NetSuite Solution for Volume-Based Inbound Shipment Costs
NetSuite Solution for Volume-Based Inbound Shipment Costs
What is NetSuite Inbound Shipment Landed Cost?
NetSuite’s Volume Based Inbound Shipment Landed Cost is the process of allocation and distribution of freight cost across multiple item receipts based on volume. This process ensures that the products taking up more volume are assigned a fair cost of the logistics. Landed cost calculations play a crucial role in the overall cost structure of the supply chain. They offer accurate shipment costing and inventory data by reflecting the actual capacity consumption.
What Are the Advantages of Volume-based Inbound Shipment Landed Cost?
Let’s discuss some advantages that are offered by NetSuite volume-based shipment costing compared to other cost allocation methods.
- Accurate allocation of cost: Volume based inbound shipment cost relies on the space occupied by the product instead of other values like weight and unit price. This closely reflects the real operational consumption data.
- Reduction of manual errors: NetSuite volume based landed cost reduces manual errors by automating cost allocation in item records.
- Improves the cost tracking of the products: This method provides the most accurate and efficient way to allocate the cost across multiple items which ensures accurate financial reporting.
- Optimized inventory management: NetSuite's volume-based inbound shipment provides a comprehensive view of acquiring inventory including all expenses incurred to the inbound freight.
Client Portfolio
A USA-based fulfillment services provider operating in the retail sector approached us to implement an efficient landed cost calculation for their items in multiple orders. They sought accurate costs so that their customers could know the exact cost of each item after shipment. Since they deal with large consignments and shipments, effective calculation of order is essential for them to track the right costs and for robust financial control.
Problem Statement
Our client faced a constraint in the efficient calculation of inbound shipment landed cost within NetSuite. The shipments included multiple purchase orders, often involving numerous bulk shipment orders. Their legacy approach distributed the shipment charges evenly across orders, leading to inaccuracies and operational inefficiencies. The client’s requirement was a precise and sophisticated solution for the landed cost calculation of each item and purchase order.
Reduced cost discrepancies in the financial reporting
Improved landed cost accuracy compared to other methods
Reduced manual effort in the cost allocation
What Solution We Have Suggested?
To address the client's needs, we recommended developing a custom NetSuite solution which is capable of accurately calculating the landed cost based on two key categories: volume and value. Our solution included the creation of a custom page where users can view the landed cost for each item and purchase order.
Key Features of Our Solution are:
- Analyzes the size and weight of each item and uses a specific formula to handle volume-based costs.
- Assesses the price of each item to utilize a distinct formula designed for value-based costs.
- Provides a holistic view of landed costs for each item and purchase order.
- Facilitates the users to quickly and easily determine the exact freight charges and shipment rates for each item.
- This feature provides the status of purchase orders from 'in-transit' to 'shipped' based on the stage of the process.
- Reduces manual intervention and ensures accurate tracking of purchase orders.
Challenges
Developing precise formulas for both volume-based and value-based calculations proved to be more complex. Ensuring these formulas were robust enough to handle the variability in shipment sizes and values was a significant challenge. Our expert team examined all possible scenarios that could affect the smooth workflow and provided the right solution.
Customer Success
Our NetSuite Volume Based Landed Cost solution has created several significant improvements for the client. Some of them are:
- Automated the landed cost calculation process, which drastically reduced the time required for manual calculations.
- Enhanced productivity by enabling users to determine the landed cost with a single click.
- Provided highly accurate landed cost calculations based on detailed volume and value assessments.
- Eliminated discrepancies and errors associated with the former approach.
- Accurate cost allocation aided the company in optimized financial planning and cost control.
- Provided a clear understanding of shipment rates and freight charges for each item.
Key Achievements
- Reduction in manual work by 70%
- Accurate landed costs for individual items
Way Forward
With these advancements, the client is well-positioned to achieve optimal configuration and accuracy in their landed cost calculations, supporting optimized inventory management and operational excellence. As NetSuite volume-based shipment costing is highly scalable, the solution can be extended to handle multiple currencies to accommodate their global operations. With just a click, you can get the entire calculation split for your specific order from the bulk shipment.
Are you looking for an efficient cost calculation for your shipped orders? Need to know the item cost individually for bulk orders? Connect with our NetSuite experts today to improve your operational excellence with Jobin and Jismi’s NetSuite Volume based landed cost solution.
https://www.jobinandjismi.com/products/volume-landed-cost
Frequently Asked Questions
Using volumes for calculating the inbound logistics costs helps in creating more accurate and realistic allocation of the landed costs. This helps in the efficient calculation of procurement and helps to expedite the profitability of the company.
Landed cost includes freight charges, customs duties, taxes, insurances, brokerage and any additional logistic expenses incurred until goods reach the warehouse. They ensure accurate inventory valuation and profitability analysis.
It aligns cost with actual space utilization, ensuring that larger items bear a proportionate share of shipping expenses, which results in more precise product costing and profitability analysis. They eliminate the inaccuracies caused by equal and manual cost splitting.
Challenges include maintaining accurate item dimension data, configuring ERP systems correctly, and ensuring consistency across shipments and vendors. Overcoming these challenges requires strong collaboration between logistics, finance, and IT teams.
It is beneficial for industries dealing with bulky goods such as furniture, electronics, and packaging materials, where space utilization significantly impacts shipping costs.
Volume based landed cost provides a clearer picture of actual product costs, enabling businesses to set more accurate pricing strategies and avoid margin erosion.
About Jobin and Jismi
Jobin & Jismi is an Oracle NetSuite implementation partner that brings deep expertise in extending NetSuite capabilities for unique business processes. Its NetSuite customization and development capabilities cover complex transaction processes, costing rules, and operational data, supported by SuiteCloud technologies such as SuiteScript, SuiteTalk, and APIs. This is particularly relevant for fulfillment businesses where cost calculations and operational requirements can vary by transaction volume, shipment, or business rule.
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