Hidden Supply Chain Risk and Incoterms®: Analysis and Mitigation Strategies

Among the many sources of financial and operational risk in supply chains are Incoterms®, which terms trade used to decide who does what a cargo movement, when passes from seller buyer pays for part movement. Wrong Incoterms® create unexpected costs or risks, at best, inoperable contracts worst, with all challenges implied. This paper analyzes chain management (SCM) through lens responsibilities imposed by Incoterms®. The authors also conducted survey 100 decision makers on creation knowledge population. Failure mode effect analysis (FMEA) reveals scenarios that pose financial, operational, even legal firms. Results suggest rules poorly understood practitioners general, often chosen personnel not aware implications their choices, therefore frequently incorrectly non-strategically, thereby increasing cost risk. discusses results performance as well mitigation strategies strategically using remove cost, risk, delay transactions.