- Less than 40% of Mexican small and midsized businesses (SMEs) have digital solutions to coordinate procurement and supply chain operations
- Digital business networks like Ariba Network can help Mexican companies expand into supply chains in the United States and Canada
SAP Procurement Solutions Team | August 19, 2020
With the recent entry into force of the United States-Mexico-Canada Agreement (USMCA), procurement and supply chain leaders play a strategic role in taking advantage of the potential trade benefits under the new rules. Success depends on transparency into supplier networks and traceability of the supply chain, which can be achieved with the help of Ariba Network, the largest digital business network in the world connecting more than five million companies, and cloud-based SAP Ariba solutions to digitalize the end-to-end procurement process and find the best suppliers across geographies.
The commercial relationships between the three member countries of the USMCA is fundamental for their respective economies. According to data from the Mexican Ministry of Economy, Mexico’s top commercial partner is the U.S. in terms of both exports and imports. Canada is fifth, being the second largest export market and sixth biggest source of imports.
Amidst the COVID-19 pandemic, procurement leaders are working to build resilience in their operations by diversifying and regionalizing their supply chains. Investing in digital tools that increase visibility into supply chains will help organizations source, onboard and monitor suppliers remotely and in line with new rules of origin requirements under the USMCA. The integration of supply chains between Mexico, the U.S. and Canada becomes a critical factor for increasing transparency and accessing real-time data to help make better decisions in terms of production, shipping, customs or even longer-term negotiations.
"Companies in Mexico must accelerate their adoption of digital technologies to maximize the opportunity that the USMCA offers,” said Eric Rossati, director of SAP Ariba and SAP Fieldglass in Mexico. “Competition from foreign companies will only increase, therefore optimizing operations and increasing efficiency by automating and streamlining business processes is critical. This can be accomplished with a clear sourcing strategy, intelligent spend management across categories and leveraging a digital business network to enhance collaboration between buyers and suppliers, from source to pay.”
Opportunity for SMEs in Global Value Chains
In Mexico, less than 40% of SMEs have digital solutions to coordinate procurement and supply chain processes. Many buyers still operate with manual, paper-based transactions with their suppliers from purchase order through invoicing. Responding to the challenges of the USMCA, Mexican SMEs must increase their competitiveness by tapping into the power of a digital business network in order to expand beyond country borders.
A digital business network like Ariba Network enables companies of all sizes to increase visibility into supply chains, find trading partners that comply with labor and sustainability standards, and facilitate better collaboration with suppliers. Among the many benefits that these digital business platforms offer small providers is the timely fulfillment of payments, which is key to working capital management, business continuity and growth, especially during the pandemic. In fact, digitalization has been found to help achieve 90% compliance in timely payment to suppliers.
Having a digital connection between buyers and suppliers enables businesses to manage supply chain risk by helping to react more quickly to potential shortages, setting up quality management protocols and monitoring for supplier practices not aligned with organizational principles and USMCA rules.