Turns out that sourcing metal or other commodity parts in Mexico (over, say, China) is a lot like dating Paris Hilton or Kim Kardashian.
Meaning, there definitely are Dos and Don’ts – but the Don’ts, both for the aforementioned ladies’ boyfriends and for metal buyers, certainly are cringe-worthy.
Case in point: this endeavor requires high tolerance to frustration and very high maintenance in the initial phrase, according to German Dominguez, an expert sourcing facilitator and coach.
However, Dominguez made clear, there are long-lasting benefits down the road.
Without further ado, German’s excellent presentation given to attendees of our live conference, Commodity/PROcurement EDGE:
DO: Set a target price from the beginning when feeling out potential suppliers.
DON’T: Be afraid to use the Translate feature when Googling potential Mexican suppliers.
DO: Negotiate face-to-face. Mexican suppliers love meeting in the flesh.
DON’T: Even think about leaving a voicemail. “They won’t return or act on a voicemail,” said Dominguez.
DO: Make them trust you. You must work on selling your company as an “interesting company.” Communicate that you’re not only trying to benchmark them, but are in fact committed to bringing your business to Mexico.
DON’T: Forget about measurements and sizes – imperial vs. metric system – the latter being in wide use in Mexico.
DON’T: Worry about supplier development opportunities for metal commodities in Mexico – there are plenty: sand castings, machined castings, steel castings; aluminum die castings; cold forging; precision machined components; metal fab weldments, stainless steel fabrications, aluminum fabs, and plating (though plating’s very expensive in Mexico; “it’s cheaper to buy in Chicago and ship to Juarez rather than buy right next door to Juarez,” Dominguez said.)
DO: Worry about the Mexican counterparts working as hard as you will on developing those opportunities (“they won’t take the initiative”), and do worry about whether Mexicans actually have access those raw materials: according to Dominguez, only a small fraction of the supply base that exists in China (especially for specialty metals) doesn’t exist in Mexico.
DO: Start small – think about single commodity component sourcing vs. multi-commodity assemblies.
DON’T: Even think about tooling – that industry is non-existent in Mexico.
DO: Expect tiiiny bit longer quoting lead-times. According to Dominguez, “the typical quoting lead time in China is 3 days; in the US, it’s 1 to 2 weeks; in Mexico, it’s 3 weeks to never.”
DON’T: Wear polo shirts! Dress for success; you won’t notice, but Mexican suppliers will be big-time judging you if you don’t wear at least a long-sleeved button-down.
DO: Expect to spend money on armed-guard escorts for shipping your copper and aluminum freight from Mexico City to the border, as Dominguez has.
DON’T: Think that you can build a quality relationship with a supplier in less than 2 years.
DO: Know that the only source of competitive advantage in Mexico is the labor cost…(just not on simple metal stampings, screw machining components or plastic injection molding).
BUT DON’T worry: if you put in your time, you will build a long-lasting and dependable relationship and reliable connections.
Just please avoid the cartels.