The Costs and Risks of Doing Business in Mexico
Posted 09-02-2010 at 11:38 AM by Albert Fong
Mexico may be a tourism Mecca with more than 25 million visitors annually, but it’s also become a haven for supply chain risk. From drug smuggling and kidnappings to extortion and much worse, the level of risk has risen significantly over the past year. For U.S. businesses, America’s south of the border neighbor is both a competitive advantage and a liability.
For supply chain managers, securing shipping operations has become an overwhelming task and in some cases, routine deliveries go through multiple levels of security checks. Cross border smuggling has been an ongoing problem for years, but it seems that the trade has become more violent recently. That leads into a bigger issue: employee safety. A large part of the workforce at American companies in Mexico is made up of U.S. citizens. With the rising crime, ensuring employee safety in the short term coupled with recruiting the best and the brightest in the long term is a constant battle.
According to estimates, security spending accounts for 3 percent of corporate operating costs. And whether or not you travel or live in Mexico, you’re paying as a consumer since those costs get passed on in the form of higher prices.
With the volatility of the environment down there, the importance of supply chain visibility becomes a necessity. While WMS and TMS solutions tend to be looked upon as luxuries here in the states, it’s an essential cost of doing business in Mexico.
For supply chain managers, securing shipping operations has become an overwhelming task and in some cases, routine deliveries go through multiple levels of security checks. Cross border smuggling has been an ongoing problem for years, but it seems that the trade has become more violent recently. That leads into a bigger issue: employee safety. A large part of the workforce at American companies in Mexico is made up of U.S. citizens. With the rising crime, ensuring employee safety in the short term coupled with recruiting the best and the brightest in the long term is a constant battle.
According to estimates, security spending accounts for 3 percent of corporate operating costs. And whether or not you travel or live in Mexico, you’re paying as a consumer since those costs get passed on in the form of higher prices.
With the volatility of the environment down there, the importance of supply chain visibility becomes a necessity. While WMS and TMS solutions tend to be looked upon as luxuries here in the states, it’s an essential cost of doing business in Mexico.
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