Best Practices to Implement a Maquiladora Process in a Global SAP System Implementation
Key Concept
Maquiladoras are Mexican assembly plants that import raw materials on a tariff-free basis for assembly or manufacturing for export. The assembled good is usually then reexported back to the origin country. Maquiladoras are also known as twin plants, maquilas, or in-bond industries. They are located primarily along the US-Mexican border.
As a business strategy to leverage the tax treaties between US and Mexico, implementing a maquiladora program in an SAP system can help companies meet regulatory requirements. Certain regulatory requirements must be met per the North American Free Trade Agreement (NAFTA). The maquiladora companies usually get the raw material on a duty-free basis, manufacture the parts in Mexico, and distribute them to the company’s country of origin via distribution plants. (The country of origin is always the US.) For this to happen, many system transactions occur to move the material from one place to another and finally complete the shipment to the customer.
I cover the best practices for getting the customer demand at distribution plants located primarily along the US-Mexican border, transferring the demand to the manufacturing plants, and fulfilling the demand from manufacturing to distribution plant. The maquiladora process involves various transactions involving the movement of material from one plant to another. I focus on best design consideration for automating the maquiladora transactions so that the plant can focus on satisfying customer demand rather than putting effort or time into the maquiladora transactions.
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