Understanding Incoterms and Supplier Realization Strategy in Supply Chain Management

Running head: SUPPLY CHAIN MANAGEMENT
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Supply chain
Student’s name
Name of the institution
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SUPPLY CHAIN MANAGEMENT
Incoterms are trading terms that guide who and what is to be done in the operations
chain; these terms are revised and published after every ten years by the transnational chamber-
of-commerce. Incoterms states the roles of both suppliers and consumers and their
responsibilities, documents that must be provided by each party and also states who should be
responsible for risk and ways to manage risk. However, choosing an incoterm has effects and
may be abused if not well understood to ensure effective communication flow, for paying for the
goods and services provided and to avoid unplanned consequences (Ramberg, 2011).
I would advise the company to understand the incoterms first before choosing to know
their roles, roles of the suppliers, and those of distributors or customers. Using incoterms gives
significant information to suppliers and buyers, they are supported by ten subsections of legal
definition which include; licenses, security clearances, insurance and contracts-of-carriage,
delivery procedures, risk mitigation, distribution of cost, effective communication, evidence of
delivery, preparation of the product for sale and helping with information. This will help them in
sourcing transportation, understanding customs, and distributing their products legally (Ramberg,
2011).
Recommended strategy.
Supplier realization
I would recommend the company to use supplier realization strategy, and this strategy
will enable them to reduce the number of suppliers so that the company develops a good and
long-lasting relationship with the suppliers.
Advantages.