Supply Chain Management Report: Incoterms, Strategies, and Analysis

This report provides an analysis of supply chain management, focusing on the importance of Incoterms and supplier strategies. It begins by defining Incoterms and their role in guiding trading operations, emphasizing the need for understanding these terms to avoid potential issues. The report then recommends a supplier realization strategy, advocating for a reduction in the number of suppliers to foster stronger, long-term relationships. The advantages of this strategy, including reduced production costs, risk mitigation, and improved efficiency, are thoroughly discussed. The report also acknowledges potential disadvantages, such as supplier competitiveness and the risk of late deliveries. The conclusion reinforces the significance of understanding Incoterms and adopting the supplier realization strategy to enhance customer satisfaction and streamline operations. The report includes references to support its arguments.

Running head: SUPPLY CHAIN MANAGEMENT 1
Supply chain
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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.

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SUPPLY CHAIN MANAGEMENT
 Reduces the cost of production- when the number of suppliers is reduced, there is an
increase in purchasing power. Giving more resources to specific suppliers will enable
them to get better prices for their products.
 Mitigates risk- having fewer suppliers helps in risk reduction through focusing on
securing all possible risks.
 Improved efficiency- development of a good relationship with the supplier, enhances
communication. The suppliers acquire a better understanding of the company's
requirements and therefore provides better products and services. There are lesser order
issues which are easily solved by the company and suppliers in case they occur
(Chemama, Cohen, Lobel & Perakis, 2018).
 United supply chain- when a good relationship is developed between the company and its
supplier, they understand and help each other more effectively.
 Improved operations- a long-term relationship enables both the company and suppliers to
acquire new ideas from the feedback given. This helps to improve their customer services
(Lorentz & Ghauri, 2010).
Disadvantages.
 Supplier competitiveness- good suppliers, should be chosen based on a number of factors
such as financial stability, certifications, among others, instead of just considering the
quality of products they deliver.
 Late deliveries- suppliers may run short of raw materials which will cause delayed
production and hence delayed supply. This is a disadvantage that may be faced by
companies who have few suppliers (Knight, 2017).

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In conclusion, the company should consider understanding the incoterms clearly before
making a choice. Incoterms will enable them to understand their responsibilities and roles of the
suppliers, the customs of the trader's country, and the right way to carry out their business. I
recommend they use supplier realization strategy where they will develop a long term
relationship which will help them reduce production cost and increase efficiency in customer
satisfaction. However, by adopting this strategy, they may be faced by challenges such as late
deliveries.

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References.
Chemama, J., Cohen, M. C., Lobel, R., & Perakis, G. (2018). Consumer subsidies with a
strategic supplier: Commitment vs. flexibility. Management Science, 65(2), 681-713.
Knight, A. K. (2017). Beyond Leveraged Purchasing: Using Strengthened Buyer/Supplier
Relationships to Accomplish Sustainable Strategic Sourcing and Smarter Single Source
Acquisitions (Doctoral dissertation, The George Washington University).
Lorentz, H., & Ghauri, P. N., (2010). Demand supply network opportunity development
processes in emerging markets: Positioning for strategy realization in Russia. Industrial
Marketing Management, 39(2), 240-251.
Ramberg, J. (2011). INCOTERMS 2010. Eur. JL Reform, 13, 380.
Ramberg, J., (2011). ICC Guide to Incoterms 2000. ICC International Chamber of
Commerce.