Sourcing in Mexico

(Purchasing B2B News – Lisa Wichman)

Toshiba of Canada pegs the pros and cons

Does it make sense to source in Mexico? It depends on the product, and the shipper’s willingness to accept start-up challenges and logistics hurdles, according to a panel at the I.E.Canada conference in Toronto recently.

One of the speakers was John O’Reilly, director of customs and traffic with Toshiba of Canada Ltd. Three years ago the company shifted some production of electronic products from China to Mexico, and is pleased with the results. But the benefits didn’t come easily. “It wasn’t without growing pains to set up,” O’Reilly said. “We went in early summer, 2006 and it I think overall it probably took about six to eight months.”

Toshiba chose Mexico for a number of reasons. The shorter lead times are helping the company meet its carbon emission reduction targets, and they’re also benefiting customer service. “From placement of the [purchase order] to production to delivery to the customer, it’s less than two weeks,” he said. “We’ve found the quality of the product that’s being manufactured there is very high.”

There’s also the advantage of price protection. With shorter lead times, goods from Mexico aren’t as affected by volatile market prices; unlike shipments from Asia, which take weeks to arrive, he added. Read more here.