The Five P’s of Logistics

Logistics moves everything. Every single item we use on a daily basis follows thousands of processes before being delivered or purchased by final consumers. Logistics is the single most essential activity for economies to properly function. 

In the case of Mexico, the backbone of the economy is its close trade relationship with the United States, together with local consumption. Likewise, Mexico has an enormous manufacturing installed capacity that is nearly impossible to replicate in Latin America. 

Moreover, Mexico is the southern neighbor of the United States, has access to two oceans and competitive labor, among other attributes. Due to that, the logistics industry has experienced significant development in the past decades to cope with the needs of such economic activity. 

Sometimes it is hard to fathom how complex supply chains are, and how extensive the resources need to be in place to deliver products on time. 

 To ensure a seamless and dynamic ecosystem, there is a principle that has been developed within the logistics industry that integrates the basic elements. It is called the “Five P’s in Logistics:” People, Products, Processes, Partnerships, and Performance. All of them are equally important and must be aligned and managed to guarantee a positive outcome. If one “P” fails, then disruptions could arise.

People are, perhaps, the most relevant of such elements. Humans are the base of logistics, from procurement of raw materials to final product consumption, the human component is the core. Logistics were created to serve people. Skill, creativity, expertise, and dedication are essential to properly manage supply chains, and to develop and implement technology. Every stage of the process should be managed carefully, and talent has been the basis. 

Products are the backbone of logistics. They are the reason why logistics exist: to take all the necessary steps to ensure that such products arrive on time at each stage of the supply chain. Proper product handling, storage and transportation require almost surgical precision, since every item needs different levels of specialization to properly arrive at the final consumer. For example, the pharma industry requires a much more specialized set of skills than automotive production or the consumer staples sector. 

Efficient logistics rely heavily on Processes, which should be specially developed for the specific product or line. Without proper processes, supply chains would waste an enormous number of resources that would significantly erode any value added previously planned. There are routine mechanisms that are equal for all logistics operations, but there are others whose complexity calls for tailor made procedures. Again, as an example, processes are diametrically different in the electronics industry than in retail. Real differentiation and value-added services could make a significant difference when the right processes are in place. 

Partnerships are another very important element within logistics. There are many steps in the process, and many moving parts that should be handled with extreme accuracy to ensure a seamless flow of goods, communication, visibility, and feedback. That is why relationships with clients, suppliers, distributors, transporters, and other stakeholders are crucial for effective results. Strong collaboration and close rapport are key to being one step ahead and bolster the ability to escalate and grow operations swiftly.  There are many global companies with strong footprints in many regions that have had close partnerships with their logistics operators for many decades, and one party has enabled the other to improve and become stronger. There is no exact way to quantify the impact of good partnerships in logistics, but there is certainly a way to measure the negative outcome of bad ones. 

Finally, the last P of the elements is Performance, which is measured in a number of different metrics, indicators, and KPIs. Efficient monitoring is critical for effective logistics. Currently, technology and AI applications are playing a crucial role in developing more sophisticated tools for inventory management, route optimization, and faster transit times.

In Mexico, TRAXIÓN is the very first company to have offered a one-stop solution for logistics, thus enabling clients to engage only one single purveyor to manage their supply chains, instead of having to employ up to seven different entities to move one product. 

TRAXIÓN’s management understood the importance of the five P’s of logistics very early in the process and has invested and developed several capabilities to ensure that all of them are aligned and closely intertwined to avoid disruptions along the supply chain that could compromise the quality of service that clients demand. 

Most importantly, TRAXIÓN designed its business model based on several pillars that ultimately boost each of the five P’s in logistics. One of the most relevant aspects that helped achieve that is the use of the most advanced technology. 

For TRAXIÓN, its people are a core element. Management believes that having the very best talent will ultimately drive the company to the best possible outcomes. From the boardroom to the most junior operative position, all TRAXIÓN’s associates are regarded as the best. An accurate example is that TRAXIÓN has one of the strongest commercial teams in the country and has developed effective human capital initiatives to create a deeper sense of belonging.

Product handling has created different ecosystems that in the end represent high value-added services. Having understood that, together with long-lasting relationships with clients, TRAXIÓN has been able to develop tailored processes that translate into efficient solutions for increasingly more sophisticated customers. 

The company’s long-term and strong affiliation with clients, suppliers, associates, purveyors, OEMs, real estate operators, and other stakeholders have translated into very deep partnerships that have facilitated efficient growth of all parties, profitability on the economic side, and value creation across the board.

In terms of performance, TRAXIÓN has always strived to render the highest quality service for its clients. This has been achieved by relying heavily on technological development, and the implementation of several KPIs that ensure continuous improvement across the board. The company serves large, multinational and global enterprises with strong footprints in Mexico, which calls for the absolute highest level of service since such clients are more sensitive to that, rather than pricing.

In the end, TRAXIÓN understood and developed the five P’s of logistics in a unique way, which has ultimately driven the company to gain considerable scale. The sheer size of TRAXIÓN’s operating infrastructure, commercial muscle, modern technologies, and financing capabilities are nearly impossible to replicate in Mexico.