Mark is a recent grad from Centennial College. He has taken a position with a local SME (small or
enterprise) only a short transit ride from his home. Megaexp Enterprises Inc. is located on 123 Progress Avenue in
Toronto. Megaexp is a wholesaler, importer and exporter of various types of consumer goods. The owner is finding
that he needs someone to help him with the logistics of his business. He hired Mark to bring new knowledge to
help him get his products to the right place, at the right time, at the right price.
Mark has had some business experience in a retail store as a sales associate. His diploma included courses on
Global Logistics and Customs Procedures. He is confident that he has the foundation to help his boss navigate the
supply chain to offer suggestions on how make it leaner.
The boss had always negotiated the trade deals himself. Starting from the price, method of payments and the
logistics he controlled it all. He states "I buy my goods the same ways with each of my suppliers, so I know how to
get the best prices". He reveals his method; the supplier will be paid half the invoice value in advance and the
other half when the product is ready to ship. The invoice value includes all transportation costs and customs costs.
Your boss only pays the total invoice value and his shipment arrives at his door.
You ask your boss if you could look at the documents for a couple of the shipments, to get a "feel" of where the
goods are shipped from. He provides the documents. You are familiar with most of the documents, due to your
studies at Centennial, and start to analysis them. Your boss leaves the movement of the freight with the supplier
and trusts that they will work in his, your boss, interests.
Mark is discovering that when a shipment is being shipped, it is too late to change its routing. His boss advised
him that there is a shipment of product, one pallet weighing 100kg that is being shipped by ocean (as per the
vendor), and your customer needs the product within 10 days. Mark thinks to himself, not a problem. Then your
boss tells you the product is in China! You ask your boss, can you just not call the vendor and ensure it gets
shipped today? Can it be that simple? Your boss tried calling Beijing with no success. If the shipment does not
arrive at the customer's warehouse you may lose that customer. Now you remember in your studies, gateways and
hubs were discussed and you wonder what role, if any, they play.
As you await the outcome of the conversation between your boss and the vendor, you wonder, as your company
sources new suppliers how should freight terms be negotiated. Incoterms is what you turn too. You know that
properly understanding Incoterms will save you company money. In fact, the savings could help lower prices of
your product and will contribute to sustaining competitiveness. Now you will have to discuss with your boss the
concept of Incoterms. All of the companies import shipments are transported by ocean. From your studies you
know that sometimes shipping by air is more effective and affordable. The key point is to understand how the
Incoterms are applied. Your boss has finished his conversation with the supplier. He asks you for your suggestion
of how to get the product to the customers store within the 10 days. You now see an opportunity to introduce
What suggestion would you recommend to get the product to the customer in time on a regular trade?(0.25
mark) Include transit times in your answer.(0.25 mark) What is the Incoterm associated with your
suggestion?(0.25 mark) Why did you choose it? (0.25 mark)
5) Your boss asks you to offer an opinion as to which Incoterm you would recommend be considered to be
used in future negotiations.(0.25 mark) Explain your choice.(0.75 mark)
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