Slide 3 - Oracle Inventory & Cost Management Cloud Release 11 Fusion Landed Cost Management Enhancements
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Hello, my name is Venkat. Welcome to training for Release 11. In this session we will talk what’s coming in Oracle Fusion Landed Cost Management.
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Slide 4 - Agenda
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For the enhancements covered in this training, we’ll give an overview, followed by more detail to explain how you can use them, and what business value they bring.
Then, we’ll walk you through a demonstration.
Next, we’ll explain what you need to consider before enabling these features in your business, and what you need to know to set them up.
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Slide 5 - Enhancements Overview
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Fusion Landed Cost Management (LCM) gives organizations financial visibility into their extended supply chain costs, including transportation and handling fees, insurance, duties, and taxes. Since these types of charges can compose a significant portion of an items' cost, it is important to accurately incorporate them into overall financial processes and decision making activities. Fusion LCM initially estimates these costs and later updates them with actual amounts as they become known, allocating them to Purchase order receipts. The landed cost eventually becomes a part of item cost and gets absorbed into Inventory.
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Slide 6 - Enhancements Overview
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Landed Cost management provides buy item unit cost view which includes the purchase order price and landed cost charges.
Charges from landed cost management are absorbed as part of Item cost in Fusion Cost Management. Once the goods are delivered to inventory, the landed cost charges are absorbed into inventory valuation.
Fusion Landed Cost management has multiple touch points to other applications, as illustrated here. It gets all the material PO information from Fusion Purchasing. All of the receipt information flows from Fusion Receipt Accounting into Fusion Landed Cost Management.
Once the services and charges are defined in Landed Cost Management, taxes on these charges can be automatically obtained from Fusion Tax.
Supplier invoices for landed cost charges like freight or insurance can be automatically matched to landed cost charges. These invoice amounts become the actual landed cost charges. The difference between the actual and estimated charges would be shown as a variance in landed cost management.
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Slide 7 - Capture Landed Cost
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Trade Operation is a logical entity that would contain all the charges that are incurred for a shipment or for a group of shipments that are related. Trade operation is the place where all of the charges are collected and allocated to PO schedules on which these charges are incurred.
On this manage trade operation UI, we can define or edit a trade operation. We can see the charges of trade operation and the cost decomposition for this trade operation. Estimated charges, actual charges and variances can also be seen on this Trade Operation UI.
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Slide 8 - Trade Operation Template
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A typical business, for most of its key items, enters into long term supplier agreements and establishes reliable transportation and importation channels. Then they will repeat this on an ongoing basis as they replenish supplies with PO schedules.You wouldn’t want to create a brand new trade operation entering all details manually every time you do a repeat purchase. In such cases, template is useful.
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Slide 9 - Estimate Charges
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A trade operation can include one or more material Purchase Order schedules for cases where shipments are consolidated. All the charges on a trade operation can be assigned to same Purchase Order or different charges can be assigned to different Purchase Order schedules.
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Slide 10 - Accrue Charges
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Upon receiving the goods, estimated Landed Cost Charges flow to receipt accounting and are credited to a landed cost clearing account in Fusion Receipt Accounting. Accrual of landed cost charge estimates happens only if there is a service purchase order, and only when the material receipt is done.
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Slide 11 - Landed Cost Setup
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Landed Cost entities like charge names, reference types and routes can be defined as per the business requirements.
Charge name is an entity or service on which costs are incurred, for example, Freight, Insurance, and Handling. Customers can also configure the default attributes like whether tax is applicable or not on each of these charge names. You may also attach default reference types and analysis groups to each of these landed cost charges.
You can now define various routes through which the raw material will be transported. Charges like taxes and customs would be different in different routes. Setting up a Route helps to capture and analyze landed cost by various routes.
Reference Types are used for matching the landed cost charge invoices to the trade operation charges. These are typically the document names that would be used in the business process, and are visible both on the Invoice and in landed cost management, for example, Bill of lading or Shipment number.
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Slide 12 - Landed Cost Invoice
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Some of the payables Invoices can be purely landed cost charge invoices. The figure here shows the invoice line and the Landed Cost Management ‘enabled’ check box, as well as the widget. After entering the primary details about the Invoice, users can click to open the landed cost management widget, and then provide reference values. If the same reference value is provided on the trade operation charge line, then this invoice would be automatically associated to the corresponding trade operation charge.
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Slide 13 - Review Item Unit Cost
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View Item Landed Cost UI shows the information at Purchase Order receipt level. It shows graphic visualization of material and landed cost charges, recent landed cost trends across few receipts and Item unit Cost for last few receipts in a stacked bar chart.
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Slide 14 - Tax on Landed Cost
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Some of the landed cost charges may be taxable. Fusion landed cost management provides the ability to flag the charges as taxable or non-taxable, both at the time of definition of charges and also at the time of the association of charges to the trade operation. Fusion landed cost management also provides the capability to calculate the tax automatically by calling Fusion Tax. If the users choose not enable automatic tax calculation, then they would have to clear the check box ‘Enable automatic tax calculation.’
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Slide 15 - Landed Cost Analytics
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Landed Cost Analytics is based on Essbase cube. There are multiple business dimensions in the Essbase cube based on which users can analyze the landed cost data. Some of the dimensions are:
• Inventory Organization
• Supplier / Site
• Route
• Charge name
• Item, and
• Item Category
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Slide 16 - Landed Cost Management
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Benefits of Fusion Landed Cost Management include:
• Maximizing Product Profitability. It automatically captures and itemizes extended costs and charges such as freight, insurance, and brokerage fees, as well as duties and taxes. This illuminates the hidden costs associated with complex supply chains.
• Enhancing Competitiveness by strategically sourcing products and components from lower cost foreign locations by identifying and measuring all of the extended supply chain costs, like charges, fees, duties, and taxes and optimizing supply networks.
• Increasing Financial Visibility into the Supply Chain, by tracking estimated costs as soon as they are known. This gives product line managers, as well as financial professionals, more insight into their exposure for budgeting and reporting.
• Finally, it ensures Compliance by itemizing and tracking all landed costs as they get applied to a product. It is a global best practice for industries with complex supply chains.
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Slide 55 - Summary of Enhancement Capabilities
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Here is the summary of the features I have talked about today. Landed costs are captured on trade operations. These charges are associated to PO schedules and receipts. Landed costs are estimated on a trade operation before a service PO or an Invoice is created. These estimates will show a better picture of item cost, until an invoice or service PO is created.
Landed cost charge estimates can be accrued in Fusion Receipt Accounting if there is a service Purchase Order. If there is no service PO, then a landed cost clearing account will be credited.
Users can define entities using which landed cost can be tracked, captured and analyzed. Users can also manage charge names, reference types and routes.
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Slide 56 - Summary of Enhancement Capabilities
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On the View Item Landed Cost UI, you can view the landed cost trend of a specific item for the last few receipts.
It displays a stacked bar chart for every receipt showing the split of material cost, taxes and other landed cost charges.
The trade operation template is used to create similar trade operations for repeated purchases. All of the charges and other details default from the template. This saves lot of time and effort for the users when entering trade operations.
Users can associate landed cost charge invoices to trade operation charges using Reference Type. These reference types could be any of the document types, like shipping document or AWB number.
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Slide 57 - Summary of Enhancement Capabilities
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Here are the rest of the features I have talked about today. Landed cost charges, in some cases, are subject to tax. Fusion Landed Cost Management is seamlessly integrated to Fusion Tax, which automatically calculates taxes on landed cost charges.
Landed Cost Analytics are based on Essbase cube. There are multiple dimensions like Item, Supplier and Route on which users can analyze the landed cost charge data.
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Slide 58 - Implementation Advice
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In this implementation advice section, we will go through what you need to consider before enabling these features in your business, and what you need to know to set them up.
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Slide 59 - Feature Impact Guidelines
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Most of the features are automatically available to use and do not require any setup. However, some of these require a setup to be performed in the application. Setup specifics are covered later in this section. All the features of landed cost management can be accessed using shipped job roles. The exact job roles are detailed later in this section.
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Slide 60 - Feature Impact Guidelines
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Here are additional upgrade considerations. User-defined landed cost management entities require setting up before getting started, whereas Review Item Unit Cost and others do not require any setup. Please take a moment to review them.
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Slide 61 - Feature Impact Guidelines
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And finally, here is the upgrade information for Landed Cost Analytics.
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Slide 62 - Setup Summary
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In summary, the setup for Fusion Landed Cost Management is achieved by defining the Landed Cost Charge names, Landed Cost reference types, and Routes. These can be defined per your business needs, and they help you track and analyze the landed costs.
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Slide 63 - Manage Charge Names Setup Detail
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Charge name is a name of an entity or service on which costs are incurred. For example Freight, Insurance, and Handling Fee. Customers can also configure the default attributes like whether tax is applicable or not on each of these charge names. You may also attach default reference types and analysis groups to each of these landed cost charges.
These charges are defined at a Procurement Business Unit Set level.
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Slide 64 - Manage Landed Cost Reference Types Setup Detail
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Reference Types are used for matching the landed cost charge invoices to the trade operation charges. These are typically the document names that would be used in the business process, and are visible on the Invoice and in landed cost management. For example, Bill of lading number and Shipment number.
Reference Types are also defined at a Procurement Business Unit Set level.
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Slide 65 - Manage Routes Setup Detail
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You can define various routes through which the raw material will be transported. Charges like taxes or customs would be different in different routes. Setting up a Route helps to capture and analyze landed cost by various routes.
Routes defined once are available for use across Business Units, Legal Entities and sets.
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Slide 66 - Job Roles
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This table shows the shipped job role that will access the new capabilities covered in this training.
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Slide 67 - Business Process Model Information
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The business processes associated with the new capabilities covered in this training are detailed here.
The high-level business process is ‘Manage Landed Costs’ with activities ‘Analyze Landed Costs’ and ‘Manage Actual Landed Costs.’
The Activity ‘Analyze Landed Costs’ has tasks ‘Analyze Landed Cost Charges,' Analyze Landed Cost Variances’ and ‘View Purchase Order Receipts.'
The Activity ‘Manage Actual Landed Costs’ has tasks ‘Capture Charge References,' and ‘Manage Charge Invoice Associations.’
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Slide 68 - Business Process Model Information
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The business processes associated with the new capabilities covered in this training are detailed here.
The high-level business process is Manage Landed Costs with activities Manage Landed Cost Estimates and Reconcile Landed Costs.
The Activity ‘Manage Landed Cost Estimates’ has tasks ‘Manage Trade Operation Templates,' ‘Manage Trade Operations’, Process Landed Costs and ‘Review Purchase Orders for Landed Cost.'
The Activity ‘Reconcile Landed Costs’ has task ‘Reconcile Landed Cost Charges.‘
This concludes this presentation. Thank you for listening. You can pause and rewind any of these slides if you require additional time to take in the detail
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