Landed Cost Set-up

Landed Cost Set-up in SAP Business ByDesign

If you don’t have a full and accurate accounting of how much it costs you to get your products to your customer, you can’t correctly calculate your profit margins on international transactions. For example. failing to take certain costs into consideration or miscalculating them can result in transactions where your profit gets wiped out altogether.

Incorrect landed costs can cause your organization to have a hard time attracting and keeping customers. If the entire cost of your product is not clear, they may not even get as far as checking out resulting in cart abandonment. And if a customer does buy a product that shows up with unexpected extra costs, your customer could refuse the shipment altogether, meaning you lose a sale, most likely lose a customer for good, and pay both the initial and return shipping costs out of your own pocket.

To provide the best buying experience, it’s important that customers understand the estimated total cost of their purchase as early as possible in the shopping process. This allows retailers to give customers upfront transparency and control the customer experience.

Let us walk through how to set up the accrued landed costs functionality in SAP Business ByDesign. Watch the SAP Business ByDesign landed cost set-up demo below. 

Need advanced landed cost automation? Explore our advanced landed cost automation extension. 

[Video Transcript]

Welcome to Navigator Business Solutions walk-through on setting up the accrued landed costs functionality. This is a Navigator Business Solutions, product, and we were very excited about it. So today in this demo, I'm going to show users how to go to the settings and set up the functionality as it pertains to your business. So, first off, we're going to go into our navigation up here and we're going to come down here and see this landed cost work center. This is a work center that's going to be scoped in. You can talk to your account executive. I'm getting this, basically has to be scoped in and wasn't scoped in. There are a few settings and prerequisites that you're going to have to go through and set up as it pertains to your business and how your business functions, as you can see the work center, if we click on it, it has a couple, work center views.

You can see, we have the global settings the accrual types, the transportation modes, the accrual type rates. And then down here, we also have the inbound accruals and accrual reconciliations. We'll talk about the inbound accruals and accrual reconciliations when we go through the end-to-end process. But in this demo, this is specifically for kind of going through the settings and setting it up in order to actually use it with the purchase order processing. So, first off you can see that we have this goal setting. So we click on this,what the global settings are, is it's going to be extremely important.

This step, this is where you're going to map your postings to your correct GL accounts and chart of accounts. So as you can see here, we have,this one set up as the set of books, 9 0 1 1, and our chart of accounts, but we also have our GL accounts mapped here as well. So this is going to be specific to your business. And, you know, when you set up your, your GL accounts and all your different mappings, this is where it's going to be mapped and how, when the journal entries are posted, this logic is what it's going to be used,to make those postings. So pretty straight forward when you come in here, gain, this is very important as you can. We're going to be setting up your, your chart of accounts and general ledger accounts for the posting entries.

The next setting type that we're going to be looking at is the accrual types. Basically the accrual types act as a category for that specific specified type. And it will either find, you know, different dimensions and different costs of goods sold accounts. Specifically want to look at this one that I set up earlier. So if we go in here and look at edit you can see that we have, it's pretty straight forward. Set up, you got your ID, you're a cruel description, you're a cruel type. And then, you know, your chart of accounts is going to default from that global setting. And then you have your COGS accounts specific for your business. And then you're done here. You can add several different transportation modes to this one accrual type, but for this one, you know, more specifically looking at transportation mode, two for truck on the inbound process, but you can also add, you know, several other transportation modes in here.

So I can come down here, click here and add barge, and I wanna, you know, assign that to inbound and I can also assign it to outbound as well. But again, I'm just going to remove this and save this real quick and close next. We have the transportation modes. So as you referenced in here, you can see that transportation modes and a cool accrual types. These are derived from this setting and transportation modes. This is basically how your parcel is getting to your business and how you're going to get basically be charged from a supplier for getting your parcel to you. So we have a couple of different transportation modes in here right now. Again, if we want to create a new one, it's a very basic easy setup. So we can come in here and put five and transportation mode, we're going do air and we're just going to hit save.

So when I close here, I can just refresh this. And as you can see, we now have a new transportation mode of air in here, and it's valid and it's ready to go. So again, this is just going to be how your parcel is getting from point a to point B in where those costs are being accrued from last but not least, we have the accrual type rates. So what these are, this is kind of a, a systematic approach to it. So I'm going to look specifically at this one right here. So as you can see, if we come in here and hit edit, this is just, and you'll see this further as I run through the process and the edit on the purchase order. So you can see that we have a transportation mode set up his truck. We have the cruel type, his truck freight.
We have a specific product. We have a preferred supplier. We have how we want to allocate the cost. We want to do it by quantity.

Do we want to do it by dimensions and volume evenly by line items determined by the amount on the line item, or do we want to do it by weight? So basically when you're going through and doing a purchase order, and you go to the cruel screen if you have this product in your, that's why the product is a required field. If you do that product, it's automatically gonna populate this information because it's derived from this accrual, right. Accrual type rate. So we have a start date and end dates set up. So you can see that if this was unlimited, then no matter what, when we put this product in, it's going to default to all these different requirements so that we don't have to enter it in every single time.
So again, so if you have a cruel type of freight and the transportation is truck for a different group of products and the cost is always going to be 500, it's going to default to them, the PO.

So that's essentially the setup and the things that need to be done as prerequisites for running through the actual process and using the accrual landed costs, work center stay tuned for my, for my next demo running through the  end to end process and going through and showing the entries that are made during the process and kind of the ins and outs starting with the purchase order, ending with a supplier invoice. Thank you very much.

Watch our next demo -  Advanced Landed Cost Automation End-to-end for SAP Business ByDesign.

Have questions or want to learn more? Contact us here, call (801) 642-0123, or email info@nbs-us.com.