I was speaking with a junior consultant the other day and they were asking various questions about the different modules inside of Dynamics 365 Finance and Supply Chain. One of the harder modules to explain was the landed cost. When would you use landed cost vs standard procurement and sourcing?
What is the landed cost module
The landed cost module allows a company to create and track voyages for goods that are mainly acquired from overseas vendors. This doesn’t always have to be the case, but this is what I’ve found to be the main use case. Typically in the landed cost module you have a few different components. First you have the purchase order for the goods, then the broker invoice for the duties and fees that are accumulated during the transportation of the goods. Also there is typically a need to track these shipments as they move through the various ports, waterways and roadways.
When do I need the landed cost module
There is typically one test that I apply when deciding whether or not a client needs the landed cost module. The one question I ask is are there goods where you take possession of the goods before they arrive at your warehouse? In other words do you need to show the goods in your inventory before they arrive at your warehouse. This is typically the scenario where goods are manufactured in China and delivered to the Shang Hai port. At that point when the goods arrive at the port the vendors responsibility is over. That inventory belongs to the business.
This is the key distinction for landed cost because the landed cost module allows you to take possession of the inventory in the goods in transit warehouse. This allows the company to keep track of the inventory that they own but is not yet in their warehouse physically.
Conclustion
The landed cost module is a feature rich module when working with shipments that are coming from overseas. The when do you take ownership test is the basic test that I apply when deciding whether it is needed or not. I have seen other projects use the landed cost module in other ways, but this is the main way it was written for. There are several videos and blog articles that I have written about the landed cost module please check those out as this is an important one to learn.
