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Foob Case

Satisfactory Essays

Incoterms are an important aspect in this research. When a freight forwarder is being asked from a shipper for a sea freight quote, there must an indication of the incoterms (such as ‘’Quote request FOB Brazil-Rotterdam). The incoterm provides the freight forwarder with an understanding of who will pay the invoice and for which part of forwarding services in the supply chain process.
Refresco Gerber intents to control its inbound logistics by controlling the terms of its purchasing raw materials. Therefore, there is a need for Refresco Gerber to look into the option of buying these raw materials under the terms that are more favorable to its expenses. In this case, an FOB (Free On Board) term seems to be the right option for the Company.
According to Cook et. al (2012), the major advantage of using an FOB term is that will give you control of the inbound supply chain. It will typically allow you better pricing, control of delivery scheduling and all compliance responsibilities. Based on their analysis for more than forty years on this subject, the authors further pointed out that the importer is always served better when they control the inbound and ‘’importer of record’’ responsibilities. The importer benefits by reducing overall logistic costs, managing compliance and security requirements, and maintaining control …show more content…

Although, by selecting an FOB term we can organize the transport according to the needs that exists within Refresco Gerber and take full consideration about inventory carrying costs, transportation costs, customer service level costs, warehousing costs, lot quantity costs other relevant costs. In addition, with an FOB term the local charges in the country of origin of each raw material product will not be part of Refresco Gerber responsibility which means that problems such as complex paperwork or language difficulties will be

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