Luis Zertuche – Draxton

As recently as five years ago, Draxton depended upon more than 6,000 suppliers to sustain its manufacturing of sophisticated automotive components. The new North American supply chain director, Luis Zertuche, determined that there’s not necessarily strength in such numbers, so he’s pruned the supply chain to fewer than 1,000.

Luis Zertuche | Draxton | Supply Chain Director

The main processes of two Mexican factories were then fueled by LP gas and delivered by truck, which is very expensive compared to natural gas. Zertuche enlisted a company to install a pipeline for natural gas for one facility, with annual savings of around $700,000. Then, he did the same for the second plant with similar annual savings. These initiatives and hundreds more loosely fall under what he calls the Draxton Way of economizing and spreading best practices across all Draxton factories globally, which seems simply good business for any manufacturer, particularly one of this magnitude.

“On a day-to-day basis, the supply chain represents a very important weight for the company,” Zertuche told Vision in July from the central Mexican city of San Luis Potosi. In the cost structure, 60 percent comes from purchases of raw materials and energy, and we must be agile and intelligent.”

It’s also not about buying the cheapest products, he’s quick to say. Draxton’s being an original equipment manufacturer—an OEM—for some of the world’s largest automotive companies, it can’t procure from the bargain basement. Many of its raw materials come from sensitive geopolitical regions—Russia, Ukraine, and China included—and Zertuche must have contingency plans should crises be beyond his control. Draxton’s also growing through mergers and acquisitions, and with each new partner comes its suppliers, which he must assess in the big picture.

Such are the wide-ranging responsibilities of this intense but collegial man who says his background in mechanical engineering and computer systems administration, as well as an MBA with a major in finance and his former roles with other multinationals in different countries, prepped him for getting the kinks out of the Draxton supply chain upon his arrival in June 2019.

Man of action

Back then, Zertuche says Draxton was a very siloed operation, with each of its six Mexican factories operating separately, and the same was true in Spain, Italy, Poland, China, and the Czech Republic. Early on, he spearheaded a global sourcing committee that meets every six or eight weeks and negotiates arrangements with a familiar stable of suppliers and other vendors. According to Zertuche, this has brought cost consistency and synergies, which have helped the company to better endure the turmoil of the past few years.

Draxton having built up its inventory reserves, Zertuche says that while manufacturing was affected, it wasn’t crippled by COVID-19’s disruption of international supply chains. Though the company buys spare parts from China, it’s less dependent on that source than others in the OEM industry. Meanwhile, the factories kept churning, albeit at a lesser pace, with new rules for onsite distancing.

More recently, while the Russo-Ukrainian War has interrupted supplies of some raw materials, Zertuche says Draxton’s production hasn’t been that set back. Well-versed in foreign affairs, he anticipated further conflict in that part of the world and tapped into other sources.

“At the beginning, it was a nightmare, but we don’t just react,” he says. “We always want our pipeline filled.”

Such foresight has again been vindicated, with Draxton investing $140 million in its Mexican expansion and Zertuche bringing further smarts into the process by, among other initiatives, harnessing artificial intelligence to help internal customers better gauge their need for components. Until recently, he says, the warehouses have lacked the latest for SKUs—stock-keeping units—the long letter/number combo for assessing inventory.

He’s got his hand in all processes. It’s all part of ensuring Draxton won’t be caught short of necessities or unduly spending on energy.

Engineer’s mindset

Zertuche’s been doing this streamlining since graduating from the Autonomous University of Nuevo Leon in 1988 with a degree in mechanical engineering and a degree in computer systems. Then after some years, he got an MBA with a major in Finance from EGADE (Escuela de Graduados en Administración y Dirección de Empresas del Tecnológico de Monterrey). He’s since augmented that with diplomas in multiple subjects from nine other institutions, including Wharton, Caltech, MIT, Cornell, Thunderbird and most recently, advanced credentials in leadership and management of economy from Harvard Business School in 2012. Ever the lifelong learner, he speaks Spanish, English and Portuguese, reads at least one book per month and is studying Chinese/Mandarin—a language that’s sure to be helpful with Draxton nurturing East Asian partnerships.

He started as a manufacturing engineer with HVAC company Johnson Controls in Monterrey from 1986 to 1988, then moved to General Motors, where he ascended to strategic planning manager toward the end of his nearly six-year tenure. GM was indeed a pivotal stop; he says that the automotive giant called upon Zertuche to develop and apply a more comprehensive skillset and weigh in on such areas as finance, planning and customer service.

All those skills and more were welcomed at Vitro, a Mexican architectural glass manufacturer with subsidiaries in the United States, Brazil, Colombia, Bolivia, Costa Rica, Guatemala and Panama—and Zertuche visited all during a 1993-to-2019 stretch, the last few years as director of sales and marketing in Austin, Texas.

How those 26 years shaped him for what was to come at Draxton, what with Zertuche starting off in Vitro’s logistics department with responsibilities that included documentation of business units and negotiations with railroad, trucking and packaging companies. After one of his many promotions, he oversaw maintenance, repair and operations—MRO—another skill he’d bring to his current employer.

More silos

Vitro’s business units were siloed—a scenario he’d revisit at Draxton. Zertuche was tasked with centralizing operations and arranged for five purchasing departments in the business units to report to him on purchasing.

“I had to optimize, standardize, use leverage to negotiate and develop the same KPI (key performance indicators) for everybody,” he says. “That was 20 years ago, and we saved a lot through simplified procurement and fewer people.”

Having acquitted himself in Mexico, Zertuche was sent north of the border, living at times in Germantown, Tennessee, and Austin, Texas, where he and his family still reside. Vitro needed Zertuche back, so he returned to Mexico for a few years. Then, he was sent to Brazil, where he was tasked with helping start a new glass factory.

Ever the enterprising sort, he worked with geologists to identify the best quality sand for glassmaking and signed a 100-year contract with a Brazilian mine. However, currency fluctuations stalled the project, and Zertuche then was assigned as Head of Vitro’s Colombian OEM Glass Manufacturing plant in Bogotá that serviced Colombia, Venezuela, Ecuador & Panama markets,

“The company had been losing money for six years, and I had a mission to make it profitable,” he says, again explaining how supply-chain inefficiencies can put any company in the red. “We had to economize and lay off many people, but after 18 months, the company was profitable.”

Having logged 26 years with Vitro, he was ready for a new adventure, and Draxton fit the bill; Draxton’s outlook is bright, he says, with the $140 million Mexican expansion a positive indicator. The automotive industry is set on electronic vehicles becoming more popular; Draxton’s is poised to provide the parts and remains diligent about contingencies.

And Zertuche, who comes across as young and energetic, has hobbies that include gardening, reading books, playing & listening to music. He expects to be around for many more years.

“I’m really enjoying my work, and there’s still a lot to do,” he says. I’ll be here proposing new ways to do things and trying to consolidate globally.”