Sourcing in Mexico can be a challenging process, but with the right research and resources, it is entirely doable. In this article, you’ll learn about the techniques used by experienced sources and unlock valuable knowledge on sourcing in Mexico.
Familiarize Yourself with All Taxes in Mexico.
To ensure successful sourcing in Mexico, it is essential to understand the different taxes involved and how they affect the prices of materials.
There are several taxes applicable to the import process in Mexico, including value-added tax (IVA), customs duties, state tax (IEPS), tax on imports or IGI in Spanish, and more.
Knowing exactly which taxes are applicable to your business can help you determine the total cost of your sourcing materials before making a purchase.
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Invest in Good Quality Logistics Services in Mexico.
Working with local logistics companies is essential to ensure a smooth sourcing process in Mexico. Expert third-party logistic companies can provide high-quality services, including cargo loading and unloading, warehouse storage, insurance coverage, customs clearance, and delivery services at competitive prices.
Working with reliable logistics providers will help you increase efficiency while minimizing costs and risks associated with supply chain activities.
Consider cultural nuances when sourcing in Mexico.
It is important to educate yourself about Mexican culture when it comes to sourcing. Cultural nuances differ from one region to another, so make sure you are aware of them in order to get the best results.
Despite its diversity, there are some cultural elements that bind Mexico such as the importance of respect, family values, and a strong work ethic. Thus, when dealing with suppliers, try to be open-minded and respectful while stressing the importance of building lasting relationships based on mutual trust.
Familiarize yourself with 6 Benefits of Sourcing from Mexico and take the lead on your competition.
Furthermore, while different cultures emphasize different values when it comes to doing business, in Mexico, it is considered important to spend time getting to know your supplier before actually discussing business in detail.
This approach is based on the “know-like-trust” principle popularized by author and leadership coach Stephen M.R Covey. Taking the time to build relationships with suppliers is key to being successful in sourcing in Mexico.
Therefore, consider taking a few social mining trips where you can learn about the area and its culture and even meet local suppliers as well.
Leverage the expertise of local brokers with experience in the region.
If you are not familiar with the inner working of sourcing in Mexico, it can be beneficial to use the services of a local broker who has expertise and experience in the area. They will help you, access experts, identify suppliers, open factories, and review paperwork.
This could save your company valuable time and money as hiring a knowledgeable broker with contacts throughout the region is likely to yield better results than trying to do it alone.
Over the years, local brokers have developed strong relationships and understand the nuances of Mexican sourcing. Not only can they provide advice on sourcing strategies and processes, but they are also familiar with suppliers in their area that offer unique advantages, including cost savings from low-cost labor and access to a large pool of experienced workers.
Additionally, local brokers are likely to be well-versed in the legal issues surrounding doing business in Mexico, which can help businesses avoid potentially costly mistakes. Utilizing a broker is an excellent strategy for companies trying to get up and running quickly or who lack experience sourcing in Mexico
Know Your Supply Chain Complexities
It’s important to understand the complexities of the supply chain when sourcing in Mexico. Different parts of Mexico have different local customs, regulations, and taxes.
For example, labor practices and tariffs between states vary greatly which can create difficulties for a foreign company that is not familiar with the intricacies.
Understanding the regional differences can help you save time and money as you navigate through these unknown waters.
