Nissan in Mexico - short-sea shipping and security issues

Simon Duval Smith caught up with Daniel Saenzpardo, Logistics Director of Nissan Mexicana and asked him about the challenges he faces working in this exciting but demanding region

Nissan builds passenger sedans, light trucks and pickups at its plants in Cuernavaca and Aguascalientes and the OEM has seen some tough challenges in recent years, as the US market’s tastes have changed from sedans to SUVs and pickups. All Japanese auto makers have grappled with weak sedan sales in the United States as larger vehicles such as pickup trucks and sport utility vehicles grew more popular, due in part to falling petrol (gasoline) prices. For example, Nissan’s sales of the Versa sedan were down 30.7 % from January through November 2018, compared with the same period in 2017. This change of demand has knock-on effects on finished vehicle logistics, as fewer trucks and SUVs than sedans can be loaded onto a truck or railcar. I started our conversation by asking Daniel Saenzpardo about the most significant challenges he and his logistics teams face in the region.

Daniel Saenzpardo (DS): We face two main challenges from which other subtopics derive: changes within the automotive industry and the economic panorama, as well as the growth of the country’s supply chain infrastructure vs the automotive industry.

Aston Martin
Simon Duval Smith (SDS: As vehicles are changing - from gasoline and diesel to more electric and hybrid, are you starting to see differences in both inbound and outbound logistics?

DS: Not really; however, the infrastructure gradually needs to be adjusted in order to handle and store EVs and vehicles with new types of powertrain.

SDS: Your mix of vehicles produced for domestic and export sales must give you some particular challenges - are there differences in your sourcing strategy for the various markets?

DS: Not really. In all the countries we operate, the actual capacity meets all the market requirements. However, there are some differences in the capacity flexibility; for example, Nissan Mexico operates six ports for export markets in order to increase the shipping reliability against almost any unexpected external conditions.

SDS: Have you seen the balance of global (and particularly Japanese, located in Mexico) suppliers and local, Mexican-owned suppliers changing over the years, and how?

DS: Not really. Historically, most of the suppliers are foreign-owned.

SDS: Do you benchmark your supply chain with Nissan activities in other regions or are the conditions in Mexico very specific?

DS: Nissan is part of the Alliance, the most successful partnership in the automotive industry. Under the Alliance’s guidance, there are KPIs that help us benchmark the supply chain, taking in consideration different elements such as Quality, Cost, Time and Safety. At Nissan Mexico, we mostly benchmark with Nissan North America, but also we have scheduled monthly and annual forums to receive a Global review of the overall performance of each region.

John Morton, Engineering Director at Drive System Design
SDS: Do you benchmark with other OEMs in Mexico and elsewhere?

DS: This information is confidential!

SDS: How do you see the balance of road, rail and sea transport for finished vehicles developing in Mexico?

DS: The balance mostly goes to trains due the operating costs.

SDS: Would you welcome more short-sea shipping routes/opportunities - to the US etc?

DS: Yes, there are opportunities to create shipping routes from Lazaro Cardenas and Mazatlan ports to cover the West coast through short-sea.

SDS: Is security of finished vehicle loads an issue - on trucks/transporters and on rail?

DS: As in all the regions we have some routes that require special security management for both train and truck transportation. We need to be conscious that the ‘red spots’ change through time based on many external factors, such as economic or political conditions. In case of train routes, we are exploring new technologies that will help us reinforce and provide insights and triggers in case of any security issues.

SDS: On inbound parts, how do you think your just-in-time 'windows'/schedules compare to other regions, and how would you like to see them improve?

DS: In Mexico, we handle and schedule directly from the Tier 1 suppliers to our plants, even those suppliers that are in the sequenced scheme that are located between 100-200 kilometres away from the plants. Other regions commonly use some consolidation centres then the Just-In-Time compliances are from shorter distances (less than 100 kilometres) reducing the Just-In-Time complexity.

SDS: What are your criteria for suppliers; in what order do you put quality, delivery, cost, innovation, location of supplier?

DS: At Nissan, we select our supplier based on Quality, Cost, Time and Innovation. Our goal is to overachieve the client’s expectations; therefore, quality is one of the most important elements we take into consideration.

SDS: Do you work to a standard Nissan faults in parts per million system?

DS: Yes, our quality standard meets the overall Nissan PPM scheme. 

Automotive Purchasing and Supply Chain Magazine - Issue 32

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