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Working closely with a large number of auto parts manufacturers, DB Schenker Mexico applies its knowledge and expertise to solving its customers’ most pressing logistics pain points.
As the seventh-largest passenger vehicle manufacturer in the world, Mexico produces nearly four million cars annually, according to Export.gov. It’s also the fifth-largest auto parts producer worldwide with $92 billion (USD) in revenues annually and the second-largest export market for U.S. auto parts. The country also ranks as the fifth-largest manufacturer and exporter for heavy and specialized vehicles and parts in the construction and agriculture industries.
Having experienced significant growth over the last two years, Mexico’s auto parts segment includes a large number of Tier One and Tier Two original equipment manufacturers (OEMs). DB Schenker Mexico works with most of them, helping them manage their end-to-end supply chains in an industry where quick, reliable shipping is a must-have.
“A lot of the OEMs rely on just-in-time (JIT) programs, which don’t leave them with much of an inventory cushion,” says Marissa Vergara, DB Schenker’s Key Account Manager, Automotive in Mexico City. An inventory management program that requires producers to forecast demand accurately, JIT works best when a parts manufacturer’s procurement department is closely aligned with its logistics provider.
“Transit times are a primary concern for our automotive customers,” says Vergara, whose team has developed a portfolio of solutions that incorporates air, ocean, land, contract logistics, and custom logistics. “Our goal is to offer a door-to-door solution for our customers.”
For its automotive customers, DB Schenker has also developed a helicopter freight service offering that helps Tier One and Tier Two auto parts suppliers speed up delivery times as needed. The company also has a customer service team that’s dedicated to the auto market, and that offers an innovative, tailored solution that meets the specific needs of the industry.
These and other services support a spare auto parts industry in Mexico that’s been growing by 35% annually. This rapid growth presents both opportunities and challenges for logistics providers like DB Schenker, which are sometimes challenged by the country’s transportation infrastructure, undeveloped highway system, and unpredictable road routes to and from the U.S.
“These issues are presenting some challenges to the logistics flow in Mexico right now,” Vergara points out. To help smooth out some of those fluctuations, DB Schenker works to provide its customers with end-to-end supply chain visibility solutions that help them determine where their shipments are at any point and time.
“Customers expect end-to-end supply chain visibility in real-time and we’re working to provide them with the technology solutions they need to be able to gain that visibility,” says Vergara.
Other challenges standing in the way of a smooth-running supply chain right now include the new international trade negotiations between the U.S. and Mexico and the need for better ocean port infrastructure. Despite these obstacles, Vergara says automotive manufacturing activity in Mexico remains robust.
There’s More to Come in 2020
Looking ahead to 2020, DB Schenker Mexico will continue to hone its end-to-end logistics solution and go beyond just offering shipments from Point A to Point B. With the volume of automotive exports and imports rising, Vergara says the logistics provider is developing programs that address the auto industry’s reverse logistics and contract logistics needs.
“We’re looking to develop more services around these two needs in the future,” says Vergara, whose team is also working more closely with automotive OEMs in an effort to better understand their biggest supply chain needs and pain points. A company that relies on JIT, for example, should be sharing its forecasting and demand planning with its logistics partner as soon as that relationship is established (and not after the fact). “The more knowledge we have in advance,” says Vergara, “the higher level of service we can provide.”