I. Landed cost overview:

For organizations involved in importing goods or items, it is important for them to know total cost of being paid for for importing these goods including cost of freight and duties on items as these cost can be quite signficant. Landed cost is the total cost that must be paid for goods or items being imported.

What is landed cost?

Landed cost is the total price of a product or a shipment once it has arrived at a buyer's warehouse. In other words, landed cost is total expenses associated with shipping a product.

What are cost components of landed cost?

Landed cost includes the original price of the product, transportation fees, customs, duties, taxes, tariffs, insurance, currency coversion, crating, fees.  These are some of individual costs are part of value of the goods being received. Tracking these help establish proper sales price and determine accurate margins.

The landed cost module helps business streamline inbound shipping operations by giving users complete financial and logistical control over imported frieght, from the manufacturer to the warehouse. 

Business can use landed cost to complete following tasks:

- Estimate landed cost at the time of voyage creation.

- Apportion landed cost to multiple items and purchase orders to transfer orders in a single voyage.

- Support the transfer of goods between physical locations by recognizing landed costs.

- Recognize accruals for goods in transit.

Landed cost provides accurate and timely cost estimates for overhead costs. At the same time, it provides financial and logistical visibility into the extended supply chain, also helps in reducing administration of costing and costing errors.

Highlights:

Voyages: 

In landed cost, a voyage is a dinstict movement from an outbound location, through a specific set of destinations over a specified period, to a specified inbound warehouse location. 

Item ownership:

In D365 SCM, goods are typically received at the warehouse destination and then invoiced. However, under most international trade agreements, a business takes ownership of goods from the time when they leave the original port, before they've been physically received. This concept is known as goods in transit order.

Costs:

When you create a voyage is landed cost, costs can automatically be added to it. These csots are set up in Landed cost, and various cost options and cost bases are available for them.

Each cost can be set up for different level of a voyage and apportioned to the item level through apportionment rules (like quantity, volume, weight, amount and defined volumetric divisors.). These estimated costs provide and accurate estimate for all costs of a voyage.

Landed cost then runs a preliminary posting/accrual of the estimated costs to ensure that accrurate calcuation of estimated costs are provided at the time of voyage creation. 

Actual costs are reverse-estimated costs that are posted at the time of cost invoicing by using clearning accounts that are setup for each type of cost. These postings behavior that is associated with the specific item. The posting is done automatically regardless of posting type (FIFO, LIFO, moving weighted average, or moving average). All inventory model group posting type are supported. 

For moving average and standard cost posting, purchase price variance accounts are available to post the differences between estimated costs and actual costs.

Item and order tracking:

As a voyage moves from the originating outbound location to the final destination warehouse, users can update each step, or leg, of its journey as required. For each leg, a lead time and a shipment status are identified. Confirmed delivery dates for movement to the next leg of the journey are also identified. 

Together, these delivery dates provide and estimated delivery date of the goods to the inbound warehouse. Users can change these delivery dates. In this case estimated delivery date of the goods is then automatically updated, based on the lead times and legs of the journey. Visibility into goods in transit by voyage and vessel is available on the a per-container basis before receipts of the goods.

Landed cost concepts:

Following tables summerizes some of the concepts of landed costs:

II. Landed cost vs Tranportation Management

D365 SCM provides two different modules for working with transportation: 

- Transportation management (TMS) 

- Landed cost

This blog provides summary of functionalities that the two modules have in common and highlights the differences between them.  This may help you determining which modules best fits your business. Please remember this blog only highlights available functionalities.

Terminology, reference data, and reporting differences:

Terminology comparison:

Tranportation Management System (TMS) and Landed cost use different terms for similar concepts. Quick summary below:

Note:

TMS and Landed cost don't share reference data for entities such as cost setup, journeys, and legs. If you use both modules, you must re-create the unshared reference data.

Reporting:

Some of the intercompant reporting do not work in conjuction with the goods in transit feature that Landed cost provides:

- Intercompany goods in transit totals report

- Intercompany goods in transit transactional report

These reports assumes that goods are put in transit as soon as you issue a sales packing slip, and that they are taken into inventory from transit upon receipt. Howeever, goods in transit aren't processed in this way. Therefore, if you use the goods in transit and intercompany features together, the results for both these reports will be incorrect.

Using the two modules together:

You can use TMS for both inbound and outbound operations. Although Landed cost provides most of the same basic functionality as TMS for inbound operations, it also adds some functionality. Therefore, you might want to consider using TMS for outbound operations and Landed cost for inbound operations.

As per Microsoft recommendation, Both TMS and Landed cost modules should not be used together for inbound operations. You should use the modules that best meets your requirements. If you do use two modules together, you must not share source documents between them.

A. Goods in transit

One of the primary features of Landed cost is its ability to process goods in transit. Goods in transit processing lets you take financial ownership of shipped items before they are physically received at the destination warehouse. Goods in transit processing is often required for international trade.

Transportation Management System (TMS) doesn't support goods in transit currently.

Landed cost goods in transit features:

Goods in transit processing is a primary feature of Landed cost and provides the following functionality:

- Goods in transit warehouses: A goods in transit warehouse can be associated with each warehouse in D365 SCM.

- Goods in transit general ledger account: Landed cost adds a specific general ledger posting account to the purchase order posting profile to handle goods in transit processing. 

- Tracking control updates: Goods in transit orders support tracking control functionality in Landed cost.

- Triggering of over/under transactions: If a variance occures between the expected goods on a voyage line and the actual goods that are received at the warehouse, Landed cost resolves it by creating over and/or under transactions.

- Goods in transit orders: Landed cost introduces a new source document that is known as a goods in transit order.

B. Mischellaneous charges and shipment costs

One of the most import aspects of shipping and shipment management for goods in recognition of the overhead costs that are associated with shipments These overhead costs aren't the direct inventory costs that are associated with a purchase order and a shipment or voyage. Instead, they are additional costs that are introduced by the nature of the movement of the goods from the vendor to your organization. These costs can include freight costs that are associated with the shipment of goods from one of physical location to another., or duty costs that are associated with the import of goods from a foreign vendor.

Landed cost handles these costs by creating a new type of cost structure that is known as auto costs. TMS handles these costs by using misc. charge functionality.

TMS Charge and cost features: 

TMS uses misc. charges to manage additional costs for loads that are allocated to the related source document lines. These misc. charges can be set at the level of either the purchase order line or the purchase order header.

In TMS, misc charges are can be apportioned, or devided, by the weight, volume or quantity of the inventory. Charges can be divided by fright and accessorial charges.

Further development is requiredto use addtional apportionment methods in TMS.

Landed cost charge and cost features:

Landed cost provides a set of cost functions that handle addtional costs that are associated with the shipment of goods. These costs are known as auto costs, and they are applied at the time of initial shipment invoicing by using the estimated cost amount.Each cost type is managed in its own posting. After the actual invoices for overhead costs are posted. the estimated costs are automatically updated to reflect the actual costs.

Additionally, the overhead costs that are associated with the shipment of goods can be invoiced during the voyage from the port of origin or any time of goods are received.

The following list outlines some concepts for the charge and cost features in Landed cost:

- Cost area: Costs and charges can be assigned to different levels, or cost areas, on a voyage. The cost can be applied at the voyage level and broken down to each item in the voyage.

- Apportionment methods: Several apportionment methods are available in Landed cost. Cost charges can be apportioned by quantity, dollar amount, value, weight, volume, measurement, or a user-defined volumetric measure.

- Clearing/variance control: Cost charge are set up as their own cost code type in Landed cost. Each cost code type lets you define a clearing account for estimated costs charges, and also accrual and purchase price variance accounts for variances in estimated costs versus actual costs.

C. Matching freight bills and invoices

TMS bill and invoice matching features 

TMS can match freight bills that contain estimated costs and invoices with the actual cost of the freight. Invoices can be received either electronically or on paper. Matching variances between the estimated cost and actual cost doesn't affect the inventory valuation.

Landed cost bill and invoice matching features

Landed cost can match freight bills to estimated cost charges and can invoice the actual cost charges to the estimated costs. At the time of invoicing, the freight charges are in an invoice journal, and the estimated costs are cleared out of the clearing account.

Additionally, the actual cost charges are posted against the csot goods sold for the item, together with the variances between the estimated charges and actual charges.

D. Tracking

An important feature of both TMS and Landed cost is the ability to track goods and identify where they are in the journey from the point of origin to the final destination warehouse. Tracking lets you follow and update where the goods are located and when they are expected to arrive at the warehouse for consumption.

TMS tracking features

TMS provides limited features for tracking incoming loads. It shows dates and enables the integration to be built to find the exact postition. For each route segment, you can enter estimated schedules and arrival times.

Landed cost tracking features

Landed cost can provide  tracking control for each voyage, from the port of origin to the final destination. Tracking control sets the status of the voyage. The statuses indicate whether the voyage is sailing, at customs for inspection or in local delivery on its way to the final warehouse. The status can be set at the level of the purchase order line, the container, and the header of the voyage. Hence you have more granular control.

E. Multi-leg journeys

The joureny concept identifies where the goods are in the process and controls the status of the goods while they are in transit. Goods can go through several legs of journey, and you can associate various costs with a specific leg.

TMS multi-leg journey features

In TMS, routes can be broken down into route segments to represent multi-leg journeys. TMS can allocate spot rates and accessorial charges to individual route segments.

Landd cost multi-leg joureny features

Landed cost provides a framework for moving goods from the point of origin to the destination through a series of legs, which are the stops or steps in a journey. The legs are combined to create journey templates, which define how goods move from the vendor to your organization.

F. Receiving by container

It can be important to manage how goods are split and stored on a vessel. On a vessel, goods can be kept in one container or multiple container. When goods are received, they are received in container, and different containers on a voyage might be received at different times or on different dates.

Both TMS and Landed cost provide functionality for managing the receipt of goods in a container. TMS uses the concept of loads to manage the goods, purchase orders, and transfer orders that are associated with a shipment container. 

Landed cost uses the concept of shipping containers to process purchase orders and control overhead costs that are associated with a container on a vessel.

TMS receiving by container features

TMS supports inbound ASNs, all variants of receiving through the Warehouse Management mobile app, and all methods of receiving through the D365 SCM client.

Landed cost receiving by container features

To support receiving by container, Landed cost creates shipping container records and associates purchase orders with a specific shipping container by using its container ID. Overhead costs can then be applied to that shipping container and broken down so that they are associated with the relevant purchase orders.

Containers in Landed cost can be received through a new type of receipt that is known as a goods in transit receipt, through arrival journals, or through mobile device receiving. When arrival journals are used, the quantities can be initialized from the goods in transit order or the original purchase order lines in the container. Landed cost provides two work types for receiving through the Warehouse Management mobile app.

Landed cost doesn't provide an ASN for the electronic receipt of goods. Additionally, it doesn't support Warehouse Management mobile app flows that process load receiving, license plate receiving, or mixed license plate receiving.

G. Rate shopping by vendor

Rate shopping enables a company to select a transportation vendor based on the lowest price, the fastest route, or a combination of both considerations.

TMS rate shopping features:

TMS lets you identify vendor and routing solutions for inbound and outbound orders.  TMS provides full rate shopping and freight optimization through the rate route workbench, flexible rating options through the rating engine, a rating engine API for integration with external parties, and support for volumentric weight.

Landed cost rate shopping features:

Landed cost provides only limited support for rate shopping by vendor, Although you can enter freight forwarder values, Landed cost doesn't compare them across multiple vendors.

H. Driver check-in/check-out with appt. scheduling

Driver check-in/check-out features enable the system to monitor arrivals and prevent congestion at the loading docks.

TMS driver check-in/check-out features

TMS lets you create appointments. An appointment represents event that occur at a dock for receiving a purchase order, shipping a sales order, or processing an inbound or outbound load on a specific date and at a specific time.

The system supports allowing drivers to check in at a specific dock door.

Landed cost driver check-in/check-out features

Landed cost can store estimates for the date and time when a container will be delivered.

I. Transfer order and additoinal costs

Businesses must be able to transfer goods between warehouses. In landed cost, transfer orders can be added to a voyage or vessel to track the movement of goods from one warehouse or site to another, estimate the delivery time and expected delivery date, and add overhead costs to the transfer of goods.

TMS transfer order cost features

TMS supports the creation of freight charges that are connected to transfers. Although these charges can be viewed from the transfer order, the landed cost isn't added to the item cost. Freight reconciliation is supported through the creation of a freight bill that is based on these charges. This freight bill is then matched against a vendor freight invoice.

Landed cost transfer order cost features

Landed cost lets you add transfer orders to a vessel or voyage. In this way, you can add shipment costs to the voyage as inventory settlements at the time of transfer order receipt. The overhead costs can be invoiced for the actual costs and tracked against a voyage to update the cost of goods sold. Although transfer orders don't use goods in transit processing in the standard release, they can be added to voyages. The landed cost is added to the total cost of each item.