The ultimate goal of every shipping company is to maximize profits while operating in a productive and dependable way. Shipping factors for both purchases and sales must be controlled properly in corporate operations. The activities may occasionally grow more expensive, forcing the firms to bill the consumer and the vendors separately or strike a mutually advantageous settlement. Without billing the items in the shipment, the corporation will incur far more financial losses than profits. This is the reason why it is important to calculate the landed cost of a product.
Why Landed Cost Is Important In A Shipping Business
The use of the landed cost of a product in a shipping company is one solution to the problem. The landed cost is defined as the product being purchased after the shipment fee is applied to the product’s purchase price.
The Odoo platform, which is the most extensively used corporate and resource planning software in the world, assists the user in dealing with this issue. The Odoo ERP provides the option for the user to utilize landed cost, which may be combined with the cost price of the items accessible.
The Odoo Landed Cost
Odoo 15’s landed cost functionality enables customers to decrease needless losses in the company’s operations. The landing cost is specified on the purchased goods, which involves additional costs that must be paid by the firm or the product will not be delivered. The expense of most cease activities is for shipping or the particular customization required on the product.
The Odoo Landed Cost Implementation
Odoo users can integrate their own unique landed costs for the product. They may apply the landed cost option in the Odoo V15 platform after activating it in the inventory module. After enabling the option, the user should also set the journal connected with the indeed cost actions in the platform.
Let’s follow the given process to configure landed cost in Odoo v15.
Go to Inventory>Configuration>Settings>and go to the ‘Landed Costs’
- Average Cost Configuration
Go to configuration>click on the ‘Product Categories’
Ensure that you change the ‘Costing Method’ to ‘Average Cost (AVCO)’, and the ‘Force Removal Strategy’ should be ‘First In First Out (FIFO)’.
- Create Storable Type Product
Go to Products>Products
Set the Sales Price and Cost of the product and check the product type of your product.
Now, in the ‘Inventory’ section, you can set the weight and volume of the product if required. After filling in all the necessary information, click on the Save button.
- Create Service Type Product
Now, in order to calculate the landed cost of your product, ensure that you have a product of ‘service’ type.
Give your product a name and select the ‘Product Type’ to Service.
In the ‘Purchase’ section, check the ‘Is a Landed Cost’ option to calculate the landed cost of the purchased product.
Go to Purchase Module in the Odoo ERP v15
Create a new purchase order by following the steps given below:
Go to Purchase>Click on the ‘Create’ button, a window will appear as given below:
Fill in the vendor, order deadline, receipt date, and add the products you want to create a purchase order for.
Once done, click on the ‘Confirm’ button. As you click on the ‘confirm’ button, you will see a window as given below:
Now in the right corner, you will find an open, ‘Receipt’, click on it to create the quotation of your purchase order.
Now as you can see the Quotation of your order has been created. You will get a purchase order number, for example, here it is ‘P00014’.
By clicking on the ‘P00014’ number, you will be directed to the page where you can create the bill for your order.
Click on the ‘Create Bill’ button as shown in the image below:
Now, create on the ‘Edit’ button as given below:
Add the ‘Shipping Fee’ to the ‘Invoice Lines’ and click on the ‘confirm’ button.
Now, you will get a window as given below. Click on the ‘Create Landed Costs’ button that will help you to find the landed cost on your shipping orders.
Once, you click on the ‘Create Landed Cost’ button, go to the ‘Inventory’ module.
Go to Inventory>Operations>click on the Landed Costs
If you will open your recently created Landed Cost, you will find a window as given below. Set the date and warehouse in the transfer field.
Click on the compute button at the bottom right corner to see what can be the valuation adjustments are.
Once you will click on the button, you will get the window given below, where you can see the valuation adjustments.
Now click on the ‘validate’ button to complete the landed cost process.
—> Note: Under the respective option, you can also set the split mechanism for landed cost operations. The Default Split Method may be set as follows:
- Equal – Splits the item line’s expenses equally.
- By Quantity – It calculates higher costs for larger quantities of items.
- By Current Cost – It splits the spending based on its cost.
- By Weight – It distributes the cost based on weight.
- By Volume – It splits the expenditure based on volume.
In the right corner, you will see the ‘valuation’ option. Click on that option to see if the landed cost has been applied to the product (Example 1).
Now go to Products>Products> and click on the ‘Example 1’ product to check its cost price has been updated.
The cost price has been changed to $15.00, which means the landed cost has been applied to the product successfully.
Now we will create a sell order for our products to check if the average cost of the product gets affected or not.
Go to Sales Module and click on the create button.
Fill in the customer name and add the products. Click on the confirm button and the quotation window will appear as given below:
Now in the right corner, click on the ‘Delivery’ button to find the final quotation for the products.
As we can see the quotation has been generated with the ‘WH/OUT’ name. It suggests that the order has been placed for a product. Now click on the ‘validate’ button to complete the process.
Go to Inventory> Reporting> and click on the Inventory Valuation option.
You will see that one quantity has been removed from the total product (Example 1).
Note: This is how you can configure the landed cost to your shipping products and sell the products based on that effectively.
If you need more details to set the landed cost on your Odoo V13, 14, or more, connect with our Odoo experts for free!
Ksolves Odoo Apps For Shipping Industry
In the shipping industry, it is important to manage the business effectively to stay in the competitive world.
Ksolves India Limited is an official Odoo Gold Partner that builds upper-edge Odoo products for all businesses around the globe.
The Dashboard Ninja app for Odoo ERP helps business owners to convert complex data sheets into visual charts. The BI dashboard charts are easy to read and create engaging charts.
You can convert your sale order, customers, and total sales using bar charts, pie charts, and more. For example, as shown below:
Create sale orders, and employee numbers easily with the Dashboard Ninja Charts.
Moreover, you can create the bank statements of your shipping business to keep track of your finances.
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The Bottom Line!
The blog covers the configuration of landed products in Odoo v15 for the shipping industry. Moreover, the Odoo products powered by Ksolves are helpful in giving a competitive edge to your business. You may quickly create landed costs and product categories for materials with the help of Odoo v15.
We offer Odoo development, customization, implementation, and more services to our customers. If you need to upscale your business, connect on the given credentials.
Frequently Asked Questions
1. How does landing cost work in Odoo?
The overall cost of a product after it reaches the consumers’ hands is known as the landed cost. This comprises the transit cost, duty, and handling fees, among other things. Want to configure now? Click here!
2. Why do we use the landed cost?
When determining profitability, landed costs are critical. Identifying them early in the manufacturing process will keep supply chain expenses under control.