Economies of Scale: Advantages and Cost Savings

By Sandra Chavez | Finance at American Industries Group®
Published 28/10/2022

For international companies wanting to set up manufacturing operations in Mexico, the quickest and easiest way is by working with an experienced shelter company. Setting up operations under this model allows foreign businesses to leverage the shelter company’s decades of experience and contacts to streamline the entire process: from site selection to finding and equipping a facility, taking care of all legal and permitting issues, and all human resources functions, among others.

Two services included in the administrative shelter program are indirect procurement services and access to its economies of scale.

Economies of scale: For all purchasing, clients have access to the shelter company’s economies of scale, which can provide an average savings on products and services from 5 % up to 20%, making a big difference in their bottom line.

Indirect Procurement: The shelter company takes care of all purchasing for non-production goods and services, ensuring that the company has everything it needs for running its day-to-day so that it can focus on handling everything related to production and direct procurement.

manufacturing operations in Mexico

The shelter services team is constantly searching out, qualifying, and tracking the performance and quality of vendors. Clients have access to its safelist of suppliers and receive assistance in locating the most qualified vendors based on their specific criteria. In addition, our purchasing of non-productive goods team constantly tracks the status of the purchase orders (POs) to ensure on-time delivery of products and services and optimize costs.

No Mark-up & no VAT  in purchasing: It is important to point out that AI doesn’t charge any mark-up to the purchases of indirect good and services, and due AI keeps the VAT certification doesn’t charge the VAT neither.

All of this behind-the-scenes work is placed at the fingertips of clients through an online purchasing module and portal, and its team is always there to provide support and resolve any issues that may arise. In addition to having access to the supplier safelist and purchasing tracking tools, the portal also allows clients choose from its list of domestic and international suppliers for non-productive goods and services, among others.

manufacturing operations in Mexico

These two services highlight ways your company can achieve a competitive advantage by setting up operations in Mexico under American Industries’ shelter administrative services model. If you would like to learn more about the benefits of doing business in Mexico and how American Industries can help, reach out today.

Sandra Chavez

Finance

American Industries Group®

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