Mexico is considered one of the emerging markets that businesses want to take advantage of and expand their operations to. This is why seeking assistance from offshore shelter companies across the border is gaining traction among many manufacturing firms in recent years.
Recent research from Gartner showed growth is possible for organizations that position themselves well and are able to reduce the risks that come along with expanding their company. Currently, more than half (51 percent) of executives that participated in the study believe their supply chains are more prepared for expansion than ever, but still must be ready for the changes their business must make when transitioning into a new country.
"Emerging markets present huge opportunities but come with unique characteristics and challenges due to the constant thrust for business growth, volatile demand and low maturity of supply chain processes," said Mike Burkett, research vice president at Gartner.
Prepare the supply chain
Having a plan of action is important for manufacturing executives who want an idea of what their processes will look like when based in Mexico. Partnering with a strong shelter company in Mexico can make this easier as they will have expert import and export management services that can quickly and efficiently move client goods. These solutions also ensure that deliveries will be made on time to suppliers, distributors and the manufacturing facility. The better the organization is prepared to operate south of the border, the easier the transition will be when it trusts a shelter company to take over certain aspects of supply chain management.
"The ability to plan demand better is a tremendous advantage, as accurate demand plans help supply chain leaders align end-to-end supply chains correctly, and forecast predictable outcomes and profitable responses to demand," Burkett said.
Adjust to the new market's rules
While a business may be successful in the United States, that doesn't mean that it can be run the same way in Mexico. In fact, the Gartner research stated the most prevalent supply chain challenge when shifting operations to emerging markets is dealing with changing rules that may include regulatory or tax requirements. This concern is another reason why an experienced shelter company is so important to the success of an organization in a new market.
Tax rates in Mexico are tough for business leaders in the U.S. to get a handle on, and joining forces with a shelter partner can reduce the strain on decision-makers. The Mexico shelter firm will take care of fiscal reporting and tax payments, as well as any other compliance issues when it comes to income tax requirements, income tax laws and other regulations. Shelter company will also assist their clients in building a team of skilled, local talent, easing the concerns of executives during market expansion.