Purpose of the Paper
Exxon Mobil Corporation is focused on being the world’s chief petroleum and petrochemical company. Keeping that in mind, the company needs to consistently accomplish unrivaled money related and working outcomes while at the same time clinging to high moral models. The company endeavors to make and keep up an assorted workforce illustrative of the various geologies where it completes its operations. The company’s Global Diversity Framework is the establishment for its approach. Differing qualities and incorporation of thought, aptitude, information and culture has made ExxonMobil more aggressive, stronger and better ready to explore the complex and continually changing worldwide vitality business.
The company distinguishes and creates authority from inside the association to exceed expectations in an assortment of universal and social situations. ExxonMobil pulls in, creates and holds a chief workforce from the broadest conceivable pool to meet its business needs around the world. The company values and regards individual and social contrasts (Bergami, 2013). ExxonMobil endeavors to cultivate a various, synergistic and profitable workplace so as to accomplish predominant business comes about. Its working environment adaptability programs improve representative engagement.
The main purpose of this paper is to look at the various incoterms, carrier selection criteria and the carrier relationship management. We will look at the best incoterms that the ExxonMobil Company can apply in its operations. We will look at the best transportation mode that the company can use in its operations. The paper will also analyze the carrier relationship management.
These are a set of rules which govern the interpretation of international trade terms. It can be easily described from its abbreviation which means international commercial terms. ExxonMobilCompanyuses the EXW whereby the buyer pays freight charges and the selection of the carrier and routing is under the opinion of the buyer.
Generally, “inland waterway only or transport by sea” regulations must only be applied for cargos that carry bulk products or goods together with the goods that are not containerized(Caruntu & Lapadusi, n.d.). In such a process, the exporter is the one responsible for loading the goods directly onto a particular vessel to be transported to the specified destination (Malfliet, 2011). However, I a situation where the goods are containerized, then the “any transport mode” regulations must be applied. The main difference that comes out between these two regulations is the point at which there is the transfer of risks from the merchant to the customer. Some of the rules of the transport mode are as follows; FCA-Free carrier, DAT-Delivered at Terminal, EXW-Ex Works,CPT-Carriage Paid To, DDP-Delivered Duty Paid,CIP-Carriage & Insurance Paid, and DAP-Delivered At Place. Rules for sea & Inland waterway only include; FAS-Free Alongside Ships, CFR-Cost and Freight, IF-Cost Insurance and Freight and FOB-Free On Board (Loan, et al., 2013). However these rules can be summarized as follows;
- EXW-The buyer is the one responsible for all carriage
- DAT, DDP, DAP-This is where the seller is the one who arranges the main; however all the risks pass before the main carriage.
- FOB, FAS, FCA-This is where the buyer arranges all the main carriage.
- CPT, CFR, CIF, and CIP- This is where the seller is responsible for arranging the main carriage however the risks pass before the main carriage.
Inco terms
It is an incoterm which entails the seller taking full responsibility is for the freight and costs of delivering all the goods to the main port of destination (Bergami, 2013). However in this incoterm the buyer is the one who is responsible for covering all the insurance of the goods being delivered at the port (Coetzee, 2010). As we can see in this incoterm, even though it is the seller who arranges for the transportation of the goods, all the risks are usually transferred to the buyer immediately the goods are loaded onto the ship.
In this type of incoterm regulation, the seller is fully responsible for undertaking everything from the insurance, the freight and the costs of delivering the goods to the destined port (Bergami, 2011). The CFR and CIF are actually same terms except that in CIF the seller must pay the insurance costs for the goods being delivered at the destined port.
My recommendation as a Logistics Manager is for ExxonMobil Company to start using the CFR regulation in its operations as it is going to help in reducing unnecessary costs, avoid facing custom clearance problems. The ExxonMobil as the company as the seller will not have the responsibility of procuring any marine insurance against any risk of damage or loss the products during their transition meaning the company will not be held liable for any loss or damage. By using the CFR, the company will be able to save so much of its costs (Ramberg, 2011). The CFR will enable the company to channel its resources into doing other important operations.
It is important for the ExxonMobil Company to take into account some considerations before making a decision to settle on a specific mode of transportation of its goods. The company should analyze the impacts of each mode on its business and also how it will impact on its customers. Some of transportation modes include; trucks, ships, trains, and planes (Choudhary & Shankar, 2013). The mode of transportation that the company decides to settle on will determine whether the company will grow or fall in terms of the profit margins. However, it is important to note that sometimes the cheaper modes may not actually be the best modes of transportation (Aksoy & Ozturk, 2011). Even though it seems awkward, sometimes using a more expensive mode of transportation like air may actually result into total low landing costs. The mode of transportation that ExxonMobil chooses can either positively or negatively impact it.
Inco terms 2010 Diagram
The transfer and intermodal network points are usually the primary contemplations when it comes to calculating the landing costs. If the company establishes good networks, then it increases the chances of the company succeeding. The other important aspects that must be considered are inventory and occupancy (Vijayvargiya & Dey, 2010). Occupancy and inventory management will make the ExxonMobil Company to ensure their products arrive at the right cost and also time. By selecting the right mode of transportation the company will gain the confidence of its customers.
Before choosing any mode of transportation, it is important for the company management to evaluate all its business needs. The company should compare the benefits of each mode of transportation. By selecting the best mode of transportation the company will be able to determine the success of its exports. The use of trucks can be very costly especially when delivering products around the world. Use of trucks may face challenges like; bad weather, poor roads, and also they are prone to accidents (Aksoy & Ozturk, 2011). The use of trucks may take a longer time to reach their destination. Trucks are not well equipped to carry huge cargos. Ships rarely face heavy traffic unlike the trucks which experience the heavy traffic.
According to me I would recommend the use of the ship vessel to transport the products of the ExxonMobil Company. Transporting the products using the ship has always the best cheaper way especially on long distance destinations. The ship is more flexible in the water as compared to the trucks which are not (Aguezzoul, 2014). Unlike the trucks, the ship has the capacity to transport products in huge volumes. There are many available ships that exist which can transport the products to their destination.
Carrier relationship management is very crucial to the smooth functioning of many different companies that involve them in matters of export (Waller & Fawcett, 2013). It is important for the ExxonMobil Company to maintain a good balance through its carrier relations team. The balance will help the company to advocate on behalf of its various shippers while at the same time enhancing the outcomes of its carrier partners. Without good carrier partners, the company will not be able to deliver its products to the customers and without the customers, the company will not be able to provide any good value to its carrier partners(Liu, et al., 2011). It is important for the company to know that the carrier partners are actually the glue that holds its business model together. The company should put the best person to head its carrier relationship department. Someone who is able to negotiate in an effective manner.
Analysis of CFR and CIF Incoterms
The company must cultivate and promote some sense of trust with its carrier partners. Lack of trust between the company and its carrier partners may result into mistrust and fear. The fear of manipulation may also arise if there is no trust. It will therefore lead to the effective stalling of communication that is value focused. The company should get into negotiations with its carrier partners with the main objective of solving and settling the major differences that may arise. The matters must be approached in a sober way (Houghtalen, et al., 2011). The parties must understand the needs of each other so as to reach a proper agreement between them. What each party perceives in the negotiations will define the type of trust that will exist.
A sense of trust is usually developed through a history of: sharing of important information between the partners, minimizing the power of influence that each partner may have openness and willingness of one of the partners to be influenced for mutual benefits, credibility and integrity through consistent fulfillment of promises and finally the understanding, values, common cultures and visions. Trust between a company and its carrier partners should be based on the future expectations (Slack, et al., 2010). The relationship value for the feature must be anticipated and real. The carrier relationship management has the responsibility of realizing the main benefits partnerships.
The company prides itself of having the capacity to investigate its purchaser’s general goals and requirements. The company ought to tailor its strategies to fit specific business procedures. ExxonMobil ought to apply a similar technique when working with its select bearer accomplices (Liu, et al., 2011). The company’s transporter relations group must work tenaciously with its bearer base to guarantee both the transporter and the purchasers get their requirements met productively and viably.
Conclusion
All carrier partners under the company ought to take after the stipulated assentation. The company ought to set up a particular balanced contract for each of its carrier partners. The company ought to join forces with the carriers that offer the best effect to the company. It will permit the company to have great carrier relationship administration group that will effectively keep up and deal with an agreement and govern changes through shared, straightforward, and business result centered correspondences with its carrier partners. On the off chance that cargo rate changes are required by a carrier, they ought not to be made in the company framework. The company needs to hold up until the carrier presents the rates to its carrier relationship group and affirm the wished rate change with the carrier. The company’s carrier relations group ought to work with the carrier partners in numerous parts of valuing focuses.
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