Supply chain dynamics and the “cross-border effect”: The U.S.–Mexican border’s case

• Published in: Computers & industrial engineering 2014-06, Vol.72, p.261-273
• Main Authors: Cedillo-Campos, Miguel Gastón, Sánchez-Ramírez, Cuauhtémoc, Vadali, Sharada, Villa, Juan Carlos, Menezes, Mozart B.C.
• Format: Article
• Language: English
• Subjects: Borders; Competitive advantage; Computer information security; Cross border transactions; Cross-border effect; Delay; Dynamics; Freight transportation; Logistics; North American Free Trade Agreement; Policies; Regional competiveness; Studies; Supply chain; Supply chain management; Supply chains; System dynamics; Transportation problem (Operations research); Wages
• ISSN: 0360-8352; 1879-0550
• DOI: 10.1016/j.cie.2014.03.015

•Proposes a system dynamics framework to analyze propagation of disruptions.•Measures the disruptive impact of “cross-border effect” on supply chains.•Provides information regarding the impact of variability on supply chain competitiveness.•Reports the high economic impact of delays on cross-border supply chains.•Provides general insights based on an automotive case study susceptible of extensions. A system dynamics model is proposed for analyzing the uncertainty caused by delays and disruptions at the U.S.–Mexican border, and how their effects propagate through the cross-border supply chains. Since Mexico’s geographic proximity and low wages provide logistics advantages to North American Free Trade Agreement (NAFTA), it is becoming a favored manufacturing and logistics location. Nonetheless, crossing the border between U.S. and Mexico remains one of the most important challenges to the NAFTA supply chain competitiveness. Based on literature review and real-life information, the security policies at the U.S.–Mexican border and their cost implications to cross-border supply chains are identified. Information regarding the impact of variability on supply chain dynamics due to “cross-border effect” derived of security inspection policies is provided. Results are based on an auto-industry case study that was chosen due to its process standardization; however, results could be applied to other global supply chains. As conclusions, implications for the design of cross-border supply chains are exposed and future research is presented.