Landed Cost Process

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Transcript of Landed Cost Process

Landed Cost Process

Landed Cost ProcessFebruary 252014 Oracle Landed Cost Management enables you to manage estimated and actual landed cost for an item purchased from a supplier. Using Oracle Landed Cost Management you can determine the "real" costs associated with acquiring items including insurance, transportation, handling, storage costs, container fees, and import or export charges.Standard LCM, Vision Operations

ContentsLanded Cost Process2Setups21)Organization Parameters22)Receiving Parameters33)Landed Cost Management Options44)Defining Shipment Line Types45)Defining Shipment Types5Process71)Creation of PO72)Shipments Creation73)Creating Receipt104)Creation of Invoice for Charges with actual value115)Accounting Entries13

Landed Cost Process

Landed Cost Management process is of two types. 1) Landed cost as Pre-receiving 2) Landed cost as service

Setups 1) Organization Parameters

First we need to enable LCM Enabled check box in Organization Parameters in Inventory as shown below.Navigation: Inventory -----> Setup -----> Organization ----->Parameters

Note: 1) Once this check box is enabled we cannot uncheck this.LCM Variance account should be defined in Other accounts tab as shown below. This field will be enabled only if LCM is enabled.

2) Receiving Parameters In receiving parameters check this Pre-Receiving in LCM check box for LCM enabled organizations and accounts should be defined mandatorily if the check box enabled.Navigation: Inventory -----> Setup -----> Organization ----->Parameters

Note: 1) This is not a mandatory for LCM Enabled organization. If this is enabled we can make estimated charges for a shipment and can be added to item cost. If this is not enabled the charges will be added only after making Invoice for the receipt.

3) Landed Cost Management Options

We have to define LCM Options for LCM enabled Org. in Landed Cost Management Module.Navigation: Landed Cost Management -----> Setup -----> Options

4) Defining Shipment Line TypesSetting up shipment line types is a mandatory step before you can use Landed Cost Management. Shipment line type is a mandatory attribute of all shipment lines on a Landed Cost Management shipment. It provides a shipment line categorization and also drives the landed cost calculation behavior.

Navigation: Landed Cost Management -----> Setup -----> Shipment Line types. Click on Create.

A window will be opened and details should be filled as below

Select the Included in Landed Cost check box if want the landed cost engine to include the line amount for this shipment type in the landed cost for the item.

Select the Associable Line check box if the shipment line can be associated to another shipment line. For example, the amount of the first line will be prorated and allocated to the landed cost of the second shipment line.

5) Defining Shipment TypesBefore you can begin to use Landed Cost Management you must create shipment types. Shipment type determines the validations that will occur for a shipment.

Navigation: Landed Cost Management -----> Setup -----> Shipment Types

Define Third party allowed as Domestic (or) Foreign (or) both to use this shipment type for particular type of suppliers. Select the shipment line types that can be allowed in creating a shipment with this shipment type.

Select the party types which will be allowed to use this shipment type in this tab.

Select the party usages, which use this shipment type in this tab.

Select the source type as the only available option purchase order.

Process1) Creation of PO

First let us create a PO for the organization which we created above LC1- LCM Enabled Organization - 1 (Pre-Rec) Organization.

2) Shipments CreationAfter PO is approved we cannot make normal receipt for this PO until a Shipment is created. So a shipment needs to be created.Navigation: Landed Cost Management -----> Workbench -----> ShipmentsSelect the organization and click on Go and Create as shown below.

A window will be opened as shown below. Select the shipment type created and then enter the group reference manually for reference (not mandatory). Select the PO Supplier in Third Party column and its site in Site column.

After entering these details click on Save and then click on Lines as shown below.

Enter the PO Number in the field shown below and click on Go

Select the check box in the line and enter the qty for which receipt is going to be made. Then click on Apply and Save.Now click on Manage Charges as shown in Figure

Then enter cost factors for the charges, Supplier and Estimated charge for that cost factor. Then select the Association type form the available options like Shipment, Line group, Shipment line.(Say Shipment). Click on Apply.

Now select the validate option as shown below and click on Go. Similarly repeat this step for Calculate, Submit.

3) Creating Receipt

Once this is done, now make the receipt in Inventory. We have to select source type as LCM and then select PO and shipment number as shown.

Here the qty column will be frozen and is equal to the qty entered in shipment in LCM module.

Make receipt and receiving transaction also as a regular process.Now we can check the charges for the shipment in LCM. Open the shipment and click on view Landed cost.

4) Creation of Invoice for Charges with actual valueSelect the supplier for which the charges have been entered in LCM and enter the actual value as shown and click on Match Select the Type as Miscellaneous if it is related to any other charges other than freight. Enter the PO Supplier and PO number click on find.

Validate and create accounting is also done for this invoice.

After this we have to run two requests in LCM. They are as follows1) Matches Interface Import2) Submit Pending ShipmentsThen click submit in shipments in Landed cost.

5) Accounting EntriesAt receipt:

At Deliver Step:

At Invoice for Goods received:

At Invoice for charges to third party:

Now the accountings at Receipt step and deliver after matching invoice with charges.

At deliver after Actual charges matched to Invoice

At Receipt before invoice matching to chargesDr. Receiving Inspection AccountCr. AP Accrual AccountCr. Landed Cost absorption Account (Defined in Receiving parameters with estimated value)At Delivery before invoice matching to chargesDr. Inventory Material Value AccountCr. Receiving Inspection AccountAt Invoice for goodsDr. AP Accrual AccountCr. LiabilityAt Invoice for ChargesDr. Charge account for Charges (Actual Value)Cr. LiabilityAt receipt after invoice matched to charges with actualsDr. Receiving Inspection Account (With difference value of Actuals and estimate)Cr. Landed Cost Absorption Account (With difference value of Actuals and estimate)Dr. Landed Cost Absorption Account (With difference value of Actuals and estimate)Cr. Receiving Inspection Account (With difference value of Actuals and estimate)At Delivery after invoice matched to charges with actualsDr. Inventory Material Value account (With difference value of Actuals and estimate-Average cost update)Cr. Landed Cost Absorption Account (With difference value of Actuals and estimate-Average cost update)