Landed Cost Management (LCM) helps you capture all the costs related to a purchase such as freight, insurance, taxes (country, state, local etc). Landed Cost Management enables you to calculate landed cost of the item, which is taken into consideration for costing and accounting purposes. This helps customers to valuate goods at actual cost and also helps in complying with the country's fiscal/legal requirements.
There are two distinct types of Landed Cost Management practices followed by customers:
All fiscal & commercial documents (e.g.: invoices) are received together with the goods. It is a legal requirement that all documents must be carried by the truck driver and delivered to the addressee along with the goods/products. In case of electronic documentation (e-invoices), the driver carriers a report print-out referencing the e-invoice number that can be tracked by any tax authority in case of in-transit audits.
In other situations you can define charge templates (freight, duty, insurance, etc) by vendor/item. When goods are received in the Receiving module, Landed cost is calculated based on the receipt quantity, charges in the template and item price, and then costing is carried out using the landed cost. In this scenario, charges are captured and landed cost is calculated in the background, without user intervention.
For information on Landed Cost Management with Purchasing, please refer to the Integration with Other Applications chapter, Landed Cost Management section.
Integration with Receiving
You can calculate landed costs in either of the following two methods:
You can configure Oracle Inventory/WMS with LCM as a pre-receiving application, to allow receipts of goods only after the landed cost is calculated in the Landed Cost Management module.
You can configure Landed Cost Management not as a pre-receiving application, allowing the user to receive the goods without cost knowledge;this triggers Landed Cost Management in the background to capture costs from pre-defined templates and to calculate landed costs.
In both the cases Receiving captures unit landed cost from LCM for the corresponding receipt line and passes the information to Costing / Accounting modules based on the landed cost instead of purchase price. Landed Cost Management supports PO receipts with Destination type Inventory. For PO receipts with destination type OSP and Expense, RMA and internal requisition receipts are made without landed cost even in the LCM enabled organizations.
In Inventory > Setup > Organization > Organization Parameters, you can define Landed Cost integrations and in Receiving Parameters optionally define Landed cost as a pre-receiving application. LCM enabled flag indicates that PO receipts with destination type Inventory (PO shipments will be marked as LCM) in this organization are made with landed cost and all other receipts with PO price. The Find Expected Receipts window enables you to query an expected receipt with reference to its landed cost records in LCM by shipment ID or Supplier and create receipts in Oracle Inventory. Oracle Inventory takes the landed cost and uses it for the inventory cost calculations instead of purchase price. You can also use Mobile receiving to receive the goods vis-a-vis landed cost records in Landed Cost Management.
Alternatively, if Landed Cost Management is not pre-receiving, then you can receive the goods without landed cost; landed cost is calculated in the background before creating receipt transactions. Receipt transactions with Landed cost are indentified with Landed cost Shipment Line ID in Oracle Inventory for cross reference at a later point of time.
If the Inventory Organization is integrated with Landed Cost Management and Landed Cost Management is a pre-receiving application: You cannot receive goods directly using Desktop/Mobile Receiving without referring to its landed cost records in Landed Cost Management. YOu can query expected shipments by PO, Line, Shipment, Supplier and LCMshipment to receive these receipts with reference to LCM shipments.
If the Inventory Organization is integrated with Landed Cost Management and Landed Cost Management is not a pre-receiving application then landed cost is calculated in the background and receiving transactions are created with LCM shipment ID reference.
You can perform standard inventory functions like Inspections, corrections, RTV etc using existing desktop and mobile functionality. If the original receipt is made with reference to landed cost records (Receipt transaction will have LCM Shipment line stamped) then Landed cost is used for costing these transactions otherwise regular purchase price is used.