Nearshoring in Mexico: Pitfalls, Potential, and Possible Problems

Thanks to the global supply chain disruptions of the COVID-19 pandemic, growing hostilities between the US and China, and rising import tariffs, U.S. companies are reconsidering a business plan that calls for them to outsource so much of their business to foreign companies in Asia. Instead, they are pivoting to “nearshoring” production in Mexico.

This new supply chain approach calls for sourcing products closer to home. For U.S. companies, that means setting up suppliers in Latin America — specifically, Mexico.

Mexico benefits from its geographic proximity to the U.S., its well-established export-oriented industrial sector, a labor force that values manufacturing jobs, and its inclusion in the US-Canada-Mexico North America free trade agreement, notes Forbes.

The move to Mexico is happening fast. Axios reports that the number of companies making moves to nearshore their production nearly tripled last year — to 42 percent of the companies polled, versus 17 percent in 2022 and just 11 percent in 2021.

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Maximizing Operational Efficiency: Expert COOs Offer Tips for Improving Process and Productivity

Operational efficiency. It’s the holy grail of business success. Chief Operating Officers are charged with creating operations management systems that root out inefficient processes, lower operating expenses, reduce lead times, and increase profit margins.

Two expert COOs, Steve Raack and Mike Bartikoski, are interim executives with repeated successes at mega-million-dollar corporations. They shared what they learned along the way during a wide-ranging webinar and Q&A moderated by InterimExecs CEO Robert Jordan:

Here’s a recap:

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The 6 Biggest Business Mistakes and How to Fix Them

Interim executives, by definition, come into difficult situations, assess them quickly, and create a plan for success. That means they have a front-row seat to the most common business mistakes companies make in the areas of leadership, operations, human capital, strategy, business finances, and change initiatives.

Focusing on these fundamental business needs is a good starting point for any struggling business.

3 Things Companies Can Learn from How Private Equity Firms Work to Maximize Value

Private equity firms have a simple recipe for making money: They identify companies they believe are undervalued, improve those companies, then sell them for far more than they paid to buy them in the first place.

Knowing how private equity firms work can serve as a roadmap for any company looking to improve operations and maximize value.

Start with these 3 things PE firms do following an acquisition in the lower middle market ($2-$15 million in EBITDA) to improve your own bottom line, whether you plan to continue operating your business or want to ready the company for a future PE investment.

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Creating an Omnichannel Customer Experience and Why Retailers Must

Omnichannel is the new retail. It means that there are no walls between brick and mortar and online, between online and social media, between social media and email and, one day very soon, between humans and the metaverse. In other words, the omnichannel customer experience creates a seamless customer journey that allows consumers to move easily among all of the channels a retailer can use to reach a purchaser.

A Digital Commerce 360 analysis of US Commerce Department data shows that consumer spending online in the US rose to $870.78 billion in 2021, up 14.2 percent from the pandemic-inflated numbers recorded in 2020. Compare the 2021 figure to pre-pandemic 2019 stats and online spending rose a whopping 50.5 percent.

Those are numbers far too big to ignore. Customer retention demands a seamless experience that allows consumers to move from in-store to online to in-app purchases with ease.

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Why Project Management Fails and 10 Ways a CEO Can Fix It

Despite a plethora of project management software tools and project management certification programs and project management training, protocols and methodologies, there is not always project management success. Schedules slip, costs balloon, plans derail.

Cynical observers of the project management process suggest these stages of a project:

  • Euphoria
  • Disillusionment
  • Panic
  • Search for the guilty
  • Punishment of the innocent
  • Reward for the non-participants

Or so says William (Bill) Mince, InterimExecs RED Team member and Chief Operating Officer at iMedrix, the California-based maker of a mobile clinical-grade ECG device that connects to remote physicians in real time. Since his first job at 3M in the 70s, Mince has built a career focused on project management.

His passion is trying to improve the project management process across organizations. He’s even writing a book about it. Project Leadership: An Executive Handbook for Project Management Success is to be published in the fall of 2021.

He offers these 10 steps CEOs can take to help ensure the success of project management in their organizations.

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How Zekelman Grew to a $3B Domestic Manufacturer

When Barry Zekelman’s father passed away he was 19 years old and six months into college. His dad left behind a business employing 5 people manufacturing steel tubing. It wasn’t much of a head start with beat up machinery, negative $5 million of retained earnings, and losing $60,000 every month. The business was on the brink of bankruptcy. Everyone told Barry to shut it down and stay in school, but he admits, “quite frankly, school was boring,” realizing that for him he had already outgrown it. This was his shot.

Barry had to piece together how to run a manufacturing business, like a pilot learning how to fly as the plane takes a nosedive. “I learned how to read an income statement and put one together real quick. I learned that making money doesn’t mean having money. You can make a lot of income – but cash is king,” he says.

He had no sooner moved into his dad’s office when two employees came in asking for a raise. Problem was, he couldn’t afford it – and he honestly didn’t know how they were making a living off what they were paid. He told them to do that he needed more production. The cash wasn’t there. The employees pleaded, ‘well – if you gave us a $2 an hour raise, this machine would never stop.”

Barry remembers thinking: what comes first, the chicken or the egg? “If this machine never stopped, I’d be able to give you a $2 an hour raise,” he said. “If I give you a raise and nothing changes, are you going to give me the money back?” The guys looked at each other and said it doesn’t work that way. Barry told them they had to do this together to be successful.

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Private Equity Looks to Operational Leadership in Hyper Competitive Markets

Private equity funds are entering a new phase that requires new tactics to be successful against many alternative sources of funds. With a vast reservoir of dry powder – $1.5 trillion waiting to be deployed – PE funds seeking the whip hand will build and pivot while the economy is reinventing and reviving in 2021 and 2022. But what worked in the past won’t work in the future. Moving forward, adding value will require more attention to management fit for the purpose of rapidly transforming portfolio companies.

“Every good private equity professional will tell you that the most important factor behind a successful investment is the management team,” said Eric Jones, a partner and member of the corporate and private equity groups at Detroit law firm Honigman LLP. Jones was a speaker at the University of Michigan Private Equity Conference held virtually in September 2020 and attended by InterimExecs. “You can have even market share, but without a very strong management team, it’s not going to be sustained. The business isn’t going to grow and the investment piece isn’t going to be realized,” he said.

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Poor System Integration & Company Culture Misalignment Leads to M&A Failure

In a merger or acquisition, discord of company cultures and disparate systems can cause the demise of a once-promising partnership. About 70% of acquisitions fail when post-acquisition results don’t meet pre-closing expectations. Many of these M&A failures are caused by poorly executed integration.

What’s surprising is that M&A failures are avoidable with careful integration planning and strategic post merger integration. Pre-acquisition, it takes a lot of forethought on how company cultures might clash and how their systems will integrate. Post-acquisition, it takes a ton of strategic elbow grease to rapidly align systems (and eliminate some), retain productive employees, keep customers, and make stakeholders happy.

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Jumpstart the Year With a Health Checkup on Your Business

Lose weight. Exercise more. The new year’s resolutions are in full gear right now. Whether it’s getting to the gym, reading more, or eating more greens, January usually begins with a reflection of how we did and what we can do more, better, faster this year.

We focus so much on being proactive in our health and personal care. But what about our business health? Is it just business as usual, again? Or do we have bigger business goals for the year ahead?

Talking to company owners and investors over the years, we have discovered a lot less proactivity than you’d expect and a lot more complacency. We don’t mean activity – everyone has lots of to-do lists – where busy work mask over big or growing problems.

We often get calls when the house is on fire: cash is draining away from the business, employees are jumping ship, frustrations are mounting, or lack of fresh thinking, innovation and true leadership have led to stagnation in the market. Owners say to us my ‘business is failing, what do I do’.

It’s hard not to think how many sleepless nights could have been avoided for an owner if they would have just acted sooner. We mean solve the issues not just by trying to dive in themselves or harangue the management team more, but instead through resources or tools that could extend their capabilities and help make vision a reality.

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