A view of the critical importance of the maquiladora industry supply chain
In order to be successful, a manufacturing, or any other type of firm or organization producing a good or a service, must have efficient and effective relationships with the various members of its supply chain in order to be able to create synergies to bring products to market at a competitive cost, with excellent quality and within an acceptable time-frame. Members of a typical maquiladora industry supply chain include manufacturers, production partners, third-party logistics service providers, warehousing companies, distributors, wholesalers, retailers and customers.
In the past, companies in the maquiladora industry supply chain routinely limited their efforts solely towards effectuating the improvement of their own internal processes. However, as markets have become increasingly globalized and competitive, over time, executives in C-Suite positions began to realize that to bring their organizations’ goods to market with quality, cost effectiveness and speed requires that greater attention be paid to the coordination of inter-organizational activities.
Executives of companies that participate in the maquiladora industry supply chain, are successful in their efforts, as well as leaders in their respective markets, as a result of moving past acting upon a mere desire to achieve dominant competitiveness in areas such as cost, quality and speed to market to discover what the source factors are that bring about the definitive results in these realms:
Two central components of a maquiladora industry supply chain development strategy:
- Supplier development – maquiladora manufacturing firms should seek to support and invest in suppliers with whom the creation and nurturing of a long term alliance can result in the production of a better quality product at a lower price. In Mexico much work needs to be done to develop indigenous suppliers. For instance, in manufacturing sectors using high technology, less than ten percent of suppliers considered to be reliable are composed of Mexican capital. This represents an opportunity for foreign suppliers to Mexico, however, since most high tech inputs to product are imported from the US and other nations.
- Subcontract and other manufacturing support – Finding a suitable subcontractor can be the solution for some firms, while other companies may wish to enter into an agreement with a provider of what are known in Mexico as “shelter services.” While the subcontract manufacturing alternative puts product quality control, delivery times and relevant core manufacturing functions into the hands of a third party, working with a shelter company in Mexico enables firms to have full dominion over all value-added activities, that make or break a company’s profitability and resultant success. Mexican shelter companies provide what might be considered G&A functions in the US. These usually include operations such as payroll and benefit administration, human resources, import-export processing, financial and environmental compliance, accounting and vendor management procurement. Additionally, shelter companies also routinely provide maintenance services on the buildings that are occupied by their manufacturing company clients.
The determining factors for maquiladora industry supply chain success:
In the maquiladora industry, as well as in others, confidence, commitment, communication and collaboration are central to successfully coordinating and completing the diversity of inter-organizational functions that must be executed to quickly bring a quality product to market at a competitive price, and in a period of time that customers demand. No longer should upper level executives limit their strategic thinking to a myopic view of their own organizations’ internal processes, but should look at all the links in the maquiladora industry supply chain in order to optimally harmonize their interaction.