What is “Total Landed Cost?” IT is the total cost of goods delivered from the manufacturing facility through the distribution network to the customer.
Often discussed since the early 2008 but seldom acted upon, the emerging trend to manage the organization’s “Total Landed Cost (TLC)”, this issue has become one of the major focal points as we approach the end of 2012. More than ever, the accurate measurement and management of any firm’s TLC has become, or will become in 2013 and beyond, a vital aspect for successful supply chain efficiency and effectiveness. Shifting global financial conditions and the volatile price of fossil fuel (crude oil), creates major shifts in currency values and the cost of transportation. These shifts have either a positive or negative impact on the Total Landed Cost.
Determining the TLC for a product can be a complex and time consuming task. All businesses need to fully understand these complexities and plan accordingly. The importance of accuracy cannot be understated especially if the business imports and / or exports products to customers. An accurate TLC enables the firm to calculate an accurate selling price and ensures that the margins are at levels required for a fair profit. The development of a Total Landed Cost Model (TLCM) that includes key parameters becomes the challenge for the firm.
What are some important aspects an organization should consider to reduce the complexity in determining the Total Landed? First, have all of the data elements in a single database. All of the key data elements that most firms will require for managing a TLC model should be stored in a single database and not widely distributed over different applications.
Secondly, ensure that the organization has the experience and proven processes to guide the firm through the complex steps in identifying, designing, developing and implementing a Total Landed Cost Model (TLCM).
Does your firm use a Total Landed Cost Model?
- -Have you considered implementing one?
- -Why or why not?
- How has this information affected your business?
- How easy or difficult was it to implement?
Learn more how IBM and Bridge Solutions Group can help develop a robust TLCM for your organization.
Robert (Bob) has over 22 years of industry experience with a focus on warehouse management, transportation management, order management and labor management solutions.