Do you have documented standard operating procedures (SOPs) in place to guide your logistics decisions? How does your team, or 3PL, make routing and mode decisions? Without logistics SOPs in place, you could be creating additional work for your team and adding unnecessary costs to your bottom line. Our experts explain how automating shipping decisions through a set of standard business rules can streamline processes and control costs.
Typically, when a 3PL and a shipper begin a partnership, business rules are set up to align the teams, regardless of who makes daily shipping decisions. Common scenarios are outlined and documented to ensure that each action is handled precisely how the client wishes. The overarching goal of a logistics SOP is to simplify logistics-related decisions.
Logistics SOPs can help:
While logistics SOPs can differ based on a variety of factors, most revolve around the mode, lane, product, consignee or vendor. For example, some clients prefer to use a particular carrier on a specific lane, always opt for the lowest-price carrier or prefer to ship with the carrier possessing the highest on-time percentage.
Logistics SOPs can also include instructions about authorization measures before premium services can be used. For example, an alpha-numeric code could be required when booking an expedite shipment to ensure appropriate internal parties have approved the additional cost incurred.
Another example is requiring reason codes such as supplier behind schedule, natural disaster, engineering change and weather-related when selecting premium transportation options such as expedite, air freight or air charter. Standardized reason code categories explain why a shipment was expedited instead of shipped via standard transit, which helps shippers measure performance and costs. Additionally, documenting that these codes must be attached to each shipment in the SOP can help the shipper recover costs from suppliers as outlined in the contract terms.
Compliance is another area where logistics SOPs help clients make faster logistics decisions. For example, some clients require that only FAST, CSA or CTPAT certified carriers be used. Additionally, shippers may want to limit their carrier base to only those with operating authority in both Mexico and the United States for cross-border shipments. Documenting these requirements in the SOPs can help avoid compliance issues down the road.
Logistics SOPs can also help shippers completely outsource the day-to-day management of shipments. Having a logistics partner manage the quoting or bid process, booking, tracking, carrier relationship, as well as the auditing and paying of the invoices, can help shippers with internal workforce management.
A fully outsourced solution may seem uncomfortable for companies that have historically always managed the logistics. In this case, a hybrid solution can be set up. For example, a timer can be set that allows the client to retain control of the shipment up to a certain time threshold, such as eight hours. At that point, the logistics partner is responsible for booking the shipment according to the outlined business rules.
Standard operating procedures can also help companies capture key data points on every shipment to build in-depth reporting and gain insights. For example, manufacturers may require part numbers, lot numbers or batch numbers to be documented on every shipment so that management has visibility to transportation spend based on detailed product information.
In the logistics world, time is money, and supply chain decisions need to be streamlined. With documented business rules in place, shipping can become simple and straightforward.
Who said logistics had to be complicated? We certainly didn’t. Contact our team to learn more about our solutions.