

In addition to increased trade between the two countries, Hamon mentions that USMCA is expected to bring a reduction in times and bureaucracy. “All trade agreements offer tariff exemptions and reduction of bureaucratic procedures, as well as other opportunities that 3PL and 4PL companies need for consistent growth,” he says.

Still, access to the US market entails compliance with regulations and quality standards, such as the C-TPAT. “If logistics companies fail to comply with these, they will have little opportunity to close a deal with automotive suppliers,” says Juárez. “Companies that have not honored their contracts have made it more difficult for young companies to earn the trust of foreign investors.”


Alejandro Salas Alejandro Salas Senior Editorial Manager