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Five Steps to Take to Develop Suppliers in Mexico

Five Steps to Take to Develop Suppliers in Mexico

In the industrial setting, efforts to develop suppliers in Mexico are commonly associated with the search for and the selection of potential providers of material inputs, goods, and/or services.  Although some possible sources of supply are eliminated for their inability to meet a buyer’s requirements, these same companies could become reliable providers to manufacturers in Mexico if their potentials were fully developed. 

In the context of global business, maquiladora manufacturers must adopt proven strategies to effectively develop suppliers in Mexico.  The goal of such efforts should be to build long-term relations where stakeholders (customers-suppliers) create win-win scenarios. 

In the process of efforts to develop suppliers in Mexico, the continuous improvement of technical, commercial, and productive skills, among others, is sought.  Building lasting relationships should be an outcome of actions taken to develop a Mexican base of supply.

However, organizations may have questions as to how they can develop quality suppliers in Mexico.  What follows are some of the five most frequently used steps to achieve the desired result.  They are:

  1. Define supplier capabilities;
  2. Define evaluation criteria;
  3. Create a supplier assessment tool;
  4. Define a supplier improvement plan;
  5. Execute a program of ongoing supplier monitoring and auditing.

Understanding capabilities in order to develop suppliers in Mexico

At this stage in the process it will be necessary to define the Mexican supplier’s capabilities in terms of volume and capacity, mixing, costs, deliveries, as well as compliance with product requirements.

Evaluation Criteria:

Some important points or criteria to consider when developing Mexican suppliers are:

  • Compliance with legal requirements;
  • Product quality according to specifications provided;
  • Delivery times;
  • Response time to improvement requirements;
  • Financial capacity;
  • Implementation of some international quality and/or environmental standard (these are typically ISO 9001 and/or ISO 14000).

Supplier Assessment:

In order to develop suppliers in Mexico, assessment should be done at a certain, defined frequency.  Each manufacturer can set assessment frequency according to its own requirements and according to the criteria that it uses to evaluate its providers.  Manufacturers in Mexico must be aware of trends related to compliance or non-compliance with requirements.  In the case of non-compliance with assessment criteria, buyers should make a list of the improvements that its supplier must make.

Improvement Plan:

Any effort to develop suppliers in Mexico must include a plan to track improvements made by key vendors or potential suppliers.  An improvement plan is of critical importance in order to ensure the development of reliable providers that supply high quality products and services. 

Monitoring and Auditing:

During this phase in the development of Mexican suppliers, the customer and the provider will review the applied requirements and check for compliance.  Additionally, the two parties will define new and additional follow-up activities to be incorporated into the monitoring and auditing process so that new areas of opportunity can be identified.

The Benefits of Supplier Development in Mexico:

The points that follow represent some of the benefits of the process of developing a quality supplier base in the maquiladora industry in Mexico:

  • Increased long-term profits for the customer and the supplier;
  • The consistent meeting of specific product and/or service requirements;
  • Certainty regarding product and/or service quality;
  • Increased supplier and customer trust;
  • Better communications between all parties.

When Mexican manufacturers that participate in global markets deal with their suppliers, common requirements of that they have are that:

  • Suppliers ensure the availability of parts, components, or raw materials;
  • Providers are able to react positively to increases in demand;
  • The quality of goods and services that are supplied is world-class;
  • Costs of goods and services are competitive in the marketplace.

The preceding points have given us an overview of the new role of supplier development in Mexico.  As has been reviewed, the process of developing suppliers is one which is measurable. 

Although the process of assessing suppliers to companies that are manufacturing in Mexico can be a laborious one, it is not impossible to achieve.  Some opportunities or challenges that may arise during programs to develop suppliers in Mexico may relate to training for continuous improvement, and resistance to change (technological, staffing, and corporate strategy).

Conclusion:

Developing suppliers in Mexico has as its main objective the strengthening of the value chain that exists between manufacturers and those that provide input to their processes.  Both buyers and suppliers benefit greatly from these efforts.  Additionally, both parties use the process of supplier development to develop standard business practices, to make cost improvements, and to increase their responsiveness to customer needs and market dynamics.

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