Subscribe to our free, weekly email newsletter!



Risk mitigation in Mexico

By Patrick Burnson, Executive Editor
May 03, 2011

As noted in today’s news section, the expected advantages to be gained from near-shoring from Mexico are lower freight costs, improved speed-to-market times and lower inventory costs. Risk mitigation was also mentioned.

According to Russ Dillion, a vice president in the Latin American Manufacturing Practice at AlixPartners, these were the top three reasons cited on average.  Other reasons included “time-zone advantages” for easier management coordination, and improved “cultural alignment” with North American managers.

“In-transit inventory, in particular, was a high priority among those interviewed,” said Dillion, “Obviously, shipping products in from long distances eats up a lot of inventory expense, and that’s something companies would like to improve if possible.”

Here are a few of the survey highlights:
·      46 percent of companies have already engaged in near-shoring or have plans to within 5-plus years

·      For companies considering near-shoring, 63 percent of respondents cited Mexico as the No. 1 destination of choice for near-shoring manufacturing operations (beating out the U.S. by a wide margin at 19 percent)

·      Executives cited “lower freight costs” and “improved speed-to-market” as the top two most attractive advantages of engaging in near-shoring

·      73 percent of companies have already engaged in off-shoring of U.S. operations or have plans to within 5+ years

·      For companies considering off-shoring U.S. manufacturing operations, most (43 percent) cited Mexico as the No. 1 destination of choice for off-shoring (narrowly topping China (No. 2 at 30 percent) and other BRIC nations (India at 14 percent, Brazil at 3 percent and Eastern Europe at 5 percent)

For related articles click here.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Largely feeling the effects of the recently resolved West Coast ports labor disruption, railroad and intermodal volumes in February were down annually, according to data released by the Association of American Railroads (AAR) this week.

The year 2015 marks a major milestone for the industry, MHI is celebrating its 70th anniversary at ProMat 2015, held March 23-26, 2015.

While the Federal Motor Carrier Safety Administration has made strides in regards to better oversight of motor carriers through its Compliance, Safety, Accountability (CSA) and chameleon vetting safety programs, there is room for improvement for it to improve its oversight to better target high-risk carriers. That was the thesis of a report released this week by the United States General Accountability Office

With an eye on capitalizing on future trade and commerce growth in South Asia, express delivery and logistics services provider DHL today rolled out its plans to build an $85 million EUR ($93 million USD) DHL Express South Asia Hub, which will be a 24-hour express hub facility within the Changi Airfreight Center at the Singapore Changi Airport.

While the Federal Railroad Administration (FRA) has long stated its goal of having Positive Train Control (PTC) technology installed on 40 percent of its network by December 31, 2015, railroad industry stakeholders have repeatedly stated that reaching that deadline would be a stretch. It now appears that the railroad sector has some members of Congress sharing the same line of thought with legislation rolled out this week that pledges to extend the PTC deadline to 2020.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA