What Automating SAP Business ByDesign Landed Cost End-to-End looks like
What are landed costs? A landed cost refers to all the costs a vendor spends to create, transport, and deliver their product(s). These costs can include shipping (crating, packing, handling, freight), customs (duties, tariffs, broker fees, harbor fees), risk (insurance, compliance, quality, safety, stock cost), overhead (purchasing staff, travel, exchange rates), and more.
When businesses try to manually calculate the landed cost of their shipments, it’s easy to forget one or more components. Even if you remember everything, using outdated information or making a mistake about a jurisdictional border could mean problems at the customs clearance, extra charges to your customer, or a chunk eaten out of your profit margins.
Navigator has built an extension directly in SAP Business ByDesign to automate your organization's landed costs. Watch the SAP Business ByDesign landed cost automation extension demo below.
Want to set-up landed costs in ByDesign? Watch our Landed Cost set-up demo.
Welcome to Navigator Business Solutions demo on landed cost. Today, we'll be discussing the end-to-end process, starting with the purchase order and ending with a supplier invoice. If you go up here to the work center navigation, you'll see that the landed costs work center has been scoped into this system. This is a Navigator Business Solutions add-on product. You don't have to talk to your account executive about getting this included in your tenant. In my previous demo, I detailed the setup, prerequisites for the landed costs. So we went through the global settings, the accrual types, the transportation modes, and the accrual type rates in this demo, we'll be touching on the inbound accruals and the accrual reconciliations. Let's get started to start the process. We'll begin with the purchase order. We'll go into the purchase order and that's normal. We will put in our supplier And we will come in and put in our products Add a row First product is going to be the gas boiler. And our second product is going to be the coolant for that gas boiler. We're going to put in our ship-to location
And we're going to put in our quantities. So this demo let's do say, we're going to be getting our parcel is going to have 40 gas boilers. And for those 40 gas boilers, we're going to have 20 cartons of liquid coolant. Now we will need to include the price as well. We will put the price for the gas boiler at a hundred apiece, and we will put the price for the liquid coolant at $50 apiece, as you can see, it's given me a little bit of a warning because the previous purchase orders were less the price than that. But from here, we can hit view all when we click to view all, you'll notice that there's a new tab up top, and that tab is associated with the landed costs added module. And that's this accruals tab right here. So once this loads, we can click into the accruals tab and you can see the UI for this.
So the first thing you'll notice is this low default information. And if you, if you saw my previous demo on the setup, all that really is let me go to my other tab up here and kind of describe what that is. So if you go to Landed Costs and we go to the accrual type rates, what this specifically does is, for instance, we look at this one right here. You can see that there's a first supplier. There's a product and there's an inbound location, and it has the quantity and the rate. So if we were to put that in our purchase order and hit this low default information, it would automatically pull that information into this screen. So you would not have to do any manual intervention, but for the demo today, I'm just going to go ahead and add a row. I'm going to select the transportation mode that we're going to be doing a truck.
Our parcel is going to be coming on a truck and I'm going to pick the accrual type ID. It's going to be the truck freight. And again, here's where we get allocated the cost. So we're able to allocate costs by dimensions and value evenly bylines, line amount, quantity, and weight. Today, I'm going to just allocate the cost by quantity. And the total accrual amount is going to be $500. That's what I believe that the cost is going to be to get this parcel to our place of business and our supplier for this is going to be AMS. So as you can see, when I put in the allocated cost by quantity and I put the total accrual amount, you can see that down below in the material split, it automatically took that total amount and split it based on the quantity in our purchase order.
So from here, it looks like everything is complete. So let me go up here and check this again. It's just barking at us because of the existing purchase order. The price is 50% lower. That's okay. I'm going to come up here and hit order. So throughout the demo today, we're going to show two different scenarios. In this first scenario that I'm working on right now, we're going to show when the supplier invoice is slightly less than the accrual amount that we input. Then the next scenario I'm going to show is when the supplier invoice is more than and with that, I'm going to show the different journal entries that are created and the inbound journal entries? Accrual reconciliation journal entries. We'll go through all of that. So after the purchase order is sent, we simply want to come into inbound logistics. And we just want to receive that purchase order, we'll just take note of the purchase order number 10 71. So again, we're going to go into inbound logistics and we're going to go to purchase orders.
Actually, it looks like it's on top right here. Cause here's our purse or 10 71. We're going to come in here and post goods on it. So we'll come up here. We'll put our, a bill of lading number in here and we're going to hit proposed quantities and we're going to save and close. So this is the inbound part. So there are two journal entries that are associated with this. And I will show these. So it looks like the amount was created. So if I come up here and go to the landed costs, this is where we're gonna start using the inbound accruals. So when I go to inbound accruals, you can see right here, our purchase order, new fresh here, here's our purchase order right here, 10 71 bill waiting 7 4 1 5 8 9 in the inbound process. If I come in here and hit edit, you'll notice that there are two journal entries associated that are already posted based on the inbound process journal entry voucher of 456 and journal entry voucher 457.
Let's jump into this other tab right here to take a look at those when we go to journal general ledger, or when we go to journal entry vouchers incident default today's. So as you can see, journal entry, 456, that was automatically posted. We have a credit or $500 to accrue them to costs. While at the same time, we have a debit to accrued Landed cost clearing for $500. The next posting was journal entry, 457. That's going to be the same thing, but again, that's going to be a debit of $500 to our finished goods at the same time, a credit of $500 again to the clearing account. So just showing the journal entry volunteers that are associated with the inbound process for the landed costs. So once that's complete, we can go back to the other screen. I really look good here so I can come here and close. The next thing I want to do is that I want to go into my accrual reconciliations from here. We can hit new.
And what we want to do is we know that our purchase order is purchase order 1071. When I come in here and enter that purchase order, and I hit search accruals, it's going to pull this line out of men. Here is our detailed information, our accrual ID, and I can hit remove on selected. So when I do that, that's going to open up these fields down here. So the adjustment type, let me touch on that for a second. So the adjustment type could either be the cost of goods sold or capitalize. So in this example, I'm going to capitalize this amount. And again, my first scenario, I'm going to, I'm going to show if the invoice amount was less than the accrual amounts, we're going to go with 475 as the invoice amount. And you can see, again, the material splits down below it, splits it by quantity and it adjusts the based on the quantities.
So you can see that line item one has a total adjustment at $16.67 cents. Whereas line item two has an, a total adjustment of $8.33. So from here, once that's completed and you put your invoice amount in and your adjustment type, you can hit create journal entry voucher, and that's going to create a different journal entry Boucher for the accrual reconciliation. So once that's completed, you can come into the journal entry vouchers tab and you see that it created two more journal entry vouchers. So again, we're going to come up here and just take a look at those refresh this. And here it is. So here's journal entry voucher 458. You can see that that difference of the $25. It was like $25 credit to the accrued landed costs where at the same time, there was a $25 debit to accrued out of cost clearance journal entry voucher, 459 had an again $25 credit to the finished goods and then a $25 debit to the ccrude landed cost clearing. So we can go back into the accruals reconciliation. And from here, you can also create the supplier invoice within the same screen, which is very nice. So we're going to put in our supplier, which we know is an AMS. We're going to put in that supplier invoice number that they sent us. And we're going to put in a receipt date and we're going to put in an invoice date from here. We can simply create supplier invoice
The system is pulling all that data in. And you can see that supplier invoice 1176 was created. Let's come back up here. I might have to go in and manually post I'd most likely have to. So let's go 1176, because that is also going to create an entry as well. So let's go to supplier invoicing and go to invoices and credit memos. You can see that the status for this is ready for posting for the total amount of $475. I'm going to simply hit post. Then after this post, I just want to go in and detail the entry that was made on this. So we can come in here. And let's go over to the document flow.
And let's look at the entry that was created. Click on that. So the journal entry that was created for the supplier invoice, it's a $475 credit to the AP domestic and a $475 debit to the accrual landed cost. So everything looks great on those entries. Everything's lining up. So now we're going to do our second scenario. Whereas if the invoice amount was more than the original accrual amount, so we can come up here and we can say this, this is the, this is the last PO 1071 that we did, and we can come here and close. So for the second scenario, I'm going to simply go into our purchase order. I'm going to copy it.
So let's look for PO 1071, and we're just going to copy this. Our suppliers already copied over our quantities, our prices, everything is copied over. We still want to go into view all and look at that accruals tab. So again, I'm going to add a row transportation mode that I'm using is our parcels coming on a truck, the accrual type ID. We're going to use truck freight. And again, we're going to allocate the cost by quantity, total accrual amount. There's going to be $500 and our supplier is again, AMS. We can come up here and check. I've been with those completed. The total amount was again split by the quantity, and we can hit order Once this is completed. We're going to go into, we can see that purchase order. 1072 is a purchase order we're looking for. And when you're go to inbound logistics and go to purchase orders, and we're going to post goods receipt on this here, you can see right here at 1072, simply come in here and propose quantities. And we'll put our bill of lading in here from our supplier and we can save and close.
The next part is we go to the landed cost work center, and we're going to go to the sub-work center down here inbound accruals, as you can see here, here's our purchase order of 1072, our bill of lading in the inbound. We can hit edit, oh, let me select the line item. You can see that two journal entries were created 460, 461. Again, we can go in here and go to our general ledger and look at the journal entry vouchers that were created today. So again, we have 460, again, to reiterate, we have a credit of $500 going to accrue landed costs. At the same time, we have a debit of $500 going to accrued landed cost clearing.
And then at the same time for a journal entry, 461, we have a $500 credit split evenly going to finish goods. And then we have a $500 credit going to accrued landed cost clearing. So those are again, the journal entries that are created on the inbound process. You can see that the 460 and the one we did before the 458, the first entry that's made as a sweep. That's the sweep journal entry voucher for the inbound delivery. Then we have a normal journal entry voucher made for the inbound delivery, which is on the finished goods. So again, we'll go back to inbound accruals, and we can see that both are created successfully. So we can simply just close this out. And now we want to go into accrual reconciliations and we want to hit new. We'll put in our purchase order number here and search the accruals.
We'll select our accrual box and remove it on selected. And you can see that that will open up these two fields to edit. We're going to capitalize this, but here the invoiced amount was slightly higher. So we're going to put $525 and you can see again that material split down below, it shows the total adjustment. So on line item one there's a $16.67 adjustment in line item two there's an $8.33 total adjustment. So at the same time, we can also create this journal entry voucher for the reconciliation for that overage of $25. Both journal entries were created again successfully. We'll come back into our general ledger refresh this journal entry voucher 462, it's showing the difference. So it's taking that difference at $25 and crediting accrued landed costs and it's debiting $25 to the clearing account. 463 is showing a $25 credit to accrued landed cost clearing and a $25 debit to our finished goats. So now that that's finished, we can move on to the supplier invoicing. So supplier invoice is going to be AMS. We'll put in our supplier invoice number, we'll put in our receipt and our invoice date, and we can simply hit this create supplier invoice button.
So the system is pulling all the information in for the supplier invoice, we can take a look at the supplier invoice once it's created so 1177. So we'll come back up to our other tab and we're going to go into supplier invoicing, and we're going to look at the invoices credit memos,
And you can see it's ready for posting. So let's just click into this and let's just take a quick look here. So the system systematically pulls in all the information that we need and automatically creates it on the accruals reconciliation screen. So everything's in here. You can also come in here and edit fields and do what you need to do. But it's simply just going to post this and create that final entry on the supplier invoice. And before we hop off, we'll take a quick look at that last entry that's made for the landed cost process. So that is posted. If we refresh this, we can come in here. Actually, we can go down to the general ledger and we can look at the journal entries and we'll see the one for supplier invoices.
Yeah. So you can see right here. So here's our journal entry created for source document 1177, which we know is our supplier invoice. So again, it came down and it credited $525 to AP domestic and it debited $525 to accrued landed costs. So that concludes the demo for Landed Costs. We showed the process from starting with the purchase order to processing the inbound accruals, to processing the accrual reconciliation to lastly processing that supplier invoice. So you can look at my previous demo to kind of show you the setup for the landed costs, but this was just an end-to-end process for purchase order supplier invoice. Thank you very much.
Want to set-up landed costs in ByDesign? Watch our Landed Cost set-up demo.
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