International Purchasing
buying goods or services from suppliers located in different countries
contracting work or services to external companies or individuals located worldwide
Global Outsourcing
clarify the rules and terms that buyers and sellers use in international and domestic trade contracts
INCOTERMS
INCOTERMS
– officially known as ____
international commercial terms.
The seven Incoterms 2020 rules for any mode(s) of transport are
EXW - Ex Works
FCA - Free Carriage
CPT - Carriage Paid To
CIP - Carriage and Insurance Paid to
DAP - Delivered at Place
DPU - Delivered at Place Unloaded
DDP - Delivered Duty Paid
The four Incoterms 2020 rules for Sea and Inland Waterway Transport are
FAS - Free Alongside Ship
FOB - Free On Board
CFR - Cost and Freight
CIF - Cost Insurance and Freight
- The seller makes the goods available at their premises or another agreed-upon location.
- The buyer is responsible for all transportation arrangements, costs, and risks from that point onward.
- The seller’s responsibility ends when they make the goods available for pickup by the buyer.
EXW - Ex Works (insert place of delivery):
- Seller delivers goods, cleared for export, to the buyer’s nominated carrier at a specified place
- The seller delivers the goods to a named place, which could be a carrier, a port, or another agreed-upon location.
- The seller is responsible for export clearance, while the buyer assumes responsibility from that point forward.
- This term allows for flexibility in choosing the delivery location.
FCA - Free Carrier (Insert named place of delivery):
- Seller pays for transportation to the named destination.
- The seller arranges and pays for the transportation of goods to the named destination.
- Risk transfers from the seller to the buyer when the goods are handed over to the first carrier.
- The seller is responsible for export clearance, but import clearance is the buyer’s responsibility.
CPT - Carriage Paid to (insert place of destination)
- Seller pays for transportation and insurance to the named destination
- Similar to CPT, but the seller also provides insurance for the goods during transportation.
- The seller arranges and pays for both transportation and insurance to the named destination.
- Risk transfers from the seller to the buyer when the goods are handed over to the carrier.
CIP - Carriage and Insurance Paid To (insert place of destination):
- Seller delivers goods to a named destination, ready for unloading.
- The seller is responsible for delivering the goods to a named destination.
- The seller bears all risks and costs until the goods are ready for unloading at the agreed-upon place.
- The buyer is responsible for unloading and further transportation costs.
DAP - Delivered at Place (insert named place of destination):
- Seller delivers goods to a named destination and unloads them.
- The seller is responsible for delivering and unloading the goods at the named destination.
- The seller assumes risks and costs until unloading at the agreed-upon place.
- Once unloaded, the responsibility transfers to the buyer.
DPU - Delivered at Place Unloaded (insert of place of destination):
- Seller delivers goods to the buyer, cleared for import, and pays all costs, including duties and taxes.
- The seller is responsible for delivering the goods to the buyer’s destination, covering all costs and duties.
- The seller bears all risks and costs until the goods are ready for unloading at the named place of destination.
DDP - Delivered Duty Paid (Insert place of destination)
- The seller delivers the goods alongside the vessel at the named port of shipment.
- The buyer bears all costs and risks from that point onward.
FAS - Free Alongside Ship (insert name of port of loading)
- The seller delivers the goods on board the vessel at the named port of shipment.
- The risk transfers from the seller to the buyer once the goods are on board.
FOB - Free on Board (insert named port of loading):
- The seller pays for the cost and freight of transporting the goods to the named port of destination.
- The risk transfers from the seller to the buyer once the goods are on board the vessel.
CFR - Cost and Freight (insert named port of destination):
- Similar to CFR, but the seller also provides insurance for the goods during transportation.
- The seller pays for cost, insurance, and freight to the named port of destination.
- The risk transfers to the buyer when the goods are on board the vessel.
CIF - Cost Insurance and Freight (insert named port of destination):
a method of payment that protects both the seller (exporter) and the buyer (importer) in a contract of sale.
DOCUMENTARY CREDIT
Documentary credits (D/Cs) are also known as
letters of credit (L/Cs).
Types of documentary credit
- revocable documentary credit
- irrevocable documentary credit
- confirmed documentary credit
- unconfirmed documentary credit
- transferable letter of credit
- standby letter of credit
- revolving letter of credit
- red clause letter of credit
Can be canceled or amended by the buyer without the seller’s consent.
Revocable documentary credit
cannot be canceled or changed unless all parties agree.
Irrevocable documentary credit
The exporter’s bank (the advising bank) may confirm a documentary credit if the documentary credit includes a request to that effect.
Confirmed documentary credit
only the issuing bank assumes a payment obligation
Unconfirmed documentary credit
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CHAPTER 1 – THE GROWING DEMAND FOR SUPPLY CHAIN MANAGEMENT33
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CHAPTER 2 – UNDERSTANDING SUPPLY CHAINS FROM DIFFERENT PERSPECTIVES43
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CHAPTER 3 – DIGGING INTO YOUR SUPPLY CHAIN38
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CHAPTER 4 – OPTIMIZING YOUR SUPPLY CHAIN38
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CHAPTER 5 – CONNECTING SUPPLY CHAIN PROCESSES15
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CHAPTER 6 – PLANNING THE SUPPLY CHAIN40
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CHAPTER 7 – SOURCING, PURCHASING AND PROCUREMENT48
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CHAPTER 8 – MAKING YOUR PRODUCTS OR SERVICES53
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CHAPTER 9 – DELIVERING YOUR PRODUCTS OR SERVICES106
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CHAPTER 10 – MANAGING PRODUCT RETURN AND REVERSE SUPPLY CHAINS25
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CHAPTER 11 – ENABLING YOUR SUPPLY CHAIN44
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INBOUND LOGISTICS35
