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Abstract
A problem common to the Maquiladora industry is that the same logistics practices developed for local business models are directly applied to plants in Mexico. However, unlike most local business models, the raw material and finished goods must travel distances of thousands of miles in the Maquiladora industry. Unfortunately, logistics considerations to support this increase have not received proper attention. This paper highlights the current logistics practices in the Maquiladora industry through the presentation of a project that focuses on the improvement of the inbound supply chain for the airbag plant of TRW in Chihuahua, Mexico.
Keywords
Maquiladora, logistics, milk-runs, transportation
Section 1: Introduction
Globalization has provided businesses with the ability to acquire and market products, resources and services throughout the world. This new business model is clearly different from the localized model of the past. As a result of globalization, companies have plants or subcontracts in countries that are thousands of miles apart and suppliers throughout the world. Consequently, the cost of the logistics necessary to retrieve raw materials, transfer parts between plants and deliver finished products to customers has sky-rocketed. It is apparent that as commercial needs broaden across the world, the need for transportation grows accordingly.
An example of globalization is given by the Maquiladora industry operating between Mexico and the United States. In this industry, most of the raw material originates in the US, the assembly is performed in Mexico and the final product is sold all over the world. Most maquiladoras were formed by simply relocating a plant from the US to Mexico in order to benefit from the Mexican labor wages. Often, the maquiladoras adopted the same logistics practices that had been employed in their original location in the US. To illustrate the problems that arise from this strategy, imagine a New York-based plant that acquires its raw material from suppliers throughout its neighboring states. Now imagine relocating this plant to the Mexican border, 2,500 miles away, and following the same policy for routing its raw material. Obviously, the transportation costs will significantly increase. For the original company model, it may not have mattered whether the routes were optimized because the cost difference may have been nearly negligible. However, the Maquiladora model greatly amplifies the faults of...