Supply Chain Spotlight on Mexico: Takeaways from Logistic Summit & Expo 2015

As I wrote last October, all signs point to Mexico playing a greater role in supply chains, as companies across a variety of industries grow their presence in the country, either manufacturing in Mexico or growing their supplier base there. A clear sign that Mexico is currently in the supply chain spotlight was last month’s Logistic Summit & Expo 2015 in Mexico City, which attracted over 10,000 attendees and almost 200 exhibitors, including leading 3PLs, software vendors, and other supply chain and logistics companies from both the United States and Mexico. This year’s sponsors and exhibitors included Ryder, Menlo Logistics, LLamasoft, Manhattan Associates, UPS, BNSF Railway, Mecalux, Logyt, Grupo MYM, Accel Logistica, and Femsa Logistica.

The summit portion of the event was a two-day educational conference with about 500 attendees. I had the honor of being one of the featured speakers, along with Sunil Chopra, Alan Dunn, Jim Tomkins, Alejandro Serrano, Mayolo Lopez, Damiano Davio, Bruno Russ, and John Brandt.

My presentation was titled “Are You Ready for the Social Supply Chain?” — or as translated into Spanish, “¿Estan Preparados Para la Cadena de Suministro Social?” Although I gave my opening remarks in Spanish, I delivered the presentation in English because, as I told the audience, I lacked the practice and courage to do it in Spanish (all English presentations were translated in real-time for the attendees via headsets). In retrospect, I should have just done it in Spanish, which is what I will do the next time I have the opportunity to speak to a Spanish-speaking audience.

I started out by defining social networking (how it’s a set of communication and collaboration tools that go beyond Facebook, LinkedIn, and Twitter), and then I discussed the business case for leveraging social networking in supply chain management and shared some case studies. I summed it up this way for the attendees:

Companies of Tomorrow will need to make smarter decisions faster…which means supply chain teams will have to transform their decision-making processes…which means people will have to communicate and collaborate faster and in more efficient and scalable ways…which is what Social Networking enables!

I learned a lot from the other presenters, who covered a variety of different topics. I don’t have the time or space to summarize all of the sessions, but here are my takeaways from a few of them:

Sunil Chopra, professor at the Kellogg School of Management at Northwestern University, Designing Effective Supply Chains for the Future: Chopra focused his presentation on a basic question: What is the best distribution network for my product? The answer depends on three factors according to Chopra: product value, the level of demand uncertainty, and information content. He then walked through several examples of products and companies, such as Zales and Blue Nile in the diamond business, and Amazon and Costco for consumer electronics. Chopra showed that, in general, a centralized distribution model worked best for niche products with unpredictable demand, while a decentralized model worked best for fast-moving goods with predictable demand. He also made the point that distribution networks and processes in emerging markets will be different than in developed countries, using India and how omni-channel retailing is evolving there as an example.

Alejandro Serrano, Director of “Máster en Dirección de Supply Chain” at Zaragoza Logistics Center, Finance in the Value Chain: Serrano underscored the critical link between finance and supply chain management, which was summed up nicely by this quote from a logistics executive that he referenced in his presentation: “Supply chain people are accountants; we have to understand finance. If you cannot understand the impact of your decisions on [the Balance Sheet, P&L, and Cash Flow], you cannot be a [successful] supply chain professional.” By linking finance with supply chain management, and having the right metrics in place and taking a holistic perspective of your supply chain, you will make smarter supply chain decisions that will benefit the financial performance of your company.

Jim Tompkins, CEO of Tompkins International, E-Commerce Trends: Tompkins highlighted various e-commerce trends and stats in Mexico, including the fact that Mexico is the second largest e-commerce market in South America behind Brazil. He also pointed to the challenges China faced more than a decade ago, which are similar to the ones Mexico faces today, such as low credit card use (according to Tompkins, only 13 percent of Mexicans have credit cards). If China was able to overcome these challenges, which gave rise to Alibaba, why not Mexico? Tompkins believes Mexico will overcome these challenges by implementing new technologies and processes, such as using e-payments instead of credit cards, and by further developing its logistics networks.

Simply put, the Logistic Summit & Expo is a must-attend event if you’re a supply chain professional in Mexico or a 3PL or technology company looking to work with companies there. It was a great venue for learning and networking, and based on the growing attendance and high energy at the conference, it’s clear to me that the supply chain spotlight will continue to shine brightly on Mexico in the months and years ahead.

A quick aside: kudos to the event organizers for a well-planned and executed event. One of my favorite things about the conference was how they produced short videos to introduce each of the speakers (see my intro video below). A very creative departure from just having someone read the speaker’s bio!