10 Essential Export Order Process. 7 Essential Information in Export Quotation. Duties of Export, Sales and Shipping Managers.

October 8, 2011 by · 1 Comment
Filed under: Export Import 

The export office

The fundamental functions of an export department may be broken down
into just two areas:

Sales         -> order getting
Shipping -> order filling

Add to these specific functions the need for overall management control and the whole department can revolve around those three.
It is perhaps easier to identify what particular things are done within each of these areas if we identify the duties of the individuals responsible for their operation. See Table 1

Table 1 – Duties of export, sales and shipping managers

EXPORT MANAGER
Liaison with Directors
Negotiation of Budgets and Targets
Market Selection
Product Development
Pricing Policy
Promotional Strategy
Channel Management
Cost & Credit Control
Staff Selection & Development
Control of Major Accounts

SALES MANAGER
Order Negotiation
Price Calculation
Quotation Production
General Sales Correspondence
Order Processing & Progress
Maintenance of Records

SHIPPING MANAGER
Assist with Price Calculation
Check Letters of Credit
Transport Negotiations
Document Production
Payment Collection
Maintenance of Records

Table 1 defines a simple structure of a Sales and a Shipping Manager
directly responsible to an Export Manager. Of course, it is always possible
that there could be an Export Director, or that the Export Manager could
report to a Marketing Director.
Also, it is not unusual that an Export Marketing Manager should run the
office and an Export Sales Manager handle the field sales operations. There
are no rules which can apply to every company because all will be different
in terms of size, product range, type and number of markets, channels of
distribution and even their stage of development.
In particular, the size of the export office will have a great effect on its
organization. Some companies’ export departments will consist of one man
or woman, perhaps with secretarial support, in which case any division of
labour is somewhat irrelevant. At the other extreme is the company with
major ex-port business which employs many hundreds of people within its
export department. In such a case it is essential that the functions are
defined down to very specialised levels of responsibility.
Whatever the size of the operation there is a logical sequence of tasks
which are necessary to develop and initial enquiry into a profitable payment,
virtually all of which are examined in detail which follow:

The export order process
• Enquiry
• Quotation
• Order
• Order acknowledgement
• Order process and progress
• Packing and marking
• Space booking
• Documents prepared
 Transport
 Customs
 Insurance
 Payment
• Goods despatched
• Payment received

Companies will develop internal procedures to deal with this process which
will vary enormously from one to another depending on the nature and size
of their business, number of shipments, number and expertise of staff etc.
There are a number of systems available to manage the process and the
sequencing of functions, the simplest of which are based on tracking files or
folders which can be completed manually, and the more complex of which
are software packages that can produce all export documentation and be
linked with internal production and inventory systems.

The enquiry
It is pretty obvious that the beginning of the process is the enquiry from a
potential overseas buyer. This may have been instigated from many sources
such as personal contact, advertising or recommendation or it could simply
be a regular buyer coming back for more. The enquiry will take almost as
many forms as there are overseas buyers; it could even be a verbal request,
but is often a simple piece of correspondence, either post or e-mail, detailing
their requirements or it could be a more formalised tender document.
Careful examination of the initial enquiry could be facilitated by the use
of a check list:
• Does the enquiry require translating?
• Is it a new or regular customer?
• Are there any restrictions by the UK authorities eg export licensing
• Are there any restrictions by the buyer’s authorities eg import licensing
• Does the enquiry match our own product/service specifications? If not,
what modifications are required?
• Can we produce the quantity required in the time required?
• What delivery terms are requested?
• What payment method and terms are requested?
• Has a status report been taken up on the buyer?
• Can the delivery period be met?
• What is the most suitable mode of transport?
• Are there any special packing and marking requirements for the market
in question?
• Are there any special documentation requirements?
• What insurance is required?
• What ancillary ( third party costs) need to be built into the price eg
freight, insurance, packing, documentation etc.
The export quotation

The quotation in response to an export enquiry may be just as informal as
an original verbal enquiry, or could be an extremely formalized completion
of tender documents. Of course, it is advisable that all communications are
in writing and recorded
Many of the problems which exporters face could be avoided by an
improved understanding of the nature of export quotations, the correct
procedures for their production and the contractual consequences of the
information they contain.
Various formats exist in practice , but it may be useful to first identify the range of information which would need to be included in a simple export quotations. The essentials are listed in Table 2 and would include:

Table 2 – Essential information in typical quotation
Goods: — Rubber hammers as per attached specification
Quantity: — 2,000
Price: — € 26.00 per unit FCA Manchester International Freight Terminal
Terms of Sale: — Except where otherwise specified this quotation is governed by INCOTERMS 2000
Packing: — Each unit carton packed (in five extra strong fibre board containers, 20 per container)
Delivery (lead time): — 12 weeks from receipt of an acceptable order.
Terms of Payment: -- Cash against documents by means of a Sight Bill of Exchange presented through Chase Manhattan Bank, New York.

Goods
As the description of the goods is directly relevant to the range of tariff and
non-tariff barriers that they might attract at destination then we should
carefully consider the wording even at this early stage of the process. If
choices exist, it could be advantageous to be selective as to product
descriptions.

Price
Perhaps the most important element of the quotation and one which many
exporters actually get wrong.
Firstly, the price makes no sense without a specific Incoterm, such as
FCA, FOB, CIP or CIF, and the importance and meaning of these terms is
not always understood.
Secondly, the actual process of calculating an accurate export price is one
which causes problems for many exporters. The worst scenario being that
the relevant costs are underestimated. Most exporters can get an Ex Works
(EXW) price correct but additional costs are often closer to guesstimates.

Delivery
One of the most common mistakes made at this stage is the habit which
exporters have of suddenly becoming super optimists as far as delivery times
are concerned. Whilst it is tempting to quote short lead times in order to
make the quotation more attractive to the customer, the long term
consequences of subsequent late deliveries really make the exercise pointless.
It is far better to promise 12 weeks and deliver in 10, than to quote 10 but
deliver in 12. From a purely practical point of view the deadlines imposed
by carrier’s schedules and Letters of Credit mean that the consequences of
late delivery can be far more severe than simply an unhappy customer.

Terms and method of payment
The exporter’s estimate of the risks involved with certain customers and
certain markets should lead to sensible choices regarding the method of
payment and the credit terms granted. A brief point here; the credit risk in
international trade is now perceived as being worse than it has ever been,
and this does not just refer to developing countries. Many nations of the
world are bankrupt in strict business terms, and as businesses would have
been liquidated long ago. Credit risk management is essential to all exporters
and starts at the beginning of the process, not at the end when attempting
to collect money.

Order acknowledgment (acceptance)
It is important to understand that a simple quotation made by a UK exporter
is seen in English law as an invitation to treat. That is an invitation for the
buyer to offer to buy. The order from the buyer is therefore an offer to buy
which can be accepted, or rejected, by the acknowledgement or acceptance
of the seller. This means that the terms and conditions of the contract can
be defined in the order acceptance and are therefore the seller’s term and
conditions.

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