Tailoring Logistics Solutions for NAFTA regionTue, 09/01/2015 - 12:06
Q: How do Hellmann’s operations in Mexico connect with the company’s global automotive strategy?
JAI: Hellmann Worldwide Logistics has an extensive presence in 154 countries, with strong automotive units in 25 of them. One of our main advantages is that we have international specialized teams that are thoroughly trained to understand each of our products. We also present several service options through our control towers, providing them with the best solutions in terms of time and costs. Furthermore, we are well supported in case of any emergency, since we can work during weekends or holidays, always maintaining constant communication with the client. Even though we manage distribution warehouses for OEMs in other regions, our main focus in Mexico is currently with Tier 1 and Tier 2 suppliers.
HR: Our automotive teams in Mexico and the US are able to oversee the supply chain of each of our customers, depending on their specific needs. Hellmann does not outsource any of its management operations, since part of our goal is to be close to our customers at all times. That way, although there might be time differences between our branches in Europe or Asia, our teams can act on behalf of our clients. So far, we have had successful experiences with even the most demanding automotive companies in our network. This is thanks to our continuous improvement process, as well as our knowledge of how to sustain good relationships between OEMs and their suppliers.
Q: What major factors have attracted so many companies to Mexico and how is Hellmann preparing to receive them?
JAI: In 2011, our automotive division in Mexico City covered the entire country. Now, we have designated a national automotive team covering all the major automotive clusters in Mexico including Puebla, Queretaro, Leon, Guadalajara, and Monterrey. Mexico’s geographical position connects North America with South America, Asia via the Pacific, and Europe via the Atlantic, giving the country a defining advantage. Likewise, the country’s investor-friendly environment has convinced several global companies to invest in the nation. While keeping these distinct benefits in mind, Hellman analyzes the supply chains of its customers and offers advice on potential areas of opportunity.
HR: Our dedicated team has enough experience in the automotive industry and the Mexican market, and even though Hellmann’s core business is logistics, most of our clients are part of this sector. Furthermore, our People Development Programs ensure that our team members are prepared to take on new leadership roles within the organization.
Q: What are the main challenges of developing logistics plans to enter the US market from Mexico?
HR: Competitiveness and security are the main challenges that Mexico is currently facing. Underdeveloped rail infrastructure between both countries requires considerable investment before we can consider rail freight a viable option. Part of our strategy is to standardize logistics plans for our clients, which will enable them to manage all their facilities in the country simultaneously. Many global companies still operate their logistics independently, unaware of the benefits of our system of integrated logistics.
JAI: While our focus is currently overseas where we possess developed infrastructure, we may begin these types of operations in Mexico in the near future; it all depends on the requirements of our clients. US protectionism still poses a challenge for logistics companies, given that the country tries to protect its national players from foreign competition. Similarly, the Mexican market does not allow US companies to have their own fleets in Mexico. Furthermore, US companies with sizeable fleets could represent dangerous competition for Mexican companies. NAFTA states that companies can import and export freely between Mexico and the US, but these conditions are currently restricting this kind of collaboration. At the moment, we have three or four companies with permission to enter the US. However, we must also comply with US regulations in terms of the fuel our units use, which creates a completely new obstacle.
Q: What will be the highlights of Hellman’s automotive logistics in 2015 and in the future?
JAI: We know the benefits that a reduction of two or three days can create for our customers. We always attempt to reduce costs and transit time, but our clients are the ones that make the final decisions. We foresee a huge amount of growth between 2015 and 2017 among OEMs that are about to start production, as well as those that are already operating. However, we are concerned about the infrastructure in Central Mexico. This region has now reached its limits in certain areas of the Bajio and we are not sure how much more growth it can sustain.
HR: We are working on transit time reduction by moving our operations to the most convenient locations. In Germany, for example, we reduced transit time by 20% by relocating our clients’ operations. The Mexican government is promoting local sourcing, and the expectation is that we will have more airlines and shipping lines offering services to and from Mexico, as well as more efficient transportation channels