Challenges to supply chains in Mexico
Those involved in supply chain management face a myriad of challenges daily. Companies must be prepared to address any volatility in their industries and predict fluctuations in demand as accurately as possible. They must construct their supply chains in Mexico to have visibility and to generate reliable data throughout the process.
Additionally, they often have to face issues such as finite manufacturing capabilities, limited transportation availability, and difficulties within their supplier base. In increasingly competitive and complex supply chains in Mexico, customers and consumers demand more maintenance or an increase in the level of service that they receive.
Regulations can signify another drawback. This is because regulatory frameworks have become more stringent over time. Market requirements driven by investors, collaborators, and consumers are pressuring supply chain service providers to adopt a posture of sustainability throughout their operations.
There are also other challenges such as limited financial resources to make the investments required to enable and facilitate optimal supply chain management; fragmentation and duplication of activities due to a silo vision of operations; difficulty finding, developing, or maintaining the required talent; and the ever-increasing need to achieve business objectives of supply chains in Mexico with cost-effectiveness and sustainability of activities as the goal.
To address these challenges most optimally and cost-effectively, the management of the supply chains in Mexico has evolved in terms of approach and vision. These changes have been achieved by integrating the elements of demand, supply, and product. Companies maintain a priority focus on value generation by synchronizing, integrating, and aligning all supply chain elements, from strategy to execution.
Phases of the maturity level of supply chains in Mexico
The stages that are enumerated below can reflect the five levels of maturity in which supply chain management in Mexico has evolved. These represent differentiated approaches, which consist of the following elements:
- A vision and that includes management by silos.
- A vision focused on increasing revenue (not profitability).
- A vision with a focus on cost optimization (profitability).
- Dedicated customer management.
- A vision and management focused on generating value for all stakeholders.
Increasing the maturity level or evolving in the direction of different phases has created an even greater need to develop more robust capacities that integrate all the elements of supply chains in Mexico. These include processes, organization, and technology. Therefore, companies must continually assess the current maturity level to identify existing areas of opportunity or gaps against the desired maturity level. This approach will enable companies to define the initiatives to achieve future levels.
Practices that differentiate leaders in the supply chain
In assessing whether or not a company has the level of maturity required for each capability, an important starting point is to understand the practices that execute and differentiate supply chain leaders from their competitors. Companies can make this determination by examining basic supply chain practices:
(a) Basic practices or areas of opportunity for the definition of maturity improvement initiatives in Mexican supply chains:
- Undifferentiated management strategy and model (“applies for all products”).
- Reactive management of supply chain processes with limited visibility.
- Periodic review of performance indicators, which are managed by silos.
- Examination of current supply chain talent to establish appropriate training and development plans.
- A check to make sure that technology integration or implementation efforts are aligned throughout the organization.
b) Differentiating practices of Mexican supply chain leaders:
- They design their distribution networks according to the needs of their customers and the characteristics of their products.
- They differentiate their processes according to their products and not just by customers.
- They have a centralized model of management of the various procurement categories.
- One of the most significant guidelines that they use in product development and innovation is reducing complexity throughout the chain.
- They have standardized indicators with a holistic business vision that enables decision-making by integrating all links through a definition of common goals and objectives.
- They use continuous improvement practices in all their operations throughout all processes, such as the lean supply chain.
- They have centers of excellence in the supply chain and physical or virtual space of knowledge. All the experience, internal practices, lessons learned, and relevant data such as indicators and history of results are concentrated in these areas. It also combines supply chain employees’ efforts with all available resources to achieve or maintain world-class performance and value generation throughout the chain.
- They have implemented control towers, which integrate a set of capabilities and are centrally managed to improve visibility. They also enable accurate analysis with an improvement approach supported by a robust technology platform and a powerful business analytics engine for decision making.
According to various studies conducted by Accenture, these practices—executed and featured by Mexican chain leaders—allow them to quantifiably obtain the following benefits and differentiators from other players and competitors in the market:
- In planning.
- In strategic sourcing and procurement.
- In day-to-day operations
- In innovation and product development.
- In after-sales service.
Alignment between priorities and strategies in Mexican supply chains
The development of the capabilities required in supply chain management—through innovation, continuous improvement, implementation, or generation of leading practices, among others— is a fundamental success factor for businesses. It has been demonstrated that through evolving supply chain management and an increase in the maturity level of the required capabilities, each of the challenges mentioned above can be successfully navigated.
However, it is also important to note that there must be a total alignment between priorities and strategies for the supply chain and its implementation to reap the benefits mentioned above. This is achieved by defining and correctly implementing key initiatives that enable the evolution and increase in the maturity level of each of the capabilities that make up the chain management model.
In an environment as demanding and volatile as today’s, in which leaders face constant challenges and elevated levels of competition, having mature capabilities within Mexican supply chains enables achieving different business objectives in the most optimal way possible.
Similarly, the use of these practices, or the evolution and maturation of these capacities, creates a differential market value. This translates into benefits regarding sustainable effectiveness and efficiency.
However, to increase the maturity level, a continuous improvement approach must be implemented, where the current level of the supply chain is known through constant evaluations, monitoring, and control. There must also be a clear and concrete definition of the level of future maturity. The definition of supply chain maturity, in turn, must be supported by a feasible implementation plan that integrates all required initiatives. Such actions must also be backed by knowledge and mastery of innovative trends and practices in the market or even generated internally.
Finally, there must be a complete alignment between the priorities, strategies, and initiatives in Mexican supply chains defined in their implementation, execution, and monitoring. In this way, positive and concrete results will be achieved in Mexico’s increasingly vital realm of supply chain management.