Task 8: Customer Order

Quotation to customer

•         A quotation is given to customer prior to the order

·         The quotation is given based on the costing of the product sold.

•         Material cost

•         Labour

•         Overhead

•         Transportation – Delivery terms

•         Sales Tax

•         Mark-up

•         Delivery items

v  Incoterms or international commercial terms are a series of international sales terms that are widely used throughout the world.

v   They are used to divide transaction costs and responsibilities between buyer and seller and reflect state-of-the-art transportation practices.

v  Incoterms deal with the questions related to the delivery of the products from the seller to the buyer.

§  the carriage of products

§  export and import clearance responsibilities

§  who pays for what

§  who has risk for the condition of the products at different locations within the transport process

·         Types of delivery items

  v   Ex Works (named place): the seller makes the goods available at his premises.

  v  Free On Board (named loading port): the classic maritime trade term, Free On Board:   

            seller must load the goods on board the ship nominated by the buyer, cost and risk being  

            divided at ship's rail. The seller must clear the goods for export. Maritime transport  

            only.

  v  CIF. Cost, Insurance and Freight (named destination port): seller must pay the costs  

            and freight to bring the goods to the port of destination,procure and pay for insurance for 

            the buyer. Maritime transport only.

  v  DPP- Delivery Duty Paid

  v  DPU – Delivery Duty Unpaid

DELIVERY ITEMS

CUSTOMER SALES AND ORDER

·         Types of customer order

ü  Trading is the exchange of goods, services or both.

–        Complete Built Unit (CBU)

ü  Manufacturing is the application of tools and a processing medium to the transformation of raw materials into finished goods for sale.

–        Complete Knock Down (CKD) 

          CUSTOMER ORDER

•          In general, a customer would place an order for Finished Goods.

–        In Electronic components trading a resistor would be considered as FG but in Electronic appliance Factory the same resistor could be raw material

–        Orders should have specific description, quantity, unit of measure, required delivery date, price, delivery term, payment term.

EXAMPLE CUSTOMER ORDER

  EXAMPLE PURCHASE ORDER

EXAMPLE QUATATION