Enhancement Request: Adding Inco-Terms at Supplier, Purchase Order (PO) Levels (Doc ID 2138597.1)

Last updated on FEBRUARY 28, 2024

Applies to:

Goal

The Incoterms (International Commerce terms) should be attached at the supplier level, and the same should flow to the purchase order.  As per the sales contract, both parties comes to an agreement to deliver the goods on a particular incoterm.  This should also be handled in Letter of Credit functionality if the PO payment method is Letter of Credit.

For every incoterm there is a set of predefined rules published by the International Chamber of Commerce (ICC).  As per these rules we know who is taking on the tasks, costs, risks, etc. and where the title passes from supplier to retailer.


For example: The seller and buyer make an sales agreement to deliver the goods on incoterm - CIP (Carriage and Insurance Paid)

CIP indicates that the SELLER will take care of the cost of:

1. Loading the goods at his location (Warehouse)
2. Transportation of goods to lading port
3. Clearing the export customs
4. Unloading of goods at lading port
5. Loading onto the vessel / plane at lading port
6. Carriage to the discharge port
7. Insurance
8. Unloading the goods at port of import
9. Loading the goods onto the truck at discharge port (can be taken by suppler or retailer based on the contract)
10. Transportation to the retailer's specified location (warehouse/store/some other location, as specified in sales contract)

CIP indicates that the RETAILER will take care of the cost of:

1. Customs clearance
2. Import duties and taxes

Tasks:
The above 12 items are the list of tasks involved.  The responsible party task is always based on the incoterm.

Costs:
Based on the incoterm, the tasks and its related costs will be borne by the specified parties.

Risks:
It is important to specify to whom risks passes, and at which place the risk passes.
In the above scenario, even though suppler pays for the insurance, the risk of loss or damage is transferred from seller to buyer when the goods are loaded onto the first carrier vessel.

Title:
In the above scenario, the title of the goods passes from suppler to retailer once the goods are received at the retailer specified location.

Solution

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