Landed Cost Module is a new module introduced by Microsoft Dynamics 365 for Finance and Operations and was made generally available on 1st April 2021 as part of release 10.0.18.
Financial and Logistical management are very important in every organization – for deliveries especially in terms of supply chain management planning as well as item cost visibility and profitability. Organizations often have global supply chains with international suppliers, exposing them to high tariffs, long lead times, and expensive inbound transportation costs.
To help here, the Microsoft Dynamics 365 Landed Cost Module provides a comprehensive solution to an organization’s inbound logistics and landed cost needs, gives organizations an innovative way to track goods in transit by providing complete financial and logistical control during full shipment, and also reduces administration of costing and costing errors.
The great convenience here is the increased financial and logistical visibility into the extended supply chain as well as detailed comprehension in item costing and profitability by tracking every point in the goods-in-transit way – from a supplier warehouse to the shipping port over freight forwarder and freight company to destination warehouse finally.
With a single data entry, Landed Cost Module allows to calculate costs quickly and accurately, what helps to predict item costs, thereby improving pricing decision making. Such administrative tasks as estimating landed costs and status tracking help to avoid financial missteps that can weaken product profitability. These enhanced features save time for users and streamline production from the supplier to the final warehouse.
Landed Cost Module can account for up to 40 percent or more of the total cost of each imported item: transport from supplier to the shipping port, loading, sailing, customs clearance, transport from the port of arrival, delays, duties, or other contingencies that will impact the item price.
This new functionality provides tracking of each part of the goods journey from supplier warehouse to the final destination warehouse. Transportation parts of the shipment can be different, organized by supplier, freight company, shipping port organization, freight forwarder, etc. and in Landed Cost Module these can be determined and settled into various legs of voyage.
With landed cost feature, containers of shipments can be controlled from landing in port, through transit till receiving at the final destination warehouse, what amplifies transparent visibility of stock delays and consistently strengths operational effectivity.
Main Attributes
Voyage – it is the central element of the new module and shows the long journey of the goods from the moment they are ordered to their arrival in the final destination warehouse.
Every step of a voyage can be defined, including adding a purchase order to a container. Voyage can have items from multiple suppliers, purchase orders, can have one or more containers and folios.
Tracking control center – helps user to prepare a trial journey plan and commit a full traceability of all containers, items, suppliers, orders by points of movement of goods, by dates, see delays, see calculated expected dates of every journey’s part and expected final date of arrival.
With voyage number user can see in a microscopic view for any tracked activity (loading customs, clearing, landed transport, etc.) and connect to sales, purchase managers, customer service and logistic stakeholders on time. With this capability the status of goods updates in real-time, every time when dates are changed. These adjustments are visible whenever a shipment’s activities are altered and throughout every step of the journey.
Goods in transit – a functionality to record and track voyage in transit, most useful when user would like to record collection goods before their physical receipt in final destination warehouse, upon receipt of the supplier’s invoice.
When an order or voyage is set up to use goods-in-transit processing, user can invoice them, what means, goods are invoiced when they leave the vendor’s warehouse or port of origin, and the financial costs are recognized when the voyage begins.
This feature lets user correctly take ownership of inventory, because goods often become the property of your organization when they leave the shipping port. The goods will be in interim “goods-in-transit warehouse”, what means they aren’t available in inventory and can’t be picked from inventory for delivery. However, user can see them in the goods-in-transit inventory and can use for master planning with expected date of arrival as date when inventory will be available for consumption.
Cost calculations – let user possibility to set up landed costs and the way they affect the cost of ordered goods. There are different areas cost allocations can be established: full shipments, containers, for purchase or transfer orders, orders lines or to a specific item. The feature helps to predefine the planned estimated costs, record factual invoices for actual logistics costs, comparing and considering the differences between the estimated and the actual cost.
Estimated cost is determined as landed cost for a collection of inbound orders. Based on estimated costs, purchase accumulations can be registered before the goods will be received. After freight bills with actual freight cost will be received, streamline invoice process with matching costs will be started, estimated costs will be adjusted, regulated to reflect the actual cost amounts and actual inventory costs will be updated.
Costs include the price of goods, shipment costs, insurance fees, customs duties, and any other charges incurred along the way from the factory to final destination. They help to define product costing and to make pricing decisions.
Automatic cost calculations can be configured for different transportation modes, duties, and other fees incurred to get the goods to the warehouse. The costs and allocation methods can be further defined on various levels, including overall shipment, by container, for the purchase order, purchase order line, or transfer order line.
By using costs calculations, the estimated cost definitions, or a cost from simulation scenario, Landed Cost Module can forecast estimated costs allocated to items within a simulated shipment scenario, and later to update costs with actual invoices, to match sums and analyze differences.
Cost comparisons and reports can help to review costs by total voyage, container, purchase order, and line item by cost type code and category (such as FOB price, freight, accessed charges, duty, commissions, and brokerage fees).
It provides the great opportunity to analyze all costs, to determine where the costs can be cut, to calculate the item profitability, to build more effective business strategy.