Juan Carlos Villa

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

Abstract 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.