Mastering Logistics with Effective Standard Operating Procedures
Mastering Logistics with Effective Standard Operating Procedures
In the ever-evolving world of international trade and logistics, having well-documented and adaptable Standard Operating Procedures (SOPs) is crucial for maintaining efficiency, minimizing risk, and maximizing profitability. In this insightful episode, logistics experts Andy and Melzie Wilson dive deep into the importance of creating and continuously refining SOPs to streamline your supply chain operations.
Main Discussion Points:
• The value of returning to the “basics” of SOPs, even in the digital age, to ensure consistency and clarity
• The limitations of AI tools in developing comprehensive, tailored SOPs and the need for a hands-on, scenario-based approach
• The importance of aligning expectations and communication between logistics service providers and clients
• The “PPD package” (Physical, Paperwork, and Data) and the significance of mapping out each component’s flow and timelines
• The role of quarterly business reviews and continuous engagement to keep SOPs up-to-date and effective
• The benefits of involving experts in the SOP development process to ensure thoroughness and accuracy
Key Takeaways:
• Effective SOPs minimize risk and liability, allowing companies to keep more money in their bottom line
• Consistent communication and collaboration between all stakeholders (logistics providers, clients, compliance, IT, etc.) are essential for successful SOP implementation
• Regularly reviewing and updating SOPs, especially in response to changes in personnel, regulations, or service providers, is crucial for maintaining optimal logistics operations
• Investing in expert guidance can pay dividends in the long run by ensuring your SOPs are comprehensive, adaptable, and aligned with your unique business needs
SHOW REFERENCES
- Melzie Wilson
Machine Automated Transcript:
Hey, folks, we’re in for another show of simply trade podcast, and I am looking forward to today’s
discussion and with somebody who’s been on the show a few times, but it’s also somebody that’s I
have a lot of respect for, and is a good friend, Melzi Wilson, who is in the center of the universe there
in Memphis, Tennessee. And I am no longer in Memphis, there Melzi. I have moved to Searcy,
Arkansas. Can you believe that I am the finance director now for the city and here in Cersei, and so I
am fairly new into the job and drinking from the fire hose, but having a great time with that, and
meeting new people and and all as well as then continuing on with the podcast. So it’s a lot of fun
here. So with that, we’re going to be talking about folks, something that is going to be practical and
something hopefully we will stimulate some ideas for you and something that you need to look at
review yourself. If you haven’t done it, you need to put it on your to do list. And that is something
about creating standard operating procedures. But in this Melzi, what aspect of wheat is going to be
looking at is like, if I want to try and do some SOPs and all of that, how do I even get ready? What do I
do if I’ve new into a department and then coming in, or I’ve been there a long time, and, you know,
it’s like everybody gets complacent. What should we do here?
Well, you know, in today’s age with all the electronics and applications, I think we’re getting away
from just good old fashioned, back to the basics. We do that in every aspect. What’s the latest bells
and whistles, but let’s put on our memory hat and think way back when you remember the old folios
that sat on your desk, and they were a through z and it was the card, and up the top it had the name
and the contact. And as things changed, as a customs broker, we were, that’s what I was doing when
those were the rage. You know, you had classification for this. It started out nice and neat, and then
you had a scratch off of as it changed or ruling came in, and you took that ruling and you stapled it to
or clip it to that existing little SOP that you had, and it just kept growing until there was a need to
write a new one, and then you took that new one, wrote it up, and clipped it to the front, because that
was your latest one you had. And so where we have great systems today, where we can input a lot of
this into our systems and generate very accurate and consistent information, I think, the old school
approach and starting out with a document that can easily be shared and that both parties, whether
or not you are the service provider or that cargo owner that’s wanting the service, whether it’s
trucking, import, export, international transportation, we’re getting away from that these days andAnd we need consistency, especially as we’re seeing our imports and exports especially become
complicated in the approach with exports and the adding of PGAS and the, you know, constant
changing of ECC and sanctions that we’re Dealing with, I think that there is a great need step back,
put on our hat 20 plus years ago. And what worked then?
Well, to that point, Melzi, yeah, it’s to your point is that one of the things that, when people try to look
at it, you know, you’ve got AI tools now that, supposedly, you know, everybody’s like, Oh, well, let’s
just run it, and it’ll create a contract for you. It’ll create a document. It’s like, you know what? There
comes a point where, yeah, you may want some, some what’s the word? I’m looking for automation
that will do some work for you. But, I mean, quite frankly, for an effective, detailed, informative sop
on your processes and all that, you’ve got to sit down and just literally go through it. And I’ve had
people look at and go, alright, well, we want to flow chart some of this, or what. Okay, still, you come
back and say, I. Right. Let me take a scenario. Don’t sit there and go so general, take a scenario. Say,
all right, we’ve got goods coming from the factory. Let’s say, in, I don’t know, Guadalajara, Mexico,
and they are coming into the US, into a particular distribution center. So let’s literally take this from
the standpoint that you can take it from the customer order, it’s then generated whatever you could
take it from the purchase order and go through and say, All right, they’re manufacturing now they’re
holding them, and now they’re going to be sipping them in but you literally step one, step two, step
three. That’s the one I usually will go through and say, just write it down. What do you do now? What
do you do next? And a lot of times they’ll get into it, and then I’ll say, Oh, we forgot about that step.
Well, I’ll go back and put it in. You know? It’s like, well, I’ve already got numbers 1234, all right. Well,
this is two, a or 2b, or whatever it is you,
you bring up a good point, Andy in the fact that it highlights one thing, no two importers are the
same. I can bring in this in the same trade line, same commodity and different imports have, or
exporters have a different approach, same way with that custom broker or that freight forwarder,
they all, and most everyone operates differently, you know, and one of the things we see in
onboarding is that it, let’s say you have a contract talked about AI using AI intelligence contract.
That’s fine and dandy, but that operator at that desk level is never going to see that contract. There
should always be a separate engagement with the team. Know your audience. If you have verbiage,
let’s say you’re in the medical field or technology, and your specifics are written as though it’s geared
toward an engineer or someone with some type of technology background. I’m just going to say
engineer, no matter what our doctor and degree in pharmaceuticals, the operator is not they’re darn
good at what they do, but they’re not going to have that high level technical background in your
product. So you have to look at it from who in your operations is going to be talking to that service
provider and do the language as it relates to the mutual understanding of how you want your
business handled. It’s very key, and I’ve seen it all too often where that doesn’t happen and and
that’s where you get the mistakes. That’s where you get the escalations, because in that 12345,
where all, everybody’s abiding by the regulatory standard, but how you approach the operation and
your service provider and how your own operations work. I’ll I’ll never forget, used to have a client.
They did their they didn’t get their documents until they paid for the goods. So the finance guy in his
brain was making a decision to pay for the goods at the very last minute. Therefore we didn’t get the
documentation. As their customs broker to handle the a timely manner. So there was a frustration
from the service provider, thinking that their contact was not doing their job when it was totally out of
their hands. So there was assumptions made on both parts when it could have been easily solved. On
that onboarding on the front end with key parties in and how it flows. To make that point to the
finance guy, Hey, understand your position. But guess what? We could be clear in your hoods five
days out, we cannot do thatwell. And yeah, the way the process and see that’s that’s something right there that I think is very
important. So I, I came up with a little thing lots of people work it, and whatever I call the PPD
package, paperwork and data. And with that is that when you’re doing your SOPs and you’re you’re
writing down your procedures of what’s going on. Because writing down your procedures the same
thing as your your SOPs. I mean, just you may make some modifications, but step one, step two, step
three, whatever. But you, I think you have to look at it, and I’d love your opinion on this. Maybe you’re
doing the same kind of thing. You just call it something different. But I always had the physical
movement of the shipment. That’s the package. Part of it. It’s like, okay, something’s ready to go. It
could be a pallet, it could be a whole plane load of stuff. It could be just a small, little parcel. But the
package itself is physical. It has to move through the physical realm, and you have to map that out, if
you will, or the steps and what’s needed. Second is the paperwork in filling out the bill of lading to the
commercial invoice, to the purchase orders, to the whatever happens in the entry and who and your
vendors, and getting information to different places. And then the third thing would be the data.
There’s times in today’s world, especially, you have data flows, data files that are exchanged and
different things of that day that needs to look at how is that working, and when does it go and what’s
the flow of that, but also the timelines on every one of those is so paramount. The package may be
alright. You got a pick and pack order. It’s going to and it may be sitting on the dock, but the data for
that shipment can go ahead and start uploading to different systems and to different vendors and
and then the paperwork is generated from that, and then it’s married up. There’s multiple updates
and all that. What do you think about that?
Yeah, I agree with that, with that approach, when you’re looking at and understanding the business,
you know is one key thing that the importer, exporter or domestic warehouse that are, or whomever
is, has the goods. You need to explain to the service provider that examine sac thing, how is the
package flowing? How are is the paperwork flowing? And is there any data electronics? How is that
moving through your supply chain? But, and then in turn, that service provider needs to explain and
and over how their process flows. You know, are you having the right people at the desk and and or at
the table, so to speak, in communicating this, because we all love our marketing sales guys, but a lot
of times, there are decisions made that are commitments made based upon securing that business
that doesn’t flow exactly to the operations and even to an Import Export Manager over that particular
product for that company in that location, and therefore flow to the operator. You start off with
escalations. You know, it’s so easy to to get everything correct up front. And I think this is it. It really
hit a home. I always believed in this very strongly. But one thing I really have to come in, huge kudos
to FedEx in that when a client is because I was in managed accounts and in managed accounts, you
could not come into managed accounts until there was a solid SOP in place that everybody
understood, because that eliminated, and, you know, any errors or misguidance, because a lot of
times, as I stated, something was committed, And then when operations, when we would get the and
work with your former team, Andy in making sure that we had everything possible, you know, there
was disconnects or report that we just couldn’t do that would entail engagement with the IT Part to
write something. So that’s one of the key elements I really loved, and I’ve really brought to heart that
aspect
well. And to that point, let me say this to our listeners, folks, here’s one of the things I think is
extremely important, especially if you are so frustrated with one of your service providers that they
don’t seem to be performing or fulfilling your expectations, and it’s just it’s they’re not getting you the
reports, or they’re not getting you the service, or they’re not you know, or they’re charging you morethan you feel like you should Be, and whatever the case may be, here’s something that with both
Melzi and I, you know, looking at in our experience, I will tell you that one of the biggest things that I
was trying to do while I was at FedEx, and it really helped. But it’s like, you apply this principle, no.
Matter where you’re at, and that’s where you’ve got to align your expectations. Make sure your
expectations as a client, as a customer, are put out there, and then work with your service providers,
your customs brokers, your transportation companies and and your handlers and the warehouses,
you need to really look at all of that and align with them to make sure that one, your service provider
knows what your expectations are. Two, you need to also be flexible enough that that service
provider may not be able to fulfill your expectations. You may be a bit unreasonable regardless. It’s
like everybody should do it. No, wait a minute, just back up a minute, because changing a service
provider that is integrated into your process is a big deal, and I would rather work with your service
provider and try and work out what’s amiable. Here’s where I was going to say is, again, align those
expectations, so you both know what you can expect from your service provider in whatever services
they’re providing. But the other thing is, if a service provider comes back, and I had to do this a lot,
I’m sorry we can’t do what you’re looking for in this step. However, now this is what was different. I
would come back. Here’s our alternative. So if you’re a service provider, you don’t just say, Nope, we
can’t do that and leave it alone. You need to come back and say, well, you’re Troy. What is it you’re
trying to accomplish? Here’s our alternatives. Here’s some of the other things we can do. And it
usually turned out that the way we accomplish things and and the thing it was even that the service
was superior to what they their expectations were, because we worked together on it,
right? Because everybody can be on the same system. You know, there’s a very well known brand out
there that is used by the industry, and I call it the beast, and it does any and everything, but it all
depends on you. May have secured another service provider that uses that same system, but what
module did they buy? How did they use the system? And it varies. I mean, you know, you’re spot on in
the in the level of expectation. I always say that when you own boarding, you should be meeting with
that client. Depending on your volume, you should be meeting with. Have a sit down and set up calls
in the you know, do pre onboarding of the client. Make sure that’s okay. Expectations are met, and
then when the service starts, keep it as a living document. An SOP is not a one. It’s
Oh, that’s so important, yes,
yeah, yeah. And then No, when there is personnel changes on yours, on the service provider side, or
on the engagement party side, you need to be having another sit down. Well, I don’t know who to call
or so, and so they’re out, but I don’t have a tier two person contact. You know, what is my escalation
process? All this should be known up front. And one key thing that I’ve added to the mix with this is
we are in a unfortunate era of cyber security and where it completely shut down your operating
systems. That’s your email. And I remember when Maersk was attacked. It even attacked their phone
systems and their cell phones, because that’s it was all connected together,
connected to the servers nowadays. Yep, right.
So in regard to that, and it doesn’t have to be out there, because, you know, there’s personal phones
that aren’t used for company business, as well as there’s emails that are your personal What’s yourthat aren’t used for company business, as well as there’s emails that are your personal What’s your
backup plan that should be known in the very beginning, because it and it has to be known on both
sides, because freight still keeps moving. But what’s our backup plan? What is our pain? What is your
plan for me to communicate with you, if, if I don’t have those means? Well,
here’s something too. As as we go through some things here, I guess, folks, I mean, when you’re
talking about doing these SOPs and on, we’ve, we’ve touched on some things that this could be a
behemoth of a project. And it’s like, what? Wait a minute, how. How do you eat an elephant one bite
at a time? Yeah. So in that scenario, there is that you pick again, the scenario is like, it’s all right. You
from Guadalajara to the US, or from China to the US, or whatever the case is, wherever your your
supplies are. And as you go through, one of the other challenges that I always like to to put forward is
as especially, you know, in the Express world, but I mean, it applies to any mode of transportation,
ocean, rail, truck, air cargo, air Express,
imports, exports, warehousing. Expectations must be addressed and understand there’s art you won’t
and the service that that service provider can give to you,
and to that point, here’s where I was going to say, I agree, right. There is all the way through. Is, if
you are the client, what will it take for all the information that’s required to be on the paperwork at
the origin. So when that origin, courier or trucking company, whatever picks up your shipment, all the
information is on that paperwork, up front, the classification, the special declarations, the government
declarations, the you know, Ogas and all that. All right, so here’s the thing. All of a sudden people
look at and go, Well, wait a minute now, let me show you. Say where. Usually this is where to me, if
you can’t trust the paperwork. And I always ask this question, let me just ask it real quick, and then I’ll
go on to the comment is, if do you trust the commercial invoice and the paperwork that comes with
the shipment from the origin? And if the answer is, oh no, we don’t trust the classification, well, from
a compliance standpoint, then you have not done your job. I’m sorry if, if that hurts your feelings, I
may be plowing too close to the corn for you, but doggone, it is like you need to reach out and figure
out, in your process with all the people, what will it take to get all that information on that paperwork
up front? So that means a whole lot of collaboration, data flows and everything else. But if you go
with that objective, Melzi, does that not empower this service provider so they don’t have to look up
at a database or somewhere else it’s already there on the paperwork
correct. And all too often, we see those classifications incorrect where you say where the SOP states
specifically do not go by the classification provided on commercial documentation. Please use our
SOP. Please use you go by the SKU or or description of the commodity from that particular
manufacturer or our reseller, and go to your database and speak in a database. Databases go along
with your SOP. You know, as it should be shared minimum on a quarter, if you have a huge
turnaround of products and introducing new products or changing skews or or or making any
adjustments whatsoever. Be proactive. Speak to your service provider and make sure they have that
information. You know one of the things, and I think I’ve said it with various clients many times this
week already, don’t assume do not assume anything. Well, it’s always been that way. Nope. When
was the last time you talked to that client or you talk to anyone about what your expectations are? So
constant engagement SOP. And I would ask if you are working with somebody that doesn’t use an
SOP template, or you’re not using one, be a little bit concerned. You know, there are many variationsand approaches to an SOP. But bottom line, it’s got there. It’s got to be there. Don’t assume people
changing systems, changing buyouts of companies, upper management structure. You know, a man,
someone, a come in and change the whole dynamics. You know, you might have used a provider that
gave carte blanche added value services that when they see something of a compliance concern and
they know your product, they just send it on to you. It could be that your next provider. Your other
provider doesn’t have that service automatic within their environment, and you need to be asking and
not assuming that when there’s something that comes out in a CSMs message, if you see something
from icpa, ncbfaa, if you see something, you’re automatically going to engage. So, you know, don’t
assume, do not assume anything whatsoever,
well. And also, the other thing is to look at it is like, you know, we were talking about, you know,
specific Lane seven segment. The other thing is to also look at doing SOPs for, you know, your
standard administrative things you you’ve already hit it on, for example, a database, a database of
your parts listing, or your your items that you’re selling and all that. Listen, a part doesn’t just
happen. And so you’ve got to look in, and there are usually weeks involved, if not months in the
design development of a of a part the sourcing or purchasing folks that then, you know, when it goes
through and it’s designed to go and then they start sourcing out for a manufacturer or source to
provide that item. So often the compliance folks are left out. So you know, in that then everything’s
going fine, and then all sudden, here comes a shipment, and it’s like, well, we don’t know about it. It’s
what’s the classification? Oh, hey, guess what? There’s FDA involved, or agriculture, or, you know,
EPA, whatever the case may be. So, you know, working collaboratively, you need to look to see how is
a part added to your parts database, and are you involved in that? And don’t assume just like what
you said. Melzi, I think it’s so important. But here’s the thing, if you’ve got that documented, and you
check that out, and it’s, you know, you can go back and review that. You may only have to review
that maybe once a year, because there’s probably no major changes. But you know, if you do an
acquisition, you need to pull that out and say, well, here’s how we do it. How are you doing it?
Where’s the where are the files? And then who gets it, sharing it. That is so important. So I you’ve hit
the nail on the handle a lot of things. So
one of my most famous stories, and I tell this, and I’ll probably tell it again at icpa, I had a client, an
import client, this many year ago, and I had a client who long standing business. We had their
database. You know, we were doing everything right, but there’s a big old but our contacts didn’t
know, so we didn’t make any changes. But they had a situation. Both of our control had had stem
from an OC supplier, but in the midst of my attorney friend doing this, he fell upon something. And he
and fell upon something. The client, the engineers had were able to change this particular component
from metal to a resin, plastic that worked in the same environment. Guess what? Huge change in
duties, and so they had to go back. We had to go back invest time that we couldn’t recoup. They as
well on pulling shipments, doing post summary corrections, etc, to get it all straightened out, and it
could have been prevented if one their engineering had been talking to their compliance people, and
they had been able to convey it to us, because there was money left on the table, because it was
outside, being able to protest so it, you know, there was money left on the table on top of that, and
especially these days, with everything changing. You know, been in DC, you know, working with, you
know, aluminum and the smelting and the melting and the certificates, and even though it’s changed
from and changing substantial character, and under another classification, you’re still going to have
to pay dumping duty on that portion that was the original form that went into that final product. So
it’s it’s not getting easier and communication and understanding, because, guess what? Your
customer’s broker is not going to know that little bitty element unless you were having continuous
dialog with them. Andthat’s where those quarterly and a bit of a quarterly, you know, Business Review, some call it a
quarterly broker Review. Admit it’s, it’s where you get your team together. And in the other part of
this is, don’t just do it with just your broker. It’s like having or just your compliance group, having your
customer service to your it to everybody’s in that room. So like a logistics Council type of a thing, that
is, I’ve seen companies use that, and it is so effective, because all of a sudden they go, Well, we
didn’t know about that or what’s going on. It’s like, for example, the the the hoodies that are, you
know, attacking the cargo ships. Well, guess what? We’re our cycle times are going up because now
the cargo ships that we are using are having to go around the Cape of Africa, or whatever. And so the
impact there. So, all right, well, let me, let me just say how, in trying to wrap this up, it also would be
good, I think, for people to look at this, I know it’s an onerous objective here, but you know, we need
to look to see how getting an expert involved in helping to write your SOPs, that is money that is well
spent. So if you’re an executive of a company, and you’re looking at this and you want to see this go,
I’m telling you, it is one of the best money you can spend in this just to say, what are we doing? You
can’t figure out how to improve things if you don’t know and have it documented on what are you
doing today, right?
You can’t use a cookie you can use a cook, a cookie cutter approach in the base. But like I said,
everybody’s unique. Everybody has a different approach and different needs. So if you can’t do it
internally, there’s people like us that that’s what we do. We listen to what you have to say, and then
knowing, you know the logistics, knowing what services are, and then have it meet in the middle, you
know, either have it as a universal application of what your needs are, and then tone it and then
adhere that that basic, universal approach to someone’s unique or services they can provide for you.
So because, like I say, all of us operate differently and and all of us have different needs. So honing in
on that is very key to a very successful because what my thing is is scream, scream with SOS or
success and SOP, yep,
well, and I will say, folks, this is one of those things where I’m going to tell you of what we hit today is
there’s definitely a lot of things you can do on your own, but there’s also a lot of things where you
need somebody that is knowledgeable about your supply chain to help you navigate through there
you get your SOPs done, and it’s going to make you all look like Heroes in every aspect of it, the
transportation, the warehouse, the compliance, the it, all of this stuff that goes on. And I’m telling
you, it will be a team effort that to upper management, you guys will get a home run out of that, so
it minimizes your risk and liability, therefore you keep more money to the bottom line and not out the
door.
There you go. Well, Melzi, I appreciate it, folks. We’re going to have Melzi Wilson’s contact information
with our show notes, but I also will say that, you know, I highly suggest you know this isn’t a
commercial for you. Melzi, you haven’t talked about this, but I’m gonna say Mel z1’s to be great to
reach out to. But also just, you know, if it’s not Melzi, if it’s other companies out there or whatever,
just take the step. Look at what we’ve talked about. If you’ve got some questions, reach out to us,
and we can maybe guide you to some folks out there that would be appropriate for youand come to my session at icpa.
Oh yes, we forgot about that. Icpa. It’s like, alright, the Dallas, the fall conference in Dallas, Texas. It’s
coming up in October. If you’re not, you know, if you haven’t made plans to to attend, look, Dallas is
easy to get to. It’s going to be a lot of fun. And Melzi is going to be there. I’m going to be there. Lalo
will be there, and all. And please come to that. And this would be a great working session, type of
session with Melzi, very
a lot of engagement, a lot of little hints, lot of things I’ve seen in the War Room throughout my career.
So yeah,
there you go. All right, Melzi, thank you so much, folks. We’re going to turn this all back over to you.
Thank you so much for listening. And again, Sheriff, reach out to us. Reach out to Melzi and LinkedIn,
reach out to me and Lalo, thank you so much, Melzi, thank you.
There is always more to learn.
Do it with GTC