Mexico needs to close IT gap with the UK and the US MexicoNow Staff Report
Information Technology (IT) is as vital to logistics and the supply chain in Mexico as trucks and trains. Put simply, without IT there would be no recognizable form of either and certainly no future.
That was the message at the Logistics Summit by Franciso Giral, CEO of netLogistiK, a supply chain and logistics consultancy based in the Mexican capital city.
Giral urged Mexican companies to further embrace IT to enable the country to compete not only in Latin America but also globally. In fact, Giral spoke of the need for Mexico to become a country more “friendly” for logistics and the supply chain so that it can compete with the likes of the United Kingdom and the United States as well as solidifying its place as leader in Latin America.
While recognizing that Mexico was at a distinct disadvantage to the wealthier nations such as the UK and the USA, he said there was no reason why Mexican companies involved in both logistics and the supply chain could not look around and see what technology they could afford and use it well.
He said: “It’s not that Mexico has fallen behind in the use of IT in logistics, it’s just that we have never really caught up. We have always been behind in technology, generally speaking, and we have always been behind in the evolution of the supply chain.
“I recently had a conversation about a study by the World Bank which showed where Mexico was globally in terms of logistics and we were somewhere in the middle. The study described the most successful countries, logistically speaking the more evolved, as being those with more friendly logistics.
“That means countries where it is easy to work and that have easy methods of transport, easier than the way it is done in Mexico. But perhaps we are not so bad, particularly when we compare Mexico with the rest of Latin America where we are in a leadership position.
“But there is no doubt that we fall behind when compared to First World economies like the United Kingdom or the United States. In my opinion, the UK is one of the top logistics countries because it has a much more complex logistics network than you get in even the United States as they have to deal with logistics in cities that have been around for 2,000 years and you get logistic solutions in a friendlier way.
“So in comparison with the UK, we have a challenge to make logistics in Mexico friendlier and more productive. Mexico is going to have closer trade relations with the UK in the future and I welcome that as we have a lot to learn from the British.”
While admitting that Mexico was lagging behind the richest First World countries in technological advances, he emphasized that did not mean that the country was in the Dark Ages. There was technology being used.
He said: “The IT I am most familiar with is the IT used in the supply chain - more specifically, in the execution of the supply chain. Things like a transportation management system and I see a big opportunity in terms of helping companies to implement technology. Here in Mexico, a lot of companies still use spread sheets but there are other, more modern and more robust systems that can be used.
“What we are seeing these days is an evolution from the screen or computer display to a tablet in the warehouse and smart phones in the transportation area. We see more proof of delivery systems on smart phones and we see more screens, unattached to a computer, in the warehouse. That is definitely a trend we are seeing.
“It is unthinkable for a chain supply system, or a logistics system, to work without the latest technology. In fact, it just wouldn’t work without IT. But you have to remember that in comparison to the UK, the average wage in Mexico is one eighth or one tenth of what the average UK worker earns. That makes it harder to justify technology in Mexico but I always think it is a good thing to encourage companies to have a look around at the technologies and see what they can do with it.”
“So there is a lot to do regarding the use of technology in logistics and the supply chain in Mexico. Technology is evolving in a very fast way. You can find handy applications on smart phones that could be of great benefit to many companies. So it is always good to look around to see what is available and to see how it can be of benefit.”
Giral’s summary of IT in Logistics has been echoed by Humberto Coronado, Manager, Corporate and Strategic Relationships in Transportation and Logistics at American Public University.
He said: “Most modern day businesses have IT departments. In the early years of information technology, an IT department would consist of one computer operator storing data on magnetic tape and then boxing it in a basement. Nowadays, IT departments have many employees with a variety of skills that include systems administration, database administration and information technology management.
“Instead of using magnetic tape, there are now sophisticated computers, servers, database systems and cryptography that help store data. Advanced IT systems have made businesses more competitive around the world, so businesses of all types are trying to stay ahead of one another with their information technology.”
He said a good example of IT driven competitiveness could be found in the logistics industry and added: “Logistics information systems are used in every big company. This system help companies improve operational efficiency by tracking resources from when they are first obtained, such as raw materials, to their point of consumption. Companies leverage these systems to gain end-to-end visibility of their products or raw materials.
“Logistics information systems also help companies track internal information within a company by providing reports on inventory costs that determine how much more inventory needs to be purchased (Ballou, 2013). This feature allows companies to be more efficient by providing optimal lot sizes and lead times. Logistics depends on a high quality level of management within the supply chain in order to be effective. These logistics managers are in charge of purchasing goods and making sure they’re transported correctly to their destinations.”
Coronado continued: “Logistics managers rely on advanced information systems to manage and track materials, starting from when they’re first made in the factory to when they’re sold in retail stores. Because of the increase in volume and complexity that businesses face, information systems are the only way to accurately manage the product flow within an organization. Information technology specialists are always coming up with specialized solutions that are suitable for their company, like finding the right goods to market or finding the right routes for their shipments. That is their job and they communicate with the logistics managers to accurately convey information back and forth.
“Businesses depend on shipping products and knowing where those products are at all times. If a shipment has not arrived at its destination, their freight tracking system will let a company know where their shipment was last scanned. The drivers transporting these goods have it easy with information systems as well. With the use of GPS mapping software, a driver can receive real time driving directions while heading towards their shipping destination.
“Newer GPS software even allows drivers to get real time information regarding the amount of traffic along their scheduled route. If their route is jammed with traffic then it may suggest an alternative route with less traffic on it.
“That is a huge advantage for a company’s transportation needs because businesses thrive on having items arrive within a certain timeframe. Sometimes though, the amount of items that needs to be shipped can be overwhelming for a company to deal with. So, they’ll implement a third party logistics system which outsources their transportation and logistics needs to other companies. It is no surprise how businesses simply cannot afford to be without information technology in this day and age.
In a plea to both logistics and IT companies, Giral said: “Again, in the UK and the USA, logistic providers and 3PLs have spent millions of dollars on IT to provide companies with order and shipment visibility as well as accurate and timely performance measurement. But, in Mexico, employing information technology as a means to enhance supply chain and logistics competitiveness is an ongoing challenge for both supply chain and IT executives.
“There are always the questions about which applications to invest in, which suppliers to use and when a version updates are appropriate. To answer those questions it is important to understand the individual roles and relative contributions of supply chain IT applications.
“The major providers today are the integrated transportation companies such as DHL, FedEx and United Parcel Service. The effectiveness of the systems will continue to improve as the major providers offer more integrated capabilities as a means to enhance their competitive advantages.”
He urged Mexican companies to get behind the drive for IT in the supply chain and logistics businesses and secure a successful future in those sectors.