Incoterms

"International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) that are widely used in International commercial transactions or procurement processes. A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the transportation and delivery of goods." [Wikipedia].

For example, the Incoterm, CFR (Cost and Freight) indicates that the seller must pay the costs and freight to bring the goods to the port of destination. Risk is transferred to the buyer after the goods are loaded on the vessel. Insurance for the goods is not included. This Incoterm is used for sea or inland waterway transportation. Other Incoterms address other modes of transportation.

Note:  ICC has defined about twelve Incoterms, and periodically revises the accepted list. Access the ICC website to verify the most current Incoterms and to determine which are applicable for your organization.

Using Incoterms is optional. To use Incoterms for your business, determine which Incoterms are applicable. You can then set up Distribution SX.e to use Incoterms:

  • Freight Terms: Functionality provides for setup, use, and printing of Incoterms codes. You can set up Incoterms codes in SA Table Code Value Setup, under Freight Terms. Those values are then available to other functions. You can assign Incoterms to a customer or vendor from the Freight Terms list in these views:
    • Customer Setup-Ordering
    • Customer ShipTo Setup-Ordering
    • Vendor Setup-Ordering
    • Vendor Ship From Setup-General
  • Transfer Location: The 24-character free-form enterable field, Transfer Location, is provided with this functionality and is paired with Freight Terms to assign Incoterms. If you are specifying an Incoterm in Freight Terms, standard practice recommends that you also define the Transfer Location, which is the named destination, port of discharge, port of destination, or port of shipment.

After an Incoterm, Freight Terms and Transfer Location, is associated with a customer or vendor, the Incoterm values are displayed by default in the sales order or purchase order:

  • Sales Order Entry-Customer Order Settings
  • Sales Order Entry-Sourcing if you are sourcing to a purchase order
  • Purchase Demand Center if you are creating a purchase order manually or as part of your Demand Center work flow
  • For direct ship transfers, the Incoterm is included from the tied sales order on the printed warehouse transfer pick ticket.

The Incoterm is included by the system for shipping and in the data stream for printing in:

  • Sales Entry Processing Pick Tickets Report
  • Sales Demand Invoices Report
  • Sales Entry Processing Print Manifest Report
  • Purchase Entry Processing Print POs Report
  • Transfer Entry Print Warehouse Transfer Report

The Incoterm is also included for appropriate electronic data interchange (EDI) documents and on the header for an order business object document (BOD).

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