Mexico is becoming a popular option as a supplement to an overall sourcing strategy from China. It can provide a way to ensure your business revenue remains stable as supply chain conditions fluctuate.
Sourcing from Mexico can help you overcome supply chain issues.
You will face challenges no matter where you choose to source your inventory. Those challenges can be managed by going through a thorough research process and creating a plan that works for your business. The country you choose for sourcing can help you mitigate those challenges or worsen them.
This article will take you through some of the common sourcing challenges and how sourcing from Mexico can be a real advantage.
1. Tariffs
Tariffs are one-way sourcing from Mexico that can help increase your revenue. Most products that are purchased in Mexico do not pay taxes. This in and of itself can be saved over importing products from China.
2. Product Quality
Product quality is always something at the forefront of eCommerce sellers’ minds. There is a government agency that helps with product safety issues. The Office of the Federal Prosecutor for the Consumerian (PROFECO) organization of the Mexican government that works with other organizations like the U.S. Consumer Product Safety Commission (CPSC) from the United States. and Health Canada from Canada to guarantee that imported products are safe for consumers.
The biggest thing to remember with quality is to know your product. The more information you can give a manufacturer the better expectations are aligned with both companies. The more you know about the materials used and the engineering process the better your relationship with the manufacturer will be.
3. Raw Materials Availability
Raw materials can also vary depending on the counties they were sourced from. Also, these raw materials may be sourced from countries other than the country you’re buying products from. It is good to have a conversation about it upfront with your manufacturer and inspect any product samples.
Big brands have been manufacturing in Mexico for decades. Next time you are in a store like Target, pay attention to where things are made. You might be surprised how many of the products that are already used are from Mexico.
4. Logistics
The proximity of Mexico to the U.S. is a huge advantage. With current shipping costs from Asia being high it’s worth your time to research how much you could reduce your overhead costs by sourcing products from Mexico. It’s these types of variable costs that can eat into your profits if you’re not careful.
5. Lead Times
The lead times of shipping from Mexico can vary depending on the specific product and manufacturer. Some Mexican manufacturers can have their products at the border in just 4 days. Compare that to China where a recent study showed that as of October 2021 the average transit time from China was 73 days. Even customs wait times are much faster. It can take 2 days, but it can be as quick as just a few hours.
6. Inventory Management
Inventory management is one area where Mexican manufacturers can excel. Because of the proximity of Mexico to the U.S. they can ship more often and in smaller orders. So, if you need 1000 units of something they can ship 200 at a time, which can help as they are not sitting in your warehouse for a lengthy period waiting for a large order to be completely fulfilled.
7. Language Barriers and Culture
The culture in Mexico and Latin America is more laid back than in the U.S. You can’t always expect a quote request to be turned around in 24 hours for example. Once you recognize and appreciate the relaxed culture you will get used to their business processes. Also, most of the medium and larger manufacturers do have points of contact that speak English so it should not be a big concern.
8. Product Cost
There is a misconception that it is more expensive to have a product manufactured in Mexico than in China. With the current state of supply chains when you add up all the overhead costs including tariffs and high shipping costs many times the product cost can be about the same or slightly more to have it sourced from Mexico. There will be some products that are still more. It is something of a business you should investigate.
The world is changing quickly. Your business may have to pivot to keep up with supply chain issues. It is worth spending the time researching what your options are as a business to keep your revenue going and to future-proof your e-commerce business.
If you are having cash flow issues in your business, please visit us to learn more about what options your business may have.
