Incoterms (INternational COmmercial TERMS) are internationally agreed rules for determining where the risk and responsibility transfer from seller to buyer during transportation.
They are a set of 3-letter terms reflecting business-to-business practice in contracts for the sale of goods and the rules describe mainly the tasks, costs and risks involved in the delivery of goods from sellers to buyers.
Many Incoterms are simply copied from contract to contract by sales people with little or no understanding of what they are shackling you to.
Incorrect Incoterms lead to significant cost increases, inappropriate retention of risk, increased administration plus difficulties in apportionment of cost and recovery responsibility when an incident occurs. Additionally, this lack of clarity can lead to a breakdown in relationships between suppliers and customers thus making future trading difficult.
We have carried out reviews for many clients including logistics service providers, retailers, pharmaceutical manufacturers and telecommunications equipment suppliers. These reviews identified many discrepancies enabling significant improvement and cost saving.
An Incoterms review will encompass agreements with your suppliers and your customers. Post review, you will receive a full report which will:
• Detail your current situation;
• Highlight any areas for concern;
• Describe exactly what these concerns are;
• Explain the impact on the business of these issues;
• Describe mitigation actions;
• Ensure that competing demands are balanced;
• Explain the potential, positive impact of any changes;
• Detail a change process.
We would then support you with the implementation of any changes you accept, including attending meetings with your suppliers and customers to explain the positive benefits of the changes to them and getting their “buy-in” to the process.