The Landed Cost module is an optional enhancement to the purchasing process of inventory items within the EBMS software. This module adjusts the purchase cost of an inventory item to reflect the true landed cost.
The total cost of a landed shipment may not equal the price listed on the purchase order because of freight, insurance, rebates, or other costs or adjustments. Landed Costs, or the "all in" costs of materials and inventory on the shelf, are very important for understanding true cost of product and margins. Essentially, a landed cost is a product cost that is inclusive of not just the cost of the material that is paid to the vendor, but all of the costs incurred in getting it to your shelf. Typical landed costs include inbound ocean freight, duties and fees paid, internal processing, hauling charges, or even guaranteed rebates from a vendor.
Some buyers even include their own internal material handling or receiving inspection charges to get inventory onto the shelf, or into a state where the inventory is ready for sale or use in a manufacturing process. Such costs can be considerable, especially if there are significant freight costs due to weight or ocean freight.
Some familiar purposes of the Landed Cost option is as follows:
Add freight Costs: This option is required if the freight costs are invoiced on another expense invoice.
Add Other Costs: Add costs such as insurance, handling, or any other miscellaneous costs to the original purchase cost.
Add Handling or Processing Adjustments: Add any internal costs such as handling, packaging, or processing that does not include other inventory items.
Reduce Cost Based on Guaranteed Rebates: Reduce the purchase cost to reflect guaranteed rebates.
The goal of this module is to record an accurate cost used to calculate profit reports and salesperson commissions.
Review the Cost Adjustment Types section for details on how to setup landed cost adjustment types.
Review the Assigning
Default Landed Costs to an Item section for instructions on how to
add default landed costs to an inventory item.
Review the Adjusting
Landed Costs within a Purchase Order section for instructions on how
to use the landed cost features.
Refer to the Inventory documentation for more details on the purchasing tools, purchase orders, and inventory counts and values.