Helping small business develop the SCM advantage.Logistics comprise about 15 percent of the total cost of operations for most Mexican businesses, compared to just seven to eight percent in developed nations, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Miguel Trejo, marketing manager of United Parcel Services United Parcel Service, Inc. (NYSE: UPS), commonly referred to as UPS, is the world's largest package delivery company, delivering more than 15 million packages a day to 6.1 million customers in over 200 countries and territories around the world. (UPS) Mexico.
This means that if your company can do better than that--perhaps much better--by developing a SCM (1) (Software Configuration Management, Source Code Management) See configuration management.
(2) See supply chain management. strategy, you will have a significant competitive advantage.
This opportunity exists in Mexico's industrial sector where, Trejo says, just 32 percent of companies have a contract with a logistics operator for management of their transportation, storage and distribution operations.
While no one disputes the potential high return on investment an SCM strategy can deliver for a company, which Trejo "conservatively" estimates to be at least 34 percent, setting one up can stretch a firm's financial resources in Mexico, where credit is hard to come by.
"One of the most important initiatives in Mexico to support the PYMES was made through one of our divisions, UPS Capital Business Credit (CBC (1) (Cell Broadcast Center) See cell broadcast.
(2) (Cipher Block Chaining) In cryptography, a mode of operation that combines the ciphertext of one block with the plaintext of the next block. )," Trejo said.
CBC was formed and the small business credit project developed after UPS acquired part of the First International Bank of the United States Bank of the United States, name for two national banks established by the U.S. Congress to serve as government fiscal agents and as depositories for federal funds; the first bank was in existence from 1791 to 1811 and the second from 1816 to 1836. . The CBC program can help a firm obtain financing to buy the machinery and materials it needs to set up its SCM system.
Not only does this program enable companies make the required investments as they develop their SCM systems, but the enhanced level of involvement strengthens UPS's incentive to ensure that the strategy is a success. It also helps UPS develop the level of trust that's essential when a company outsources part of its operation.
Because many UPS operations cross borders, a major part of its marketing focus is on companies that export. With the explosion in Mexican exports and imports since 1994, demand for international logistics The negotiating, planning, and implementation of supporting logistic arrangements between nations, their forces, and agencies. It includes furnishing logistic support (major end items, materiel, and/or services) to, or receiving logistic support from, one or more friendly foreign services has also grown dramatically.
Another UPS initiative is aimed at smoothing the process of moving goods through customs. It has worked with customs officials in Mexico to develop ways to expedite ex·pe·dite
tr.v. ex·pe·dit·ed, ex·pe·dit·ing, ex·pe·dites
1. To speed up the progress of; accelerate.
2. procedures. The result is a program called Trade Direct Cross Border.
"Basically, this is a service that allows Mexican exporters to move packages to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. on a consolidated basis and, by doing so, creates the possibility of clearing Mexican and American customs as a single package," said Trejo. "Once the merchandise is on American soil, it gets deconsolidated and every package is sent to its particular addresses."
On the import side, a company can use Mexico's electronic pre-validator to validate its consolidated import declarations in seconds, and then make its payments electronically.
The effort to smooth cross-border movement of goods is logical and necessary because, as Trejo notes, while Mexico enjoys a labor cost advantage over the United States, it is at a labor disadvantage compared to its growing export rival, China.
"With the worsening wors·en
tr. & intr.v. wors·ened, wors·en·ing, wors·ens
To make or become worse.
Noun 1. worsening - process of changing to an inferior state
decline in quality, deterioration, declension labor cost disadvantage ... Mexican businessmen must obtain as many benefits as possible from the geographic proximity to the United States," he said. "This means that the ability to move products across the border expeditiously ex·pe·di·tious
Acting or done with speed and efficiency. See Synonyms at fast1.
ex is a definite asset in economic competitiveness."
Companies that move a lot of goods can develop an advantage over their national and international competitors with an SCM strategy. If they wait, in a few years, they will have to install one just to catch up to the others.