Isabella has been talking about logistics to the manager of the plant in Mexico. The manager is concerned that his shipping department staff has not been correctly labeling shipments of pediatric HIV drugs bound for clinics, hospitals, and infirmaries throughout the developing world so that the risk of loss in transit passes from Pharma Heal Corporation to the buyer at the earliest possible point. She is concerned that he may not fully understand the terminology involved. Isabella gives you the task to have a video conference call with the plant manager and his shipping department staff to achieve the following objectives:
• Review the critical points for the passing of risk of loss from buyer to seller in the transportation and delivery process.
• Match those points to the appropriate International Chamber of Commerce (ICC) International Commercial Terms (INCOTERMS) for designating when the risk of loss asses.
• Advise the manager and his shipping staff as to the INCOTERMS that are the most favorable to Pharma Heal Corporation for the sale of the pharmaceuticals that are to be shipped to the buyer by common carrier.
The question belongs to Operations Management and it is a scenario analysis where Pharma Heal Corporation, which provides infant HIV drugs to third world countries, is facing an issue with the labeling system. Without which, if at all any untoward incident occurs, the company has to bear the losses.
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