Responses of 100 or more words to the following(Examine when a shipper should use FOB origination pricing and when they should use FOB destination pricing) 3 forums. Responses should be a minimum of 100 words and include direct questions.
1. F.O.B. remains for Free On Board and shows the point in the inventory network where the merchant surrenders proprietorship and the purchaser acknowledges responsibility for acquired in a particular exchange. Dandy Shipping Point, indicates that the deal happened at the transportation point at the seller’s delivery dock. Dandy starting point implies that the purchaser takes possession at the seller’s area and is in charge of it by then. In this way, the deal is finished once the item is grabbed by the purchaser. With FOB shipping point, responsibility for products being sent exchanges to the purchase right when the things are dispatched. With FOB shipping point, the merchandise has a place with the proprietor when it leaves the merchants dock, so if the shipment is lost it is up to the purchaser to present a case for the missing things.
FOB Destination shows that the deal will happen when it lands at the destination at the buyer’s getting dock. The purpose of FOB destination is to exchange the title to the products to the buyer when they’ve landed in the buyer’s area. Just once merchandise has touched base at the last delivering destination if they are accounted for as a buy and as stock by the buyer, and as a deal and expansion in records receivable by the seller. With FOB destination, responsibility for products stays with the seller until the things are conveyed to the purchaser. If FOB destination is utilized, then the merchant would at present possess the products, and they would need to document a case to recover the expense of the lost merchandise. The key components of the considerable number of minor departure from FOB destination are the visible area amid travel at which title changes and who pays for the cargo. On the off chance that a purchaser’s transportation division is proactive, it might maintain a strategic distance from FOB destination terms, rather supporting FOB shipping point terms with the goal that it can better control the logistics procedure
2. F.O.B. can stand for free on board or freight on board and depending on the arrangement between buyers and sellers it can have varying degrees of meaning.
F.O.B. origin put simply means that the buyer has the responsibility due to contract agreements to make arrangements to transport commodities or freight it has purchased from the seller. The seller is then is not responsible for the items purchased other than the actual manufacturing and packaging of the product in good shape or not damaged before the items are picked up from the seller (47.305-3 F.O.B. origin., 2019).
F.O.B. destination on the other hand places the responsibility of transportation of the commodities or freight into the actual price of the items that are sold, and the shipment of the items are included to warehouses or retailers from the seller (47.303-6 F.O.B. destination, 2019).
The decision to use a F.O.B origin or F.O.B. destination comes from bargaining of the sellers and buyers depending on many factors that would be related to how they conduct business and what benefits who. The decision to use one or the other might be beneficial if a company has their own fleet of vehicles to move the freight and reduce transportation costs by using F.O.B. origin, such as a grocery company. If a company does not have its own fleet of vehicle and relies solely on F.O.B. destination then this might be a cheaper or more practical way to move freight from one place to another, such as with freight that would cost them more to ship with its own vehicles.
3. This week we have been tasked with discussing when a shipper should use FOB origination pricing versus when FOB destination pricing should be used.
First and foremost we must determine was FOB is; FOB is free on board, or terms of the sale. It is when the buyer and seller discuss the terms of who will be responsible for the goods while they are in-transit and who will be paying for the provision of the transportation of said goods. This is no small responsibility either; depending on how the terms are agreed upon one of the parties will assume all responsibility for the safe delivery of all the goods bought and sold. This means they are also responsible for damaged and lost goods as well as if the delivery is late. (Goldsby, Iyengar, & Rao, 2014)
FOB origin is that which states that the sale of all goods between two parties will take place at the shipping dock of the seller. This means that when the buyer loads the goods onto their mode of transportation they become responsible for the load. FOB destination means that the seller ships the items to the shipping dock of the buyer and until they reach that shipping dock the seller is responsible for the load. This brings us to the main question at hand for this weeks forum. (Goldsby, Iyengar, & Rao, 2014)
As a shipper there will be negotiations and this is when the attention will turn to specific services, prices, and the terms. The reliability of service, frequency of shipments, volume, and speed will be considered before a shipper is hired or contracted because their track record will say a lot about the company being used or bidding for the contract. A lot of times the pricing of shipping will already be included in the original contract between the buyer and sellers which will also set the price for the shippers that they can be paid (Goldsby, Iyengar, & Rao, 2014). So in all actuality the decision as to whether a shipper would use FOB origination or FOB destination will fluctuate and depend on the pricing and the shippers reputation in my opinion.
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