The TTI Mexico Proximity Warehouses are strategically located in the major industrial centers of Mexico and provide same-day delivery at no charge to the customers in most cases. This distribution model can save customers a significant amount of money and logistical hassle.
Mexico’s IMMEX program allows manufacturers to “virtually import” goods that will be manufactured, transformed or repaired and then “virtually export” the items without payment of taxes and compensatory quotas. This program can be leveraged to make manufacturing in Mexico especially lucrative. However, manufacturers are held to relatively tight turn times with regard to component parts. In most cases, they must turn the product within six months. As a distributor, TTI is able to maintain inventory for up to 18 months and then deliver the goods to the customer when they are ready to receive them, allowing the customer much greater flexibility in their production schedule.
Documentation and compliance can be difficult to navigate in any new market. That’s why TTI created TTI/ILS, a wholly-owned Mexican company of TTI, as the logistics arm of TTI in Mexico. TTI/ILS helps customers save time and money by supporting the pedimento process, the customs form required to track the movement of components and manufactured items in country. Since TTI can retain possession of components in its warehouse until the customer needs them, the pedimento process and reconciliation is simplified for the customers. And, TTI consolidates each customer’s pedimento into a single document each month that can then be completed and verified by a customs broker (Agente Aduanal).
The local warehouse strategy requires the distributor to be integrated into the OEM’s supply chain strategy. In order to have so many different locations in-country, distributors must carefully stock the inventory that allows them to deliver the right parts at the right time. TTI supports customers operating in Mexico by integrating TTI’s Advanced Inventory Management (AIM) platform, with Specialists trained in the same high quality standards for which TTI is known globally. TTI works closely with buyers and their production forecasts to ensure lines never go down due to an unavailable component.
Transportation is an especially strong vertical for reshoring. With consistent year-over-year growths since 2010, forecasts are calling for Mexico to exceed five million auto units by the end of the decade2. With the increased electronic content of light vehicles, TTI expects this market opportunity to be significant. And, this growth will have a positive impact on the U.S. economy as well since 70% of Mexican auto production is exported to the U.S. The aerospace and harness industries are also heating up in Mexico.
With six Mexico Proximity Warehouses in place, one in development and other locations being considered, TTI has seen sales through ILS warehouses in Mexico grow more than 20 percent each year for the last few years. This new local distribution model, combined with TTI’s proven U.S. distribution system, ensure that the company is well-positioned to help OEMs navigate this reshoring trend.
1 Deloitte and MAPI “Footprint 2020: Expansion and optimization approaches for US manufacturers”
2 Mexican Automotive Industry Association, January 2015