News, Insights and Best Practices for Manufacturing in Mexico

What to ask before offshoring with shelter companies

01 Aug 2013

Category: Manufacturing in Mexico

Business decision-makers in the manufacturing industries have a lot of tough choices to make to shape the future of their enterprise, one of which is if they want to seek out shelter companies in Mexico to expand production capacity. These options give firms the opportunity to offshore human resource, payroll and benefits management across the border, and allow business executives to focus solely on manufacturing to better meet the needs of their supply chain partners. 

Times are changing in Mexico
In the past, organizations in the United States may have been hesitant to offshore to Mexico due to the unsafe reputation of some areas throughout the country. But now times are beginning to change, and market expansion is a realistic option for businesses that want the assistance of a shelter company. Erik Markeset, president of the Council of Supply Chain Management Professionals Round Table in Mexico recently spoke at the eyefortransport's 11th annual North American 3PL Summit, held in Chicago, and discussed how the Mexican government has begun to instill economic reform to increase its attractiveness as a viable option for offshoring, according to Supply and Demand Chain Executive.

"There hasn't been a revolution in Mexico - there has been a change in government," Markeset explained.

What should companies consider if they want to offshore to Mexico?
Deciding to trust a shelter company across the border to handle some of the organization's processes is a tough decision, and it will often take a lot of planning. Here are some potential considerations that executives need to talk about when deciding if Mexico is the right place for expansion that were broached during the 3PL Summit outlined by Supply and Demand Chain Executive:

  • How will the company benefit? Businesses will only decide to work with a shelter company if they will be able to see how they can achieve a competitive advantage. One of the main reasons firms will offshore across the border is if they have high demand and they need to focus purely on manufacturing. By taking care of legal, tax, HR and a myriad of other services, partnering with a shelter company enables businesses to benefit from laser focusing their attention on more pressing issues.
  • How will processes be simplified? Offshoring is a good idea for many businesses because it allows firms to reduce the amount of variables they need to improve their operations. Shelter companies are intended to provide a resource for enterprises that want to produce better products without the distractions of clerical processes.
  • How will the business be protected? One concern that keeps business decision-makers up at night is if their physical and intellectual property will remain safe when a shelter company is handling other parts of their firms operations. However, shelter services are created to ensure that information will remain safe and be managed correctly in all areas of the operation.

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