UNIVERSIDAD AUTONOMA DE NUEVO LEON

FACULTAD DE CONTADURÍA PÚBLICA

Y ADMINISTRACIÓN
LICENCIATURA EN NEGOCIOS INTERNACIONALES

ABASTECIMIENTOS

PIA

Teacher: Sergio Himbler Guerra Luna

Group: 5Ei
Saucedo Castillo Lizette Ashley 1903978
Ubaldo Torres Elías Caleb 1899968

May 2022
Monterrey, Nuevo León, México
Company: METALSA S.A. de C.V.

What does METALSA DO? Since its foundation in 1956, METALSA has sought to
provide the automotive and commercial vehicle industry with high quality metal
structures for heavy trucks, buses, lightweight trucks, and passenger cars.

Mission: Provide structures that help our customers move the world more
efficiently while protecting the environment and ensuring the long-term economic
and social value generation for our stakeholders.

Vision: To become a leading mobility manufacturer of chassis & electrified

solutions for the automotive, trucking, and off-highway industries.

History: METALSA is part of “Grupo Proeza”, which is here in Monterrey. It was

founded in 1956 by Guillermo Zambrano under the name “Manufacturas Metálicas
de Monterrey”. In the late seventies was when it changed its name to METALSA
and when it started operating in Apodaca, Mexico.

Category: Mobility manufacturer.

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What METALSA sells? Chassis, Trucks, Buses; Chassis, Fuel Tank, Brake Dust
Cover, Front and Rear Bumpers, Box Cross Members, Trailer Hitch.

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 FINANCIAL AND MARKET INFORMATION

METALSA registered annual sales of US$3.53 billion in 2020. The METALSA, S.A.
de C.V. family of companies includes 43 companies. It has a total of 12,000
employees in all its locations.

METALSA, the leading lightweight vehicle chassis manufacturer in the Americas,

generated US$210 million in EBITDA (Earnings before interest, taxes,
depreciation, and amortization) in 2020.

The Monterrey-based company plans to increase its EBITDA to $300 million in

2021 and $330 million in 2022. The company's only outstanding debt as of 2020
was USD300 million in senior notes maturing in 2023. The company had USD300
million of undrawn committed lines of credit maturing this year.

North American locations of METALSA, the production of pickup truck increased by

about 15% in 2021 and 5% this year.

EBITDA of approximately USD300 million in 2021 and USD330 million in 2022-

2023.

Their customers: HONDA, Renault, Paccar, Jaguar, Ford, Porsche, RAM, GMC,
Nissan, Volkswagen, Bentley, Mercedes Benz, Tesla, Toyota, Mack, The Lincoln
Motor Company, Ferrari, Volvo Fiat, Blue Bird, Chrysler, Bugatti, Lamborghini,
Aston Martin, and so on.

Some of the competitor of METALSA are Wurth Canada Limited, BMW

Manufacturing Co, Tupy (Brazilian company), Tenneco (Automotive and originally
Tennessee Gas Transmission Company), FlexNGate (producer of products and
systems for the automotive industry), MAGNA (Canadian company), Delphi
Technologies (company engaged in the development, design, and manufacture of
vehicle propulsion systems), HELLA, DANA, SRG Global, Faurecia, Valeo y Lear.

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 ESTRUCTURE OF THE COMPANY

EXECUTIVE STRATEGIC
BUSINESS UNIT:
De León González Rubén

EXECUTIVE EXECUTIVE PRODUCT STRATEGIC

ASSISTANT- OPERATIONS/ DESIGN SOURCING
LEVEL 2 MANUFACTURES ENGINEERING MGMT
Orozco Tirado Garza Pineda MGMT Coto Pon Ricardo
María Enrique González
Francisco

REGIONAL STRATEGINC
SALES MGMT - BUSINESS
LEVEL 5 DEVELOP MGMT
González Cantú Hinojosa
González Carlos Juan

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 STRUCTURE OF SUPPLY CHAIN CURRENTLY OPERATING
PROCESSES

OUTSOURCE METALSA CUSTOMER

SUPPLIERS
Steel supplier
Fasteners suppliers
Child parts suppliers
Assembly fixtures
Cheking fixtures
Equipments
Siderails production Product delivery
Assembly process
Powder Paint line
Ecoat Paint line
Quality validations
Logistic operations

SUB-PROCESSES

MATERIALS FORMING ASSEMBLY

Commercial Steels Stamping Resistance welding
Alternative Steels Hydroforming Projection welding
Aluminum Roll-forming Spot welding
Heat treatment Bending Seam welding
Tailor rolled Hot forming Laser welding
Tailor welded Brazing
Fiber- Reinforced Bolting
Composites Riveting
Clinching
Gluing

TOOLING FINISHING
Tool Design E-Coat
Specialized Tools Powder CUTTING
Prototyping Hot Wax Mechanical Piercing
Cavity Wax Hydraulic Piercing
Chrome Plating CO2
Stone Chip Coating Yag Laser
Plasma
High Speed-Machining
QUALITY Hot Cutting
VALIDATIONS
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LOGISTICS DELIVERY TO
 SUPPLY STRUCTURE: POLICIES AND PROCEDURES, PROCESSES, FIND
OUT IF THE PROCESSES ARE BEING FOLLOWED.

The supply chain is managed through an approach that prioritizes the strength of
the business and the reliability we seek to convey to our suppliers. The company is
committed to raising the levels of safety and continuing to generate value,
achieving safe and sustainable growth that promotes an operational infrastructure
aligned with its objectives.

The Procurement area is responsible of all relations with suppliers; it defines

applicable terms and conditions of commercial relations. The logistics area
maintains operations running smoothly by communicating all requirements to
suppliers, so they comply with the production plan. The main products METALSA
purchase are steel, extruded aluminum, fasteners, welding wire, wire forms,
metallic stamping parts and chemicals for coating. In addition, it procures the
services and spare parts necessary for the business to continue operating. The
company aim to engage in long-term relations with suppliers that work with the
same ethics and values as METALSA.

The supply chain partners must comply with the Supplier Manual of the company,
which includes:

LABOR PRACTICES: Our partners must uphold freedom of association and the
effective recognition of the right to collective bargaining. Furthermore, they must
ensure the elimination of all forms of forced and compulsory labor and the effective
eradication of child labor, as well as the elimination of any kind of discrimination.

ANTI-CORRUPTION: Businesses should work against corruption in all its forms,

including extortion and bribery.

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METALSA CODE OF CONDUCT: The commercial relationship shall be conducted
with integrity, fairness, and respect in all countries where we have operations.

HUMAN RIGHTS: Businesses should support and respect the protection of

internationally proclaimed Human Rights and make sure that they are not complicit
in any type of abuse or infringement.

ENVIRONMENT: Organizations are required to support a precautionary approach

to environmental challenges and encourage the development and diffusion of
environmentally friendly technologies.

RESTRICTED SUBSTANCES: Suppliers must assure compliance with all

governmental and safety requirements on restricted, toxic, and hazardous
substances used in the manufacture of products.

Through the METALSA Supplier Business Assessment, it is executing a

comprehensive assessment of the supply chain. The company use it to select new
suppliers and follow-up on the existing’s performance and rate each supplier’s
quality, environmental and social practices. If the enterprise detects and
opportunity for improvement or non-compliance with their guidelines, METALSA
request corrective measures so that the relation continues; subsequently, they
must be reexamined to ensure they improved.

The questionnaire includes topics regarding quality, employment conditions,

human rights, ethics, corporate governance, legal compliance, sustainability, as
well as criteria aligned to institutions and standards like International Automotive
Task Force (IATF), Automotive Industry Action Group (AIAG), ISO 14001, among
others.

According to our investigations, the previously mentioned protocols and

procedures are carried out correctly and without any impediment, and the company
is constantly looking to renew or improve the procedures, according to current
trends, so METALSA can guarantee a better relationship with its suppliers, as well
as a good quality of products for its customers.

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 METALSA DURING THE PANDEMIC

During 2020, due to the COVID-19 pandemic, the supply chain of the company
suffered stoppages in production and reduced sales. Nonetheless, it was managed
to maintain timely supplies to ensure the business continuity. How it was
mentioned, METALSA, the leading lightweight vehicle chassis manufacturer in the
Americas, generated US$210 million in EBITDA (Earnings before interest, taxes,
depreciation, and amortization) in 2020. Its result was affected by a 39 percent
drop in the first half of the year, but as the company implemented cost-cutting
measures and production in the automotive industry recovered, in the second half
it surpassed the figure achieved in 2019 for the same period.

WHAT WERE THE CHALLENGES IN THE PANDEMIC AND WHAT ARE THE
CURRENT PROBLEMS?

● Falling demand
● Excessive personnel for low demand
● Unsafe spaces to work and avoid contagions
● Drop in sales

HOW WERE THE PROBLEMS SOLVED?

- Personnel liquidation
- Elimination of office expenses integrated with home office work.
- Pause of implementation of new processes and products
- Adaptation of spaces to protocols
- Elimination of non-relevant operations

WHAT WAS DONE TO PREVENT IT FROM HAPPENING AGAIN?

- Organizational restructuring

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 - Lessons learned and contingency plan procedure
- Documentation of solutions for future similar cases

OVERALL CONCLUSION

The realization of this PIA made us go deeper into the search for the different
supply processes of the METALSA company. The work of this company is focused
on the production of car parts such as Chassis, Trucks, Buses, a very important
market today due to the demand for cars and their parts. The supply processes of
each company are very important when doing business because the correct
management of the company's resources and resources is also linked to the
methods of their supply chains. It is very important to see how METALSA manages
its storage assets and how it searches for other assets to create its pieces. Its
supply is given to the form of the demand for its products, the METALSA company
has a high demand in its commercial market because it has various clients such as
some very well-known ones, these are HONDA, Renault, Paccar, BMW, Jaguar,
Ford, Porsche, RAM, GMC, Nissan, Volkswagen, Bentley, Mercedes Benz, Tesla,
Toyota, Mack, The Lincoln Motor Company, Ferrari, Volvo Fiat, Blue Bird, Chrysler,
Bugatti, Lamborghini, Aston Martin, and so on. In the realization of this project, we
had to contact a direct employee of the company, which was very interesting to do
since it opens the vision of seeing the concepts that we see in the career positions
in the labor field such as the supply chain, the structure of the company and its
buying and selling processes. At the time of carrying out this PIA we found many
interesting data about the company and also concepts seen in this matter of
supplies such as Structure of the company (it was very interesting to observe the
various areas of work in a company as large here in Monterrey as it was
METALSA). Following in the footsteps of the PIA and analyzing the company
through the survey of its employees makes us better understand the concepts of
supplies and further opens our vision of the field of sales and the international
market. With this semester passed we set our sights on the commercial supplies of
the company and the way in which they should be managed, it is important to
conceive this information and take it to the labor field when it is our turn.

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 PERSONAL CONCLUSIONS

Saucedo Castillo Lizette Ashley

After concluding this work and having done a detailed field investigation with one of
the employees who assisted us in the company, on behalf of the administrative
area, I was able to realize that the COVID-19 pandemic, which started in 2020,
greatly affected the companies and one of them was METALSA; I could realize that
the pandemic of COVID-19 started in 2020, greatly affected the companies and
one of them was METALSA that as mentioned suffered production stoppages and
a considerable reduction in sales, which were reflected in the earnings before
interest, taxes, depreciation and amortization, as they were reduced by 39% in the
first half of the year with a total of $210 million dollars, so it was necessary to find a
way to solve these problems.

Among the solutions that were made to solve the problems was the elimination of
non-relevant operations, which although they were not specified, we deduced that
they were activities that did not contribute anything to their logistics or to the supply
chain, which as we saw in class are usually removed precisely because they do
not contribute benefits but disadvantages or unnecessary expenses, In this way I
realized that sometimes companies do not manage their processes correctly and
often have processes that are tedious and therefore result in a decrease in the
effectiveness of service to customers and also greater burden for employees who
are responsible for performing these processes.

It is very interesting how the company immediately sought to solve the problems so
that neither they nor the customers were affected by the pandemic, as was the
case in all countries of the world and with many of the supply chains, resulting in
delays in production due to a shortage of supplies and therefore a delay in product
deliveries, This we could observe in all kinds of situations, for example when I

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ordered a product online, I found a very long delay in the shipment, or even several
delays that ended in cancellations or occasions in which international shipments
were not allowed because of the restrictions of the pandemic. However, in our
country, among the main challenges are the insecurity in the country, the financial
volatility, the lack of knowledge in data management and the absence of
incorporation of new technologies to optimize processes.

Now almost concluded the semester and after having seen the different topics
discussed, I can conclude that it is of utmost importance that companies look to
have a supply chain management that is efficient, effective and intelligent, having a
team that is focused on optimizing all elements, processes and activities that make
up the supply chain, and also having a complete visibility of the planning
landscape, control, monitoring and optimization of activities such as purchasing,
sourcing, manufacturing and logistics, having close relationships with suppliers,
having inventory control, considering the best packaging, controlling warehouse
inputs and outputs, and last but not least, reviewing transportation systems all the
way to the final customer. The supply chain is a strategic and logistical function
that is indispensable for companies, since it involves all the operations that are
necessary for products to reach the market and final consumers; organizations
today understand that to gain productivity, competitiveness, and profitability it is
necessary to have a supply chain that provides them with the tools to maintain a
level of quality in the products.

With the accomplishment of this work I could analyze how a supply chain really
works, and I was also able to see how many of the concepts that were seen during
the classes were applied, such as the supplier selection processes, the
agreements that are carried out, a part about the market information, how to cover
the demand, the ways to improve and optimize the supply chain, the manuals that
are implemented to maintain a close relationship with the suppliers, the
communication and commercial relations and above all how a process is
connected with another one so that everything is carried out in the best way.

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 Ubaldo Torres Elías Caleb

With the realization of this PIA we conclude our deliveries of evidence that we were
seeing and carrying out throughout the semester. This semester seemed very
interesting to me along with all its classes, I loved the general study of the works of
this matter of supplies. Personally, the supply chain was a topic that I really liked
seeing how companies have to carry out a process so that the creation of their
products is based on the necessary supplies for them. I think that when making
supplies in the company it is necessary to have a broad knowledge of the work
areas of the entire company. A clear example that we saw in class was in the case
of the lack of materials, machinery and some vital process for the realization of
products, it is important that those responsible and in charge of supplies know
these same processes so that at the time of To make the purchase of what is
necessary, consult the engineers, the operators or the people in charge of the
other areas about the necessary product. It is also necessary to realize the legal
knowledge that was seen in this matter, as was the subject of the execution of
contracts. Contracts are generally already revised contracts that are used again in
negotiations or terms with clients, but in any case, if the execution of a new
contract is necessary, it is important to have legal knowledge of the supply area for
the correct execution. of the necessary clauses at the time of making the purchase.
When carrying out this PIA we consulted the information of a person from the
Metalsa administration area, I found it very interesting to review how the company
is structured and see the concepts that we saw in class given in real and working
life. Personally, I liked to be consulting the data that the employee of this company
showed us since it opens our vision to the things that we must always remember
when going out to work. I liked seeing their work processes for the realization of
their products, which in this case are Chassis, Trucks, Buses; Chassis, Fuel Tank,
Brake Dust Cover, Front and Rear Bumpers, Box Cross Members, Trailer Hitch.
The company's work process is based on machinery and the operation of
employees and engineers. But also, as the staff told us, the role of supply
management is of great importance in these processes since there must be
continuous monitoring of the actions and movement of the company's resources

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(whether the machinery and operations, or the resources
that are used for the realization of the products of sale of
the company).

The supply chain must also be based on realities, on the

daily movements that occur in society, what do I mean by
this?, on the economy in general. It is not possible to
make a very large investment for the realization of a new
product without being based on the real needs that are taking place at that moment
in society, it is very risky to try to make a huge investment without knowing in detail
the risk of it. For this reason, the role of the administrator in supplies is
fundamental in order not to generate losses with the elaboration of new products
or, in his case, with the products that the company already has, but the economy
indicates that there is no longer a high demand for them. Although it is also
important to be in constant monitoring of trends that are taking place in the
economy to generate good investments and good supplies, for example, the
growth of electric cars is taking place a lot and gasoline and diesel are being left
aside. . That is why it is important that the administrative area take into account the
new generations (which in this case is automobiles) and begin to reduce the things
that will be left behind (such as the fuel tank).

As we saw in class, the role of negotiation is also important in supplies, since you
must have good relationships with customers and suppliers that the company has
already established as trustworthy. It is important to know about prices and
relationships in the market since just as there are risks in investing, there is risk
when it comes to finding new suppliers. The way in which you are going to
negotiate and the same business that is handled with the suppliers is of vital
importance because you can get a guarantee, a benefit or anything that helps the
company through the supplier contract.

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