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News Article

Supply Chain Success: Purchasing Manager Strategies

Tue, 09/30/2014 - 17:22

Moderator: Oscar Albín, President, INA
Panelist: Eugenio Madero, CEO of SANLUIS Rassini
Panelist: Gonzalo Esparza, President of Tachi-S
Panelist: Carlos Garcia, General Manager of Timken
Panelist: Xavier Ordoñez, Partner at Deloitte

Oscar Albín, the president of the Mexican auto parts industry association (INA), started off by thanking the Mexico Automotive Review for its work to develop the automotive industry in Mexico. He then paid tribute to the former director of Mazda, Leopoldo Orellana, who now rests in peace, for his contributions to the Mexican automotive industry. The focus then fell on the light automotive industry’s production, which Albín stated would reach 4.5 million vehicles yearly by 2019. Mexico was the sixth-largest producer of auto parts worldwide in 2013, but if growth remains stable, Albín states Mexico will surpass Germany as the fourth producer of auto parts. He then explains that the panel will cover the importance of Mexican suppliers, the development of technology within Mexico, the cost and quality of said technology and the potential the country provides for international suppliers to establish themselves here.

Eugenio Madero, CEO of SANLUIS Rassini, mentioned how the development of OEMs in Mexico had put pressure on Mexican suppliers. In his own case, the arrival of Korean OEMs that brought their own suppliers of braking systems with them put pressure on SANLUIS Rassini. This was particularly true since innovation is highly important for Mexican suppliers to retain customers. “Being a Mexican supplier is a continuous process. Many OEMs that come from abroad bring in experts, who look at the quality of suppliers’ equipment rather than their nationality of the suppliers. OEMs look for suppliers that can provide what they need when they need it,” he explained. Carlos Garcia, Managing Director of The Timken Company, agreed with Madero and added that the speed of production and delivery could make or break the ambitions of a Mexican supplier. “Research and development takes investment, both in terms of capital and time, and an acceptance of the risk involved in such endeavors. These are the reasons for the speed of innovations in the automotive industry, as although these may seem to come slowly when compared to other industries, they come at a steady pace.”

Gonzalo Esparza Pedrosa, President of Tachi-S Mexico, picked up the thread to explain how OEMs are under pressure to produce products of an ever higher quality at an ever more competitive price. He said this reality meant that a new approach was needed in the way business was done in the Mexican automotive industry. “It is necessary to reduce dead time in production and make operations more effective. The packaging of products, for example, is a process that can still be improved among suppliers in Mexico. It is also important to have imagination and to never be satisfied by any one product. Suppliers that are already established in Mexico are sought out by OEMs that come and establish themselves in Mexico,” said Esparza Pedrosa. As evidence of this, he offered up the example of Tachi-S that has been in Mexico for 23 years, but is managed by Mexicans, despite still being a Japanese company. This local reputation sees new OEMs and Tier 1 suppliers alike approach Tachi-S to supply both these vital links in the automotive supply chain.

Xavier Ordoñez, Partner at Deloitte, Strategy and Operations, approved of this theme for continuous improvement. If possessed by a supplier, this constant drive to excel would see them not only provide innovative products, but also reduce operating costs, integrate themselves better in the supply chain and make sure that investments on assets or products are correctly used to ensure a proper return on investment. Ordoñez agreed that there had been many developments to try and better integrate suppliers in the Mexican automotive supply chain. Yet, despite these efforts, a Deloitte survey showed that most companies still believed there was a long way to go to achieve the desired level of integration in the Mexican supply chain. To close, Ordoñez advised that OEMs and suppliers work on better communication, connectivity, and proximity to achieve this integration.