Best Practices to Implement a Maquiladora Process in a Global SAP System Implementation

  • by Manjinder Sohi, Manager, Capgemini America Inc.
  • December 4, 2017
Learn how to effectively implement the maquiladora (also referred to as maquila) process using the best design practices in your global SAP system implementation. Discover the complex processes on maquiladora in your supply chain management, take away lessons learned in maquiladora implementations, and know how to automate the maquiladora transactions in the SAP system.
Learning Objectives

Reading this article, you’ll learn:

  • An overview of the maquiladora manufacturing process
  • The configuration steps to fulfill the US-Mexican maquiladora business process
  • Challenges faced in implementing the maquiladora process using standard SAP functionality
  • Suggested improvements in maquiladora process 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.

Note
In this article I use the abbreviations FR for France, MX for Mexico, and US for the United States.

The US Maquiladora Shipment Process

In a scenario for my example, the customer shipment process is from US 21 company code. Figure 1 is a diagram of the US maquiladora shipment process.


Figure 1
The US maquiladora shipment process

Manjinder Sohi

Manjinder Sohi specializes in deploying SAP ECC and CRM solutions and has a track record of successes in implementing IT solutions in the auto manufacturing, chemical, educational, banking, healthcare, and media and entertainment industry sectors. His expertise includes SAP ECC Sales and Distribution, Material Management, Production Planning and SAP CRM-IPM. He holds certification from SAP and is the order-to-case (OTC) industry solution leader for Capgemini’s SAP digital industrialization group. Manjinder graduated from the University of Texas at Dallas with a master’s degree in computer science. 

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