Latin American countries can offer U.S.-based firms an opportunity to expand their list of suppliers while cutting down on costs. However, a lack of reliable communications networks and differences in currency, transportation, infrastructure and laws are just some of the issues they face in return.
Hoping to find solutions to these and other problems, several representatives from U.S. firms with an interest in Latin America-based supply chains plan to attend the Supply-Chain Council’s first Supply-Chain World-Latin America educational conference, which kicks off Monday in Cancun, Mexico.
Ted Raiman, director of supply-chain logistics at Hunt Corp., an office supply manufacturer in Statesville, N.C., said he hopes to find some South American suppliers at the conference and learn some new supply-chain techniques he can use at his company. He would also like to find out about integrating his company into the Mercosur, a major marketplace for South American countries.
“Mexico provides an opportunity because of the NAFTA agreements, closer proximity than China or Japan or Korea, and the still relatively inexpensive labor cost,” he said.
Technology Issues
Hunt, which already purchases some of its supply-chain components from the Far East, faces a constant challenge to keep its costs in line with those of overseas competitors that import directly to Hunt’s customers, including Wal-Mart Stores Inc., Staples Inc. and Office Depot Inc., said Raiman.
While computers are common in Mexico, high-tech communications aren’t as reliable as they are in the United States, so fewer people are networked via the Web, said Robert Sabath, a consultant at Deloitte Consulting in Chicago. This makes it difficult to automate the supply chain and reliably monitor inventory as it passes from one link to another.
“In rural areas, you’re talking technology that is 30 years old at least,” said Sabath. However, he predicts that the rise of cellular communications may take care of the networking problems during the next few years.
Because of Mexico’s technology disparities, a company looking to connect with suppliers there will either have to invest in a mixed electronic data interchange (EDI), Web, phone and fax infrastructure or link up with third-party logistics providers that can offer the necessary interfaces, said Gene Sevilla-Sacasa, vice-president of Mexico operations at Ryder System Inc.
The Miami-based transportation services firm makes 4,000 border crossings per week in the Texas area alone and serves dozens of companies in different industries, according to Sevilla-Sacasa.
For instance, Ryder moves 3,000 different parts from Latin America for an automotive manufacturer that assembles trucks in Indiana. Each Sunday, Ryder gets an e-mail with the plant’s requirements. Half of the parts makers are either online or have EDI capabilities; the other half require phone or fax-based transactions. To keep track of inventory, Ryder uses a mixed radio, cell phone and EDI communications system.
Sevilla-Sacasa said Ryder had to build a “considerable infrastructure” to facilitate the communication mix.
