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In this episode of the Auto Supply Chain Prophets Podcast, hosts Terry Onica and Jan Griffiths dive into the complexities of global trade, compliance, and logistics with their guest, Jeff Peterson, Director of Global Trade and Logistics at DRiV, a Tenneco company. 

Jeff digs into the challenges facing the trade compliance industry today. He highlights the ocean shipping container shortage, which has led to increased costs and delays. He also addresses other disruptions, such as port backups and global trade policies, which compound the complexities faced by professionals in the field. ​

According to Jeff, staying informed through reliable 3PLs and brokers and leveraging technology and software applications is crucial in dealing with these issues.

Jeff Peterson explains that they handle customs audits by focusing on security and compliance. They take a proactive "shift left" approach, doing necessary work upfront to avoid audits. Their comprehensive strategy helps mitigate risks to both business and national security.

Talking about the challenges at the US-Mexico border, Jeff explains that security is the main focus. They use the CTPAT and FAST programs to facilitate smoother border crossings, similar to a TSA pre-check for cargo. These security measures help ensure efficient movement across the border.

Jeff's passion for people development shines through as he discusses his strategies for talent growth. He believes in creating comprehensive programs that offer career paths, hands-on experiences, and continuous learning opportunities. 

When it comes to future-proofing the industry, Jeff advises Tier One and Tier Two leaders to focus on the people aspect of the business first, have an action plan, maintain pristine data, and be ready to pivot as necessary. He believes that while technology is vital, it's the dedication and expertise of individuals that truly drive success.

Themes discussed in this episode:

• The ongoing ocean shipping container shortage, predicting higher costs and delays due to global disruptions
• The need for staying updated through reliable 3PLs and brokers to manage unexpected global trade issues
• The use of predictive logistics software to manage supply chain risks and ensure timely deliveries
• Placing customs and compliance within the supply chain rather than in finance or legal departments for better integration
• The importance of breaking down organizational silos to ensure smooth operations and proactive risk management
• How trade wars and the COVID-19 pandemic have brought supply chain management into the public eye
• Managing security and compliance at the US-Mexico border through programs like CTPAT and FAST
• The role of technology and software in maintaining compliance and streamlining logistics processes

Featured on this episode: 

Name: Jeffrey Peterson

Title: Director, Global Trade and Logistics CI, DRiV Inc. – a Tenneco company.

About: Jeff Peterson is a seasoned professional specializing in global trade and logistics. Currently serving as Director of Global Trade and Logistics CI at Tenneco, Jeff has extensive experience managing various functions, including Client Management, Reconciliation, Restricted Party Screening, and Export Operations, during his tenure at Livingston International. He has also led the Graduate Rotation and Development Program, aimed at cultivating entry-level talent for accelerated career growth. Jeff's expertise spans emergency management, cross-border improvement projects, and implementing supply chain processes to meet regulatory requirements. His leadership and contributions are instrumental in driving operational excellence and client satisfaction in international trade environments.

Connect: LinkedIn

Mentioned in this episode:

• Episode with TS Tech: Driving Supply Chain Efficiency: TS Tech's MMOG/LE Journey
• (MMOG/LE) Materials Management Operations Guideline/Logistics Evaluation
• What is 3PL?
• CTPAT
• Free and Secure Trade (FAST) program
• Authorized Economic Operator (OEA)

Episode Highlights:

[04:48] Global Container Shortage: Regarding current customs and trade challenges, Jeff highlights the shortage of ocean shipping containers. With high demand and low capacity, he anticipates escalating costs and delays globally.

[06:12] Staying Ahead of Global Events: Jeff shares how to stay on top of the issues they currently face in global trade, compliance, and logistics. He explains the importance of utilizing information from trusted partners and the use of technology.

[09:46] Always Shift Left: Terry explores the risks of customs audits with Jeff, who advocates for proactive measures. Jeff stresses the importance of "shifting left" or doing necessary work upfront to avoid audits.

[15:02] The US-Mexico Border: Outlining the challenges at the US-Mexico border, Jeff talks about their focus on security and their use of programs to expedite cross-border movements. 

[19:05] People and Talent Development: Discussing his commitment to talent development, Jeff believes in structured programs and wide-ranging experiences to cultivate skills and perspectives essential for success in customs and trade.

[23:19] Advice for Supply Chain Leaders: Jeff advises leaders to focus on the people aspect of the business first, have an action plan, maintain pristine data, and be ready to pivot as necessary.

Top Quotes:

[04:54] Jeff: “I think the biggest thing that I'm dealing with right now, and I think it's unfortunately going to get worse, it's the ocean shipping container shortage. We're facing high demands and low capacity, and that's starting to come down the pipeline right now. So, it's not necessarily a trade compliance issue. It's a global trade impact, and it's going to get progressively worse. So, if you're talking about one thing that I'm dealing with right now, that's it. We're going to expect higher container costs. We're going to expect delays at the moment.”

[07:47] Jeff: “There's a lot of software opportunities out there that you can rely on, so you could put your supply chain in a software application that'll analyze risk for you. So, we rely heavily on that. That's beyond basic restricted party screening, where you're actually looking at your suppliers for a risk base, or you're actually looking at your supply chain environment. So, we have labor disputes, you have natural disasters, you have things like that, and they can actually put your supply chain into software and detect where risks might be to kind of put you into that challenge at hand. So, that would be probably one of the other areas that I would concentrate on.”

[10:30] Jeff: “With audits and risks, always shift left. So, that means you're doing the work upfront. You're doing the work while it's happening, not in an audit. So, we don't wait for audits. We don't want to prepare for an audit. We want to avoid an audit. And by doing so, it's developing that risk analysis, doing our own internal audit. So, if a governing agency came to you and presented you, we can say, 'Okay, here's our audit results. We've done most of the work for you. Show us where you think we've done right or where you think there's holes in it, and if you ask us to validate it, we have a proper audit trail to do it.'”

[12:31] Jeff: “I think in the supply chain, you have that visibility, that end-to-end on the inbound from the suppliers, on the outbound to the customers, and everything in between. That connection with purchasing, corrective actions on suppliers that are challenged, and getting data on the back end in countries that have indirect tax implications: Europe and Mexico. A lot of times, you'll see more of an argument to go that direction, but generally, that's what I would say is the rub. I would always go with the supply chain. I like it better in the supply chain.”

[23:41] Jeff: “Obviously, technology is the answer to that. But I want to take a step back, not to forget the people element of it. I mean, it takes people to operate. It takes people to be committed to it. So, I really feel that the real answer is people, but outside of people, it's technology.”

[25:04] Jeff: “The other piece is data. One thing everybody wants to say: I want to commit to a software provider, and I'm going to revolutionize my business. Well, generally, you're not going to do that if you don't have good data. So, at the ERP level, at the material master level, at the supplier and customer level, all your master data, you need to make sure that it's clean and it's proper, or else anything that you're looking to gain out of a system isn't going to happen. So, that's where I would focus. Make sure that the fundamentals are there.”

[Transcript]

So, I've been talking to Ford yesterday to review the course material that I'm coming up with and also TS Tech, who was a guest on our show a little while ago, from a tier one perspective, making sure that we really nail it for this next course. So, I'm super excited to start developing it. Hopefully, it'll be available in the September timeframe.

And so, with audits and risks, always shift left. So, that means you're doing the work upfront. You're doing the work while it's happening, not in an audit. So, we don't wait for audits. We don't want to prepare for an audit. We want to avoid an audit. And by doing so, it's developing that risk analysis, doing our own internal audit. So, if a governing agency came to you and presented you, we can say, 'Okay, here's our audit results. We've done most of the work for you. Show us where you think we've done right or where you think there's holes in it, and if you ask us to validate it, we have a proper audit trail to do it.' So, on the compliance front, it's doing the work when you're setting up a supplier, doing the work when you're choosing your logistics providers. Doing that all up front, shifting that supply chain left, auditing it along the way as it's happening while it's building that routine, that cadence. And then on the backend audit, look for continuous improvement opportunities to improve it along the way, and you should be good for compliance.

On security, really, we need to make sure that we've designed a secure supply chain from end-to-end. Any vulnerability built into a supply chain is a risk to your business, and honestly, it's a risk to national security as well. When we look at security, we want to build it from end-to-end and make sure there's no vulnerabilities, no risks, no holes within that. And that's choosing the right suppliers, screening the right suppliers, it's both on the material and on the logistics selection of those suppliers, making sure they have the right accreditations, and if they don't have the right accreditations, analyzing it, putting questionnaires, doing site audits, making sure that they're doing the things that they need to make sure that our supply chain is secure because it's a risk to us and it's a risk to our national security as well.

[00:14:30] Jan Griffiths: Yeah, that's what COVID did for us, right? Before, nobody knew what a supply chain was. Most of my life I would go to a party or something, and somebody would say, 'What do you do?' And I'd say, 'Supply chain.' They'd go, 'Huh?' And then move right along because they didn't even want to know what it was. And now everybody in the world knows what a supply chain is.

On the Mexico side, the system is called OEA, and it's technically the Spanish pronunciation of Authorized Economic Operator. And so, when you put those two programs, those two security programs together, you essentially have end-to-end access of the border, where you're pre-checking to get in, and then that material and that truck moves in pretty good cadence across the border. So, that's how we execute. But how do we get there? We get there through doing security checks on all of our trailers, putting in systems to be able to do that, and when I say systems, I'm talking about physical security procedures with the people who are looking at our trucks before they leave. Choosing the right carriers, making sure our carriers have the proper designation, and putting CCTVs in place so that if anything goes awry, you can take a look at it. We're also looking at agriculture now. Four or five years ago, we never really thought about we have a seed in one of our trucks. Is that seed a big deal to cross in the United States? It actually didn't really cross our mind, but the answer is yes, those seeds, bugs, anything like that. So, we do container cleaning, different things like that. And we put these procedures in place to make sure that we can prepare for when we say a security audit. We get the security audit. The next phase is we get to use the benefits of that, and that's the fast lane.

[00:19:12] Jeff Peterson: I think it starts with designing a program. So, having something that everybody believes in, putting the proper organizational design in place, and then working those people up through that organizational design. So, it's very difficult to bring somebody if you don't have a career path for them to achieve. So, you have to do everything. You have to have a program that everybody subscribes to and says, 'Yes, this is how I want my program. This is something that I believe in, that I'll work to, that if I have an extra half hour that I can help contribute to developing and growing and continuously improving this program.'

Then, the organizational design. If you work people up through the business or you work people up wide through the business, you present opportunities for the next people coming up through the line. But then you have to develop them, get them access, things like this, just learning those anecdotal things of what could happen, why you're doing what you're doing, not just doing what you're doing, trade shows, different things like that, networking, seeing things. We talked about those getting out of silos; understand what are the trade and logistics implications on finance? What are the trade and logistics implications on IT? That's how you learn, and you grow people. It's not necessarily always up. It's getting that wider perspective of what's going on.

So, I've launched a lot of technology and I've put in objectives and saying, 'I want to achieve this and this,' and I've never been fully successful in executing every use case in an initial launch. Now, I may be able to massage it to get it there and get to the place where I've met all my objectives, but from the launch, you're going to have challenges.

So, you have to be prepared for that when building that 5-year plan on getting there and being able to pivot. Businesses changes. You have acquisitions, divestitures, you have change in ownership, you have all sorts of things that may take place. But you just have to be able to plan for it and be ready for any of those challenges that happen.

But the other piece is data. One thing everybody wants to say: I want to commit to a software provider, and I'm going to revolutionize my business. Well, generally, you're not going to do that if you don't have good data. So, at the ERP level, at the material master level, at the supplier and customer level, all your master data, you need to make sure that it's clean and it's proper, or else anything that you're looking to gain out of a system isn't going to happen. So, that's where I would focus. Make sure that the fundamentals are there. Make sure that the plan is there. And then as you execute, be prepared for having to move and pivot on your original objectives.