Buyers, like other professions face a lot of challenges every day. Now that the economy is improving in some industries, prices and lead times are increasing and selected availability is decreasing.  Industrial buyers need to find the right product, at the right price, right quality and right time. Just understanding specifications may be time consuming before finding and qualifying suppliers. Depending on the price and company policies, the part may need to have several bids from prospective suppliers before negotiating the final details.  That is a lot of work.

What is amazing is how many buyers think FOB origin is the best transportation notation on their PO.

FOB is free on board, although it is commonly thought of as freight on board. FOB origin considers where title of the goods transfer and not who pays for freight or who is liable.

So why do some buyers spend so much time negotiating details and not consider what happens when the freight is damaged or lost in transit? One rail car of material could easily cost what the calculated savings are for an entire year.

Buyers Beware, FOB matters! While understanding your company policy,  you may want to consider added freight terms to your agenda while negotiating!