“Seriously?!” My eyebrows were climbing up ignoring expensive botox in my forehead muscles... “What do you mean by negotiating the delivery terms closer to the equipment readiness? The supply contract was signed 5 months ago... at a lump sum condition.”

The project manager [Mark] looked at me calmly. “We did not need to fix those details at the stage of the contract signing. We were in a hurry and under the pressure from stakeholders, so we signed it as is.”

I had to take a pause. Deep short inhale, the long exhale and leaving for a cup of coffee – my tactics not to fall into a reactive mode, by simply taking myself out of the room and giving myself time to process in input.

While dealing with latte I opened the contract pdf again. I could not believe my eyes. According to it the delivery term was ‘EXW, EU multiple sites’ and a small comment in the text of the contract that a supplier does not provide packaging of the equipment. Nice detail to keep on mind, by the way. Especially when you have no idea at which geographic points you need to pick up your bulky disassembled equipment, something like several 40 feet containers of volume and big storage tanks, each size of a 20 feet container.

To translate it to someone who does not speak Incoterms language: imagine you have ordered a brewing factory. When it is assembled from different parts (tubes, tanks, control units etc.) it will make a size of a standalone house for a family of 3. So this factory consists of 4 – 5 bulky pieces of equipment, some of equipment will be loose tubes, elbows, valves, cables, electrical equipment etc., and according to the agreement you are paying to the supplier XXX currency units for making it according to your unique order and then to supply it to you at an agreed place and in an agreed form / shape / condition. Disassembled.

And then you sign a contract where you agree to pick up all the equipment yourself. It means: you need to arrange your own trucks, cranes (EXW means the supplier is not obliged by default to load the cargo on the trucks / railroad etc.), manpower to load / unload, to pack all the equipment according to the transportation requirements and safety rules, so - you somehow need to know them! And with all this you do not know from which 5 geographic points you need to pick up your cargo. How do you like it? Would you sign a contract with these conditions? I am very interested to hear from you.

For me then it was a bit of a challenge. It’s not a rocket science to arrange transportation. Though you have no idea about real cost on your end: special packaging of loose and bulky equipment is a costly piece of budget. As well as transportation from unknown places. Are the supply places within 200 km? Or are they within 2000 km from each other? Making a budget and timeline for transportation project did not seem doable until all the geographic points are known. Only 2 missing details in a supply contract made it a big problem that was placed on shoulders of a buyer....

TIP: When you sign supply contracts (for goods, works or services) – do not hesitate to ask a professional supply chain officer nearby to skim it before signing. Just in case... You do not want to face with surprises at a later stage of your project execution.