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costly buffers that exceed 20 days” “79% of all information is rekeyed multiple times” “If supply chain visibility has bee the Holy Grail for just about every manufacturer, why is financial data relating to cost of the supply chain barely on the radar of many panies” Marcia Macleod Automotive Logistics, July/August 2023 *(AMR, Journal of Commerce, May 28, 2023) 22 Schenker AG BAX Global NAFTA Automotive Logistic Challenges MOSS – Material OffShore Sourcing Objective: develop industry standards for data munication that speeds up the flow and accuracy of goods (AIAG with GM, DCX, Honda and Ford)* With new global industry standards for data munication in the process of being developed, should logistics provider continue to invest heavily in inhouse SCM visibility tools or promote a future standard? *(AMR, Journal of Commerce, May 28, 2023) 23 Schenker AG BAX Global NAFTA Automotive Logistic Challenges 5. NAFTA’s rush to LCCS (Low Cost Country Suppliers) A. Generic reasons for going to LCCS Costs…. Forecasted volumes: plans to produce 1015 million cars by 2023 B. Theory vs. Reality Theory: LCCS allow you to reduce costs, increase profit margin Reality: Different culture (politics, socioeconomic, infrastructure and mind set often offset these profits C. Why ? Slow knowhow transfer to LCC Different quality standards Lack of management infrastructure from OEM/tier1 in LCC Lack of economic and cultural know how Result: Unbudgeted additional cost and lost of time Question for LPs : How long will the economic boom last? What are the success chances for late market entry of LPs? 24 Schenker AG BAX Global NAFTA Automotive Logistic Challenges D. What does that mean for NAFTA LPs dealing with LCC? ■ Higher degree of flexibility from LPs ■ LPs require a solidly established infrastructure in LCC (legal, HR, quality, operation, partnerships, finance, IT, etc.) ■ Successful SCM requires true partnership approach between client and LPs to tackle the continuously changing demands and opportunities for both client and LPs Trend: Several OEMs and tier1 are returning “home” and rediscovering Mexico as a viable alternative option as an LCC 25 Schenker AG BAX Global NAFTA Automotive Logistic Challenges Summary: 1. LCC have a massive logistic opportunities but are not the often anticipated “overnight success” 2. Understanding respecting the LCC culture as well as the willingness in a long term investment is a precondition for LPs. 3. For NAFTA OEMs and tier1 a renewed focus toward Mexico has emerged as a viable alternative (low labor costs, lower transportation costs as pared to, for instance China, faster access and intervention in processes is possible) …..Mexico is being re discovered. 26 Schenker AG BAX Global 6. Increase Built to Order A. Increase in customer’s willingness to wait for the