LCM

 Landed Cost Management

Cost to "Land" a material on buyers final Location

Cost Includes:

ü Includes insurance
ü Transportation
ü Handling, storage costs, container fees
ü Import or Export Charges, Taxes etc…

Landed Cost Management Setups

1. Inventory Organization
2.  Responsibility Creation
3.  Responsibility assignment against User
4.  Shipment Number Generation and Shipment Types Setup
5. Cost Factor
6. Transaction Process Flow
7. Accounting and Costing

1. Inventory Organization

Enable the inventory organization as LCM Enabled.

Navigation: Inventory: Setup: Organizations: Organizations

2. Responsibility Creation

Create Landed Cost Responsibility

Navigation: System Administrator: Security: Responsibility: Define

3. Responsibility Assignment against User

Assign the LCM responsibility against user

Navigation: Navigation: System Administrator: Security: Responsibility: Define

 4. Shipment Number Generation and Shipment Types Setup

Define the shipment number generation as “Automatic” or Manual based on the business requirement.

Navigation: Landed Cost Management: Setup: Options

 Define the Shipment Line types

Click on Create and create the shipment line type.

Navigation: Landed Cost Management: Setup: Shipment Line Types

 Define Shipment Types

Click on create and create the shipment types. Attach the shipment line type with the shipment type.

Navigation: Landed Cost Management: Setup: Shipment Types

 5.Define Cost Factor

Create cost factors such as Freight, Insurance, Import , Export Charges, etc..

Navigation: Purchasing: Setup: Purchasing: Cost Factors

 6. Transaction Process Flow

Create Purchase order and take the receipt without entering the additional costs such as Freight, Insurance.

6.1 PO Creation

Create and approve the Purchase order

Navigation : Purchasing : Purchase Orders  : Purchase Orders

 6.2 PO Receipt

Take the PO Receipt. If you try to take the PO receipt without entering the additional cost, system will not allow to take the receipt

Navigation: Purchasing: Receiving: Receipts

 Enter the Additional Cost (Cost Factors) in LCM Responsibility and created Shipment number as shown below

6.3 Create Shipment

Click on shipments and create the shipment number

Navigation: Landed Cost Management: Workbench: Shipments

 Create new shipment using the “Create” Option

 Select the purchase order from the List of Values and save

 From Actions Select “Manage Charges” and Click Go. Enter the additional charges.

 Click on “Apply”. Next select the Option “Validate” from actions and click Go

 Next select the Option “Calculate” from actions and click Go.

 From Actions select the Option “View Landed Cost” and click Go.

 Landed Cost is calculated as shown above. Submit the shipment to interface the records to Oracle Purchasing.

Now take the receipt with Shipment number as reference in Telnet –Mobile Application.

Navigation: Inbound: Receive: All

Note: Receipt can be taken in Oracle Application as well with the help of Shipment number. If you are taking the receipt in Oracle Application make sure that Source Type is selected as “LCM” as shown below

6.4 Receiving Transaction Summary

Follow the below navigation to find the summary information

Navigation: Oracle Purchasing : Receiving : Receiving Transactions Summary

7. Accounting and Costing

To check the costing and accounting details follow the below navigation.

7.1 Receiving Transaction

Follow the navigation to find the receive accounting entry

Navigation:  Cost Management: View Transactions: Receiving Transactions

7.2 Material Transaction

Follow the navigation to find the deliver accounting entry

Navigation:  Cost Management: View Transactions: Material Transaction

Accounting Entry

Transaction Type	Account	Dr (AED)	Cr (AED)
Receive	Inventory AP Accrual		1000
	LCM Absorption		250
	Receiving Inventory	1250
Deliver	Material Inventory Valuation	1250
	Receiving Inventory		1250

7.3 Item Cost

Choose the cost management responsibility to find the cost history.

Navigation: Cost Management: Item Costs : Item Cost History

Average Cost Update Calculation

Average Cost = (Transaction value + current inventory value) / (Transaction quantity + current on-hand quantity)

Average Cost = (1,250 + 10,0100 ) / (100+10010)

Unit Cost = 1,01,350/ 10110 

Unit Cost = 10.02473 for Each Quantity