mexico vs US in supply chain perspective

The supervision, oversight, or administration of products and services is referred to as supply chain management (SCM), and it entails the shipment and handling of raw materials, finished goods, and work-in-process inventory from one stage to the point of use or consumption (Kruger 31). In a supply chain, interlinked or integrated business channels and networks work together to distribute necessary goods and services to end consumers (Yang 22). Furthermore, supply chain management entails the task of preparing, organizing, implementing, overseeing, and managing different supply chain operations in order to create sustainable infrastructure, creating net value, synchronizing demand with supply, leveraging global logistics, and measuring performance internationally (Kruger 32). This paper seeks to compare the business dealings in Mexico and United States from a supply chain management perspective, with the focus on how they differ, as well as various advantages Mexico has over the United States.

One of the SCM areas where the two countries differ is infrastructure. Having advanced infrastructure is helpful in lowering transportation costs so as to allow the carriers to pass reduced costs to both the brokers and shippers. Currently, most Mexico’s road networks are not under favorable conditions, a situation which contributes to delay in transporting raw materials and finished goods from one point to another within the supply chain (Garcia and Giachetti 415). However, Mexico is in the process of making major road improvements so as to enhance the flow of goods and services within and from the country using all its major entry ports (Kruger 33). The Mexico carriers currently factor in the time invested in moving products and services from one point to another when requesting for payments due to unfavorable conditions of the roads (Garcia and Giachetti 417). On the other hand, the Unites States’ carriers rarely have to worry about the state of the roads since the U.S has well-established and maintained road networks, and the carriers can confidently plan their routing and deliver products and services within schedule (Yang 23).

Another area where Mexico’s SCM differ with the United States’ relates to the cost of diesel and petrol, which is a critical factor considered in the transportation of goods and services from one point of the supply chain to the other. The fuel costs in the United States fluctuate upwards or downwards as opposed to the fuel prices in Mexico which vary only upwards. The fuel prices in Mexico get controlled solely by a government managed and state-owned petroleum company, Pemex, thereby limiting competition and increasing the cost of fuel (Botha, Andries, Jacomine, and Yadavalli 24).

The SCM in Mexico and U.S also differ in the area of supply and demand. The supply and demand curve in the United States in more predictable than it is in Mexico (Yang 25). The practice of using load boards in securing round trips before accepting the first phase of the trip gives the U.S carriers significant advantage by making them reduce the empty miles that the customer is required to pay for, as well as making the process more efficient (Yang 26). The use of technological platforms by the U.S carriers also allows them to confirm the impact the market rate for a given lane has on their rates, so as to adjust established long-term rates based on the fluctuating market conditions (Yang 27). Mexican carriers, on the other hand, have very limited use of technological platforms, and the lack of established market rate forces the carriers to depend on the rates that they hear their colleagues charging. However, the Mexico carriers have a high likelihood of maintaining a year-round rate if they keep a good relationship with their customers (Botha, Andries, Jacomine, and Yadavalli 25).

One of the advantages Mexico’s SCM has over the United States is in the context of security. In Mexico, the law does not require cargo insurance, and the carriers usually charge their customers a premium for it (Garcia and Giachetti 420). Unlike the United States, the Mexican government launched an initiative aimed at securing the country’s supply chain, thereby putting pressure on the carriers to invest more in protecting their shipments. The clients, therefore, do not have to pay for various security services provided by the carriers (Garcia and Giachetti 422).

Another advantage that Mexico’s SCM has over the United States’ relates to Logistics competence. In Mexico, the trucking industry does not have several regulations like the United States (Kruger 35). Several regulations in the U.S trucking industry complicates the process of choosing carriers for the transportation of various goods and services. For example, for the U.S brokers to comply with different service requirements, they have to do their due diligence when choosing carriers with business practices and technology platforms so as to serve the customers with best standards (Yang 27). However, in Mexico, the prices provided by various carriers for the same route could have significant variations due to their investment in advanced tools to make the transportation process efficient (Garcia and Giachetti 424). Additionally, Mexico carriers tend to offer a more competitive rate to brokers and shippers with whom they have great relationships (Kruger 28).

Despite the United States having a well-established and managed infrastructure, there is still more to be done to enhance the country’s supply chain management system. In overall, the U.S supply chain management system has a broad range of advantages of that of Mexico. However, the Mexico’s supply management system also has a few advantages over the United States, ’ and the Mexican government is in the process of improving its infrastructure to facilitate the country’s various supply chain management processes.

Works Cited

Botha, Andries, Jacomine Grobler, and V.S. Sarma Yadavalli. “System Dynamics Comparison Of Three Inventory Management Models In An Automotive Parts Supply Chain.” Journal of Transport and Supply Chain Management 11.0 (2017): 23-29 Web.

Garcia Reyes, Heriberto, and Ronald Giachetti. “Using Experts To Develop A Supply Chain Maturity Model In Mexico.” Supply Chain Management: An International Journal 15.6 (2010): 415-424. Web.

Kruger, Stephen. “Journal Of Transport And Supply Chain Management.” Journal of Transport and Supply Chain Management 6.1 (2012): 31-37. Web.

Yang, Yeonglin H. “The Development Of Logistics Services In The United States.” Journal of Operations and Supply Chain Management 8.2 (2015): 22-28. Web.