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Rob den Heijer 23 th of May 2012 Istanbul

Selecting the right Incoterm to minimize risk, reduce cost and accelerate supply chain collaboration. Rob den Heijer 23 th of May 2012 Istanbul. Table of content. Introduction Collaboration versus INCO terms Overview of Incoterms 2012 A case of using incorrect INCO terms

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Rob den Heijer 23 th of May 2012 Istanbul

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  1. Selecting the right Incoterm to minimize risk, reduce cost and accelerate supply chain collaboration Rob den Heijer 23th of May 2012 Istanbul

  2. Table of content • Introduction • Collaboration versus INCO terms • Overview of Incoterms 2012 • A case of using incorrect INCO terms • Reduction of risks in the supply chain • Saving costs • Which INCO terms DSP is using to accelerate Collaboration • Practical advices

  3. Introduction • 53 years old, married 3 sons • Logistic experience: • 10 year experience sailing on a barge • 3 years head of logistic department • 5 years Logistic Manager Europe/America’s • 2 years Global Demand & Supply Chain Manager Finished Dosages • Expertise in Incoterms since 1995 • Hobby: hiking, training for the “Vierdaagse van Nijmegen”

  4. Collaboration versus INCO terms Do both parties have the same definitions of Incoterms? • DSP’s definition of Ex Works Do both parties understand them? • DSP orders green but mean blue Choosing right Incoterm will clearly define: • Who is arranging what and who is paying for it, this helps DSP as well as UTi Well defined transition point of risks that is documented: • In case of damage we have paper proof who is responsible for damage Knowing who is responsible gives insight: • As being responsible seller/buyer can mitigate the risk by getting an insurance

  5. Overview of Incoterms 2010

  6. A case of using incorrect INCO terms In 2009 a customer Service Agent of DSP used FCA Sellers Premises as Incoterm for the sale where a LC was used.

  7. Reduction of risks in the supply chain When using a container, no FOB, CFR or CIF! Better to use FCA or CIP instead!

  8. Saving costs The buyer will always pay all costs involved in transport + Insurance, either by arranging it himself or by a higher selling price. Goal should be to avoid double payment for some actions: • THC destination port • Loading in departing port • Using HAWB versus MAWB Last but not least, who is responsible for which part of the total transport to either accept this or get coverage for it

  9. Which INCO terms DSP is using to accelerate Collaboration DSP has taken into account the following criteria: • Best for collaboration with LSP due to well defined and documented transition point of risks • OWC reduction • Control over transport due to LC Based on these qualifications the following golden rule has been implemented within DSP in 2010: Use CIP by default ALWAYS, unless customer arranges main transport. Then use FCA

  10. Practical advices • When EXW or FCA sellers premises is used: do not sign CMR or other transport document, because you will become part of transport agreement • In case of FOB: demand a copy of B/L and make sure you are not mentioned as shipper, otherwise you become liable for transport • If your company has an “umbrella insurance” then incoming flows are likely to fall under this agreement. Choosing CPT as Incoterm could avoid paying double insurance premium

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