Understanding Estimated Landed Cost (ELC)

Global-Logistics.jpg

Today’s global corporations need the capability to source products from around the world. It enables them to increase product availability, reduce costs and explore new business opportunities. One of the major challenges of global trade is to accurately estimate the total cost of a product – which is also known as Landed Cost. To put it simply, landed cost is the total cost of a product incurred by the buyer.

Why is Landed Cost important?

Extended supply chain costs often constitute over 40% of a product’s cost. This makes it important to accurately incorporate supply chain costs into the overall financial process. Estimated Landed Cost (ELC) is used to accurately estimate these costs and update them with actual costs to provide more clarity on invoices and pro-rating them to shipments, orders and products. As a result, organizations get better insights into outstanding liabilities and can ensure that trade activities comply with rules and regulatory provisions.

In a globalized business environment with complex supply chain managements, it is difficult to accurately estimate landed cost. But for organizations, it is crucial to identify the best sourcing option and avoid the risks of hidden costs within the supply chain. With better visibility of anticipated charges prior to generating a purchase order, organizations can make more informed decisions which will enable them to reduce costs, protect profit margins and stay competitive.

How can ELC be calculated?

Estimated Landed Cost (ELC) can be calculated using a web-based application called Landed Cost Simulator. It is part of Oracle Global Trade Management (GTM) and is used to compare estimated and actual costs when shipping an item. The Landed Cost Simulator follows a pre-determined process to estimate landed cost:

  Landed Cost Simulator Process

 Landed Cost Simulator Process

The sourcing options are determined based on:

•         Country of Imports

•         Classification Type

•         Product Information

•         Quantity 

•         Country of Export

•         Transport Mode

•         Incoterms

•         Invoice Value

 

The components used to determine landed cost are:

•         Logistics Fees

•         Insurance

•         Brokerage Fee

•         Bank Fee

 

The Landed Cost Simulator considers these components to determine the total landed cost for different sourcing options. It allows Oracle Global Trade Management (GTM) users to compare the ELC across a range of scenarios by considering variables such as country of origin, mode of transport and incoterms.

What are the benefits of calculating ELC?

Better Competitiveness

ELC provides an unrivalled strategic visibility into the information required to support complex sourcing decisions and supplier negotiations. Companies can use this information to price goods more accurately and fully understand the charges that are associated with procurement and distribution of items.

Increased Product Profitability

ELC has the capability to automatically capture and itemize extended costs including freight, insurance, brokerage fees, duties and taxes. These cost components are allocated and assigned to the products to which they apply. Charges can be viewed before or during the shipment of goods and adjusted when actual invoices are matched to the receipts. ELC users get access to detailed item cost tracking and accurate profitability reports. In addition to this, they can also identify opportunities for additional cost reduction per unit by viewing a detailed list of an item’s cost factors.

    ELC Benefits within the Supply Chain

   ELC Benefits within the Supply Chain

Organizations frequently incur unexpected costs during various stages of the procurement and fulfilment processes. ELC makes it easier to anticipate charges even before the generation of a purchase or sales order, allowing organizations to make informed decisions towards cost reduction, increasing profit margins and managing competition.

Compliance

ELC allows industries with complex supply chains to comply with global best practices. It enables organizations to link the product supply flows with financial processing and reporting. For organizations operating in regions with regulations requiring item specific profitability documentation and income tax calculations  ELC can help save several man hours. It can also automatically link invoices to receipts which can provide evidence to authenticate inventory cost declarations in financial reports.

Are you curious about ELC and its possible uses for your business?

Write to us on info@accelalpha.com for a free demo.

3 Business Benefits of Configure Price Quote (CPQ)

3 Business Benefits of Configure Price Quote (CPQ).jpg

Configure Price Quote (CPQ) is a powerful tool for companies that are focused on increasing revenues, profits and customer satisfaction levels. CPQ automates the order to quote process and ensures that the most accurate price is quoted for products. Implementing CPQ positively impacts several functions within the business. Here are 3 major reasons why CPQ might just be the boost that so many organizations are looking for:

1. Shorter Sales Cycles: CPQ software can reduce your sales cycle by a third. Using CPQ, sales representatives can generate quotes faster without sacrificing accuracy. This allows them to close deals faster. The average sales cycle for a non-CPQ enabled companies is 4.68 months* which is reduced to 3.42 months* (33%) using CPQ.

2. Increased Deal Values: CPQ software can help sales representatives with cross and up selling suggestions during the quoting process. By recommending customers to purchase additional items like add-ons or accessories, CPQ helps increase the deal size. Product configurators within CPQ display customizations, add-ons and accessories for the customer to easily choose them. This gives the sales representatives more chances to up sell without being too ‘pushy’. According to research*, this results in 57% greater margins than the companies who do not use CPQ.

3. Better Customer Satisfaction: CPQ can help sales representatives with their CRM objectives. For example, they can receive alerts when its time for a contract renewal or product upgrade. These alerts serve as advance notices of opportunities to cross or up-sell. CPQ can then assist the sales representatives in recommending the best products, services or bundles to the customer. The speed and accuracy that CPQ brings to the table results in a higher degree of customer satisfaction and retention.

Configure Price Quote is an efficient solution that can transform your business and take it to the next level. CPQ can especially be used to fuel the growth of companies that are expanding and return the highest level of ROI in the technology solutions space.

About Accelalpha CPQ

Accelalpha Inc. is a premier IT consulting firm that specializes in implementing packaged software solutions. It provides services across a breadth of industries including Retail, Hi-Tech, Oil & Gas, Accelalpha’s unique CPQ implementation approach is aimed at:

•       Providing superior user experience to ensure client satisfaction

•       Reducing up-front investment through accelerated implementation plan

•       Utilizing scalable design practices for long-term success

Have a question or want to learn more about CPQ? Write to us at cpq@acelalpha.com and let one of our CPQ experts get back to you.

 

* Data from the Aberdeen Group’s Research Report

Accelalpha Modern Supply Chain Experience 2018 Wrap-Up

                                                                           Accelalpha at Booth 826

                                                                          Accelalpha at Booth 826

The Oracle Modern Supply Chain Experience (MSCE) is one of the most coveted events for supply chain and logistics professionals worldwide. Each year, professionals from across the globe attend the MSCE to stay updated with the latest industry trends, case studies and insights. The 2018 edition of the MSCE was held in San Jose, California. 

                                                                           Accelalpha at Booth 826

                                                                          Accelalpha at Booth 826

The Accelalpha team had a busy couple of days at the MSCE 2018. Here are some highlights: 

  • Accelalpha's GTM, OTM and WMS teams connected with customers and experts in the industry and offered insights to successful Oracle implementations. 
  • Tuesday, 30th Jan: Accelalpha hosted an invite-only customer and partner cocktail reception at the Arcadia Lounge, San Jose Marriott. The reception was a success and saw a huge turnout that included industry leaders, senior partners and others. 
  • Wednesday, 31st Jan: Seagate Technologies, one of the largest data storage companies in the world, presented their case study 'Seagate Migrates to GTM Cloud'. Accelalpha has been working with Seagate for several years and was instrumental in helping them successfully migrate to the GTM cloud. 
                                                              Seagate Presentation: GTM Cloud Migration

                                                             Seagate Presentation: GTM Cloud Migration