Selecting the Right Supplier in Mexico Delivers Cost Reductions

by Mike Gibson, Managing Director, Manufacturing Market, Standard Register

Major U.S. industrial manufacturers continue their wide-spread expansion into Mexico with upwards of 80 percent establishing some type of presence in the country. Yet, as they do so, these manufacturers face many challenges. While striving to deliver best-of-class products and services, manufacturers deal with:

  • Increasing costs and slimmer margins
  • Supply chain control and management issues
  • Lack of quality consistency for printed production parts
  • Additional regulations
  • Customs and importation issues
  • Shorter lead times
  • Competition from all directions

Manufacturers expanding into Mexico are quick to realize that “global” growth means much more than simply having a physical presence beyond their native border. For example, according to leadership of one of the world’s largest industry automation companies, revenues for the company outside of its U.S. operations exceed nearly 40 percent of total sales. In fact, the company expects to derive half of its revenue from sales outside the United States by 2009, according to a recent annual report.

In order for industrial manufacturers to remain competitive in today’s global marketplace, they must constantly strive to drive cost reductions in their supply chain. Globalization has made a tremendous impact on the competitive environment, and in order to survive and prosper, industrial manufacturers are focusing on production costs and materials.

Choosing a Supplier in Mexico
As industrial manufacturers expand operations into Mexico, one of the first orders of business is to establish its supplier network. When doing so, several factors must be considered by the manufacturer, including the supplier’s:

  • Knowledge of and adherence to agency requirements, such as UL, ANSI and CSA
  • Control and management of the supply chain
  • Long-run versus short-run production
  • Consistency in quality
  • Lead time and ability to react quickly
  • Proper execution and control of processes, such as PPAP (production part approval process) and design approvals
  • Customer service and potential communications barriers
  • Customs and border issues
  • Speed and accuracy of shipment tracking
  • Adherence to drawings and specifications
  • Ability to protect global branding, including version and design control

Taking all of these factors into consideration, a supplier of choice must provide excellent opportunities for cost reductions in printed production parts to Mexico-based industrial manufacturers. With the supply chain for these companies localized, suppliers of these manufacturers should provide a one-stop shop for a complete range of printed production parts as well as access to an extensive distribution network that services all major industrial areas of Mexico.

Printed Production Parts –The Mexico Supplier Difference
When establishing a relationship with a Mexico-based supplier, manufacturers must be sure that all of the factors above are taken into account. Solutions to these various factors are certain to be varied among suppliers; however, several services should be considered necessities. These include label printing capabilities, warehousing, kitting, digital on-demand printing and a wealth of other features that clearly differentiate the supplier in the manufacturing space, such as:

  • An inventory management system, preferably Web-based and bi-lingual, that can provide real-time inventory with reporting, parts catalogs, electronic shipment tracking, and standard and uniform engineering drawings
  • The capability to work with both national facilities and maquiladoras
  • Flexographic capabilities along with kitting operations
  • Adherence to Six Sigma/Lean Manufacturing principles and practices
  • Warehousing and distribution
  • Bi-lingual customer service representatives and management
  • Long- and short-run label production and color printing capabilities

Case in Point
This global manufacturer of electrical products and tools has nearly 100 manufacturing locations around the world, with sourcing centers in China, Mexico, India and Eastern Europe. Based on these extensive operations, the company was looking to consolidate their more than 50 label suppliers into one large player who was capable of handling both their U.S. and Mexico operations, while at the same time delivering cost reductions and value-added services.

Through past dealings with local label suppliers in Mexico, the manufacturer had learned that common practice was to produce at least a year’s worth of label product and ship it to the customer. The customer would then be responsible for their own inventory management and warehousing. Since this was not a practice they wished to follow, the company was in need of a supplier who could provide a structured, detailed manufacturing label and technical literature solution.

Following an extensive assessment of the company’s specific business needs, supplier Standard Register de Mexico created and implemented a program for the company’s over 2,000 printed production parts. The result was an estimated savings of 22 percent through operational efficiencies created by process improvements on the production floor, reduced lead times and lower freight costs. The company also experienced quality improvements through Standard Register’s design services, agency compliance expertise and engineering reviews of all printed production parts.

To learn more about how Standard Register de Mexico can address your manufacturing printed production parts needs, contact Standard Register today.