Landed Cost

The Landed Cost feature allows you to include "add-on" costs such as freight or duties in the purchase order cost of a product.  The Report Value of Inventory routine includes these add-on costs, increasing the accuracy of your inventory values.  In addition, the Landed Cost feature provides more accurate gross profit figures for your sales.

The Estimated Landed Cost field in Purchase Order Entry displays the total landed cost The total cost of a shipment, including the initial price of the goods, transportation and insurance fees, customs duties, unique taxes such as excise and value added tax, as well as other origin and destination charges. for the order at the time of entry.  Since this landed cost may change by the time you receive the order, STORIS labels this field as "estimated".  Once you receive a PO, the system includes any associated landed costs when calculating the average cost of the products on the purchase order.

STORIS calculates landed cost at the time of receiving.  When determining the final landed cost of a product, the system adds the calculated add-on and freight costs to the material cost The cost of the raw materials that go into a product. The material cost of a product excludes any indirect costs, for example overheads or wages, associated with producing the item. and posts these to the GL accounts indicated in the General Ledger Assigned Account Settings for any of the following add-on costs that have been specified for the product.

• Landed Cost Add-on 1

• Landed Cost Add-on 2

• Landed Cost Add-on 3

• Landed Cost Add-on 4

• Freight

Defining Add-On Costs

You can define add-on costs in multiple places in the system to add vendor ship from to the landing cost hierarchy. None are mandatory, so where you define add-on costs depends on the needs of your organization.  When determining which add-on cost to use for a product on a purchase order, the system references the following files in the following order, applying the first cost found.

1. regional product level ship from exception - District and Regional Product Settings, Regional Settings tab, Action button at Freight and Add-on Cost fields.

2. regional vendor ship from exception - Advanced Regional Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Vendor Ship From Exceptions.

3. product vendor ship from exception - Advanced Product Settings, Cost tab, Action button at Freight and Add-On Cost fields, Vendor Ship From Landed Freight and Addon Cost screen.

4. vendor ship from exception - Advanced Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Vendor Ship From Exceptions.

5. regional product level - District and Regional Product Settings, Regional Settings tab.

6. regional vendor group exception - Advanced Regional Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Group Exceptions.

7. regional vendor category exception - Advanced Regional Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Category Exceptions.

8. regional vendor level - Advanced Regional Vendor Settings, Shipping tab.

9. advanced product level - Advanced Product Settings, Cost tab.

10. advanced vendor group exception - Advanced Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Group Exceptions.

11. advanced vendor category exception - Advanced Vendor Settings, Shipping tab, Action button at Landed Freight and Landed Cost Active fields, select Category Exceptions.

12. advanced vendor level - Advanced Vendor Settings, Shipping tab.

13. company - Costing Control Settings

 All add-on costs follow the same hierarchy, but discretely. That is, the system can apply any of the costs from any level in the hierarchy.  For example, if you set up landed freight for all your vendors but only some products, and you do not use the regional options (numbers 1 and 2 on the list), then for all products set up for landed freight, the system determines landed freight via the Advanced Product Settings.  For all other products, the system references the Advanced Vendor Settings.  

STORIS recommends you set the freight factor at the vendor level rather than the product level except for unusual products, for example products that are very heavy or otherwise more costly to transport.

Activating Add-On Costs

Use the Costing Control Settings to activate the add-on costs.  Each add-on cost has an Active field. Check the box at these fields to activate the associated add-on cost.  Each add-on cost also has a field in which you can enter a label for the cost (for example, Duty or Misc).  The labels you specify appear whenever the add-on cost appears in the system.

To specify the method by which to calculate add-on costs, use the Landed Cost Distribution field in the Costing Control Settings.

Adjusting Add-On Costs

If you think your estimated add-on cost settings result in inaccurate estimates, you can use the following routines to compare estimated add-on costs with actual add-ons costs from selected vendor invoices.  Based on the comparison, you can decide whether to update your settings for estimating add-on costs.  

• Distribute Add-on Receiving Costs - Use this routine to enter information from invoices received from vendors and create a database of the actual landed add-on costs on each invoice.  

• Report Add-on Distribution Analysis - This report displays information on variances between estimated landed add-on costs and actual landed add-on costs entered via the Distribute Add-on Receiving Costs routine.