Dress for Mexico Sourcing Success: German Dominguez Offers Tips for Reshoring South of the Border
German Dominguez led a lively late-morning breakout session on near-shoring yesterday at Commodity/PROcurement Edge, in which the Mexico sourcing expert was open about his goal to encourage US buyers to source from their neighbor. Many US companies may be considering near-shoring and reshoring, yet for many, Mexico remains an unexplored opportunity. “When I talk to US buyers, I find that they’re expert at sourcing out of China but don’t know anything about Mexico,” German said.
He warned the audience against using with Mexican suppliers the same best practices for sourcing in China (“Forget everything you know about sourcing in China and start from scratch”). Companies that approach sourcing out of Mexico unprepared are bound to meet obstacles that turn them back onto what German calls “the path of least resistance,” in other words, sourcing in China.
After 17 years of working with automotive, electronics, and numerous other industries, German has accumulated his own arsenal of best practices as pertaining to Mexico, and expounded on a few things that US buyers tend to do wrong. German introduced the concept of reverse marketing, in which buyers approach and woe suppliers and persuade the latter to do business with them. It sounds counterintuitive, and German does note that reverse marketing is something you will only see buyers do in Mexico, but this best practice is an important one.
German relayed an anecdote from his time working for a big automotive company in 2000. The Vice President of Purchasing at the time approached German, perplexed as to why Mexican suppliers seem disinterested to the point of arrogance in conducting business with companies that approach them. “Mexican companies don’t seek our business or win your business. You need to take initiative of marketing your business to them,” German explained to the breakout session audience.
“Buying from Mexico is easier said than done. What works depends on your commitment, and your supply base can make or break your competitiveness. No Mexico sourcing initiative is complete without a supplier development initiative,” German said. And before thinking about supplier development, companies must think about supplier relationship management. Mexican suppliers might suspect US buyers of benchmarking and planning to go back to domestic suppliers to negotiate, and German recommends saying specifically that your company is not benchmarking. This will help your company be taken seriously by the Mexican suppliers.
German also stressed the importance of having target costs. “If you have one dollar in mind, the first quote you’re going to get from Mexico is two dollars,” said German. “So go ahead and give them your target price. This is a very controversial subject, but after 17 years, I still believe that target-cost sourcing is very important in Mexico.”
Other best practices? Try to do face-to-face negotiations and avoid phone and email. And don’t wear polo shirts, for God’s sake. Wear a long-sleeved shirt. German explained that you can perhaps get away with it on a border town, but anywhere else in Mexico, a polo shirt in a business meeting will not score you points with the supplier. German assured us all that dressing nicely will be helpful down the road.
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