A Review of the Distribution Automation Landscape in Mexico

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Distribution Automation System

We all know and believe that automation is the future (and in some cases, the present), but what’s different for Mexico and LATAM (Latin America) in general? Why is it so difficult to take that first step to automate material handling processes in those countries? What should be done to help companies in those countries be confident that automation is the solution for their manufacturing or distribution center?

Wages and Exchange Rate

First, we must realize that wages in Mexico are much lower compared to wages in North America. People who work in warehouses in Mexico cost companies an average of $90,000 – $100,000 pesos annually, which makes it difficult to justify automation simply because of labor.

Adding to the low wages is the current exchange rate that has dramatically increased in the past few years, reaching a high of 21.90 pesos per dollar. This economic situation makes it hard for companies to decide to invest in capital, especially if that capital is in US dollars.

Short-Term vs. Long-Term Costs

So, why would companies invest in automation if today they can solve their needs just by throwing additional people at their processes? Well, here is where we must help them understand the other values of automation.

It’s a reality that manual, non-automated practices generally cost more to the companies than they realize. In some cases, mistakes and errors increase, due to the lack of training of new people added to an already large labor force.  And often, the added people may not necessarily be suited for the job, as they were hired in a hurry – responding to the normal response most companies in Mexico and LATAM have, “There’s more demand? We need more people”.

For some companies, it might work in the short term, but what if we, as automation suppliers, can offer a better solution? A solution that might cost more in the short term, but help them in the middle and long term to reduce this effect.

Automation Pioneers in Mexico

There are many companies in Mexico that are revered as pioneers in their operations: Liverpool, Bimbo, P&G, Unilever, PepsiCo, Coca-Cola, PUMA, and Coppel to name a few.  And what do they all have in common?  All of them have taken that step into material handling automation and are starting to benefit from it.

Some are in the early process of understanding how to use automation, convincing their management that it was the best logical step to take their operations to a higher level.  Some are in a more mature state, where they have moved to see automation as their ally to meet high standards and to keep growing.

So, despite the economic environment and the low wages, we should help companies in Mexico realize that automation will help prepare now for the future. They should investigate now to fully understand the capacity of an automated process in their environments and how to increase productivity, increase throughput, and increase sales without compromising any operational parameter.  Automation can take the Mexican company to a completely new level – a world class level.

Carlos Minjares
Carlos is a consulting engineer based out of Mexico City, Mexico. He works closely with our consulting team and Mexico office to support clients' needs.

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