Landed cost management or LCM capture additional costs associated with procuring materials.It helps in Estimating the total purchase costs in advance for better decisions. there can be user defined landed cost entities to capture actual landed cost invoice data
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Why LCM is required
Landed cost charges are the direct and incidental costs incurred in bringing a product to its final destination to be included in the inventory value.
Find below the components ca be included for the product
Freight and transportation costs, from the supplier to the buyer’s ultimate location.
Costs associated with the physical preparation of the goods in order for them to be transported such as labeling,
picking, packaging and packing goods, including all inventory, distribution center, and warehouse costs.
Ship loading, unloading, demurrage, and other assessorial costs.
Haulage, drayage, storage, and detention fees.
Equipment and container fees.
Sales tax and value added tax (VAT).
Import and export charges, import VAT fees, customs brokerage fees, and excise taxes.
Port or pier fees, wharfage, and harbor maintenance fees.
Currency revaluations, with currency fluctuations and multiple currency conversions
Benefit of LCM
As with LCM you can get Inventory value which includes total landed cost, it will helps in Accurate product
You can take Corrective steps when you see that landed costs are not as per your plan
You can take better sourcing decision with LCM
You can generate Reporting in Landed Cost Management based on various dimensions primarily driven by analytics from Essbase cube.
Analysis can be done on the following dimensions:
• Business Unit
• Inventory Organization
• Third Party Supplier
• Item Category
• Time Period