Nearshoring: The Opportunity for Mexican and U.S. Companies in 2024

I was going through today’s news and was surprised to see how nearshoring is transforming supply chains between Mexico and the U.S. ???? Here are the most interesting points and how you can benefit:

What is Nearshoring?

Nearshoring is the practice of relocating business operations to a country close to the main market. This movement is gaining momentum due to factors like geopolitical challenges, security concerns, and the need to reduce carbon footprints. Companies are looking to optimize their global supply chains and bring their operations closer to home, all at a lower cost.

Major Opportunities in Mexico

• Mexico will open 25 new industrial parks by the end of 2024, driven by $35 billion in foreign direct investment.
• 88% of U.S. small and medium-sized businesses are restructuring their supply chains to utilize suppliers in Mexico in 2024. ??

Optimize Your Supply Chain and Access the U.S. Market with These Advantages:

• Geographic Proximity and Trade Connections ???: With over 3,000 km of shared border, delivery times range from 0.3 to 3.5 days, compared to 26.5 days from China.
• Extensive Network of Trade Agreements ??: Mexico has 12 free trade agreements with 46 countries, including the USMCA (United States-Mexico-Canada Agreement).
• Foreign Direct Investment (FDI) ??: FDI in Mexico reached $35 billion in 2022, and 25 new industrial parks are expected to open by the end of 2023.
• Low Labor Costs ??: Imagine reducing your manufacturing costs by up to 50% compared to China. This means higher profit margins to reinvest in your business.

Fast-Growing Sectors and Products ??

• Electronics: Demand for electronics continues to rise with remote work and digitalization. Specific products: Electronic components and final device assembly.
• Automotive: Increase in demand for electric vehicles and automotive components. Specific products: Passenger and commercial vehicles, as well as auto parts.
• Food and Beverage: Rising demand for processed foods and beverages due to changing consumer habits. Specific products: Processed foods, bottled beverages.

Actions Taken by Companies

Our clients have implemented innovative strategies to capitalize on these opportunities and optimize their supply chains. Here are some of the most effective actions:

• Adoption of Advanced Technology:

Technological Solutions: Implement digital transportation management systems (TMS), real-time tracking, and data analytics to make informed decisions. These tools allow you to optimize routes, reduce costs, and improve on-time deliveries.

Success Story ??: Coca Cola FEMSA implemented GPS applications and checklists, achieving unprecedented accuracy and efficiency in their delivery operations.

• Investments in Infrastructure:

Logistics Centers: Develop and enhance logistics centers near borders and strategic distribution points. These facilities enable efficient storage and rapid product distribution.

Success Stories: Clients in Monterrey and Querétaro have invested in facilities to maximize proximity to key border crossings, improving cross-border delivery speed and efficiency.

• Training and Development:

Training in New Technologies: Ensure employees are well-trained in the use of new technologies and advanced logistics practices. This includes managing software, tracking tools, and process optimization techniques.

Continuous Improvement Programs: Implement programs to stay up-to-date with industry best practices. This ensures the company always operates at maximum efficiency and responsiveness to market demands.

Practical Example: Train your logistics and operations teams in using advanced digital tools for order tracking and management. Companies that have adopted these practices have seen significant improvements in operational efficiency and customer satisfaction.

• Establishing Strategic Alliances:

International Collaborations: Form alliances with international companies to access new markets and technologies. These collaborations can open doors to business opportunities and valuable knowledge sharing.

Local Supplier Network: Develop a strong network of local suppliers to ensure a more resilient and flexible supply chain. A strong local supplier network can offer redundancy and security against disruptions in the global supply chain.

Success Story: Our clients have created collaborative networks with local suppliers in Mexico to ensure a robust and adaptable supply chain. These networks have enabled greater flexibility and responsiveness to changes in demand and market conditions.

Next Steps ??

Nearshoring is a strategic opportunity you shouldn’t miss to optimize your supply chain and reduce risks.

Take advantage of Mexico’s competitive advantages in highly skilled labor, geographic proximity, and trade agreements. It’s essential to address logistical challenges through investments in infrastructure and technology.

?? What do you think about nearshoring? Share your thoughts in the comments. ??

Are you ready to take your supply chain to the next level? Don’t hesitate to contact me. Together, we can strengthen your business, focusing on data and advanced analytics.