Schedule: Timing Topic

15 minutes Lecture and Demo

00 minutes Practice
15 minutes Total
SCM Cloud: Cost Management Implementation 17 - 2
This slide states the topic covered in this portion of the lesson.

SCM Cloud: Cost Management Implementation 17 - 3

Landed Cost Management (LCM) gives organizations financial visibility into their extended supply chain
costs, including transportation and handling fees, insurance, duties, and taxes. Because these types of
charges can represent a significant portion of an item cost, it is important to accurately incorporate them into
the overall financial processes and decision-making activities. LCM initially estimates these costs and later
updates them with the actual amounts as they become known, allocating them to purchase order receipts.
The landed cost eventually becomes a part of the item cost and is absorbed into inventory.

SCM Cloud: Cost Management Implementation 17 - 4

Benefits of Landed Cost Management:
• Maximize product profitability: Automatically capture and itemize extended costs and charges
such as freight, insurance, and brokerage fees, as well as duties and taxes to reflect the hidden
costs associated with complex supply chains.
• Enhance competitiveness: Strategically source products and components from lower-cost foreign
locations by identifying and measuring all of the extended supply chain, thus optimizing supply
networks.
• Increase financial visibility into the supply chain: Tracking estimated costs as soon as they are
known gives product line managers, as well as financial professionals, more insight into their
exposure for budgeting and reporting.
• Ensure compliance: Itemizing and tracking all landed costs as they apply to a product is a global
best practice for industries with complex supply chains.

SCM Cloud: Cost Management Implementation 17 - 5

This slide states the topic covered in this portion of the lesson.

SCM Cloud: Cost Management Implementation 17 - 6

LCM interfaces with the following applications:
• Purchasing: LCM receives the material PO information. The trade operation charges are associated
with the PO schedules and allocated proportionately to the PO schedules and receipts.
• Receipt Accounting: All the receipt information flows from Receipt Accounting into LCM. Accrual
for the service purchase orders is booked in Receipt Accounting based on the information flow from
LCM. Tax information about the material PO and receipt information also flows from Receipt
Accounting to LCM.
• Cost Management: Charges from Fusion LCM are absorbed as part of the item cost in Cost
Management. After the goods are delivered to inventory, the landed cost charges are absorbed into
inventory valuation.
• Taxes: Taxes may be applicable on the service charges coming from LCM. After the service
charges are defined in LCM, taxes are automatically calculated, when applicable, by calling the Tax
application.
• Payables: In most cases, suppliers send invoices for the services provided (such as freight). These
invoices are for the landed cost charges defined in LCM. In Payables, users can provide a reference
number on the invoice, and the reference number is used to match these invoices automatically with
the landed cost charges. The invoice charges become the actual charges, and the difference
between the actual and estimated charges are shown as variance in LCM.

SCM Cloud: Cost Management Implementation 17 - 7

This slide states the topic covered in this portion of the lesson.

SCM Cloud: Cost Management Implementation 17 - 8

Landed Cost Management performs three main tasks:
1. Capture Charges: Landed Cost Management provides the capability to capture charges such as
Freight, Insurance, and so on. These charges are captured and grouped under an entity called trade
operation. A trade operation is a logical entity that denotes a single instance of a business
transaction or process in which you would like to capture all the charges—for example, a single
shipment or container.
2. Perform Allocations: Material PO schedules are associated to charges. This denotes the PO
schedules that are part of the trade operation or that are impacted by this trade operation. After the
PO schedules are referenced to charges on the trade operation, the charge amount is distributed
and allocated to the respective PO schedules and further on to the receipts that are performed on
those schedules.
3. Create Accounting: The final step is to account for all the charges that were incurred. This is done
by transferring all the charge information to Receipt Accounting and Cost Accounting.

SCM Cloud: Cost Management Implementation 17 - 9

SCM Cloud: Cost Management Implementation 17 - 10
Schedule: Timing Topic
30 minutes Lecture and Demo
00 minutes Practice
30 minutes Total
Oracle SCM Cloud: Cost Management Implementation 18 - 2
There are three main setup tasks for Landed Cost Management:
1. Set up charge names: Define the charge names that are incurred at different stages of procuring
and transporting a material.
2. Set up reference types: Reference types are used for matching the landed cost charge invoices to
the trade operation charges. These are typically the document names that are used in the business
process and are visible on the invoice and in LCM—for example, Bill of Lading, Shipment Number,
and so on.
3. Set up routes: These are the routes through which a material is transported. Charges such as taxes
and customs are different on different routes. Setting up routes helps to capture and analyze landed
cost by various routes.
Additionally, you can create Trade Operation Templates: A trade operation is used to capture and allocate
the landed cost charges that are incurred for material shipments. Trade operations can be modeled on a
single shipment or a group of shipments. A trade operation template can be used to create trade operations
quickly, in cases where a business performs similar trade transactions and makes regular shipments.

Oracle SCM Cloud: Cost Management Implementation 18 - 3

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 18 - 4

You can define your own landed cost charge names for costs such as freight, insurance, handling fees, and
so on. You can also configure default attributes—for example, whether tax is applicable or not. You can also
attach default reference types and analysis groups to each of these landed cost charges. This screen image
shows where some of these selections are made.
An analysis group consists of analysis codes that are mapped to one or many cost elements. This would
help to look at the same cost information in multiple dimensions.

Oracle SCM Cloud: Cost Management Implementation 18 - 5

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 18 - 6

Reference types are used to match the landed cost charge invoices with the trade operation charges. These
are typically the document names that are used in the business process, and are visible on the invoice and
in LCM—for example, Bill of Lading, Shipment Number, and so on. This screen image shows where to
make these selections.

Oracle SCM Cloud: Cost Management Implementation 18 - 7

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 18 - 8

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 18 - 9

Define the routes through which materials will be transported. Charges such as taxes and customs will be
different on different routes. Setting up routes helps to capture and analyze landed cost by various routes.
This slide shows the Manage Routes screen image.

Oracle SCM Cloud: Cost Management Implementation 18 - 10

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 18 - 11

This slide discusses mapping landed cost charge names to cost elements.

Oracle SCM Cloud: Cost Management Implementation 18 - 12

Oracle SCM Cloud: Cost Management Implementation 18 - 13
Schedule: Timing Topic
30 minutes Lecture and Demo
00 minutes Practice
30 minutes Total
Oracle SCM Cloud: Cost Management Implementation 19 - 2
This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 19 - 3

Landed Cost Management performs three main tasks:
1. Capture Charges: Landed Cost Management provides the capability to capture charges such as
Freight, Insurance, and so on. These charges are captured and grouped under an entity called trade
operation. A trade operation is a logical entity that denotes a single instance of a business
transaction or process in which you would like to capture all the charges—for example, a single
shipment or container.
2. Perform Allocations: Material PO schedules are associated to charges. This denotes the PO
schedules that are part of the trade operation or that are impacted by this trade operation. After the
PO schedules are referenced to charges on the trade operation, the charge amount is distributed
and allocated to the respective PO schedules and further on to the receipts that are performed on
those schedules.
3. Create Accounting: The final step is to account for all the charges that were incurred. This is done
by transferring all the charge information to Receipt Accounting and Cost Accounting.

Oracle SCM Cloud: Cost Management Implementation 19 - 4

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 19 - 5

Trade operation templates can be used for repeat purchases. Create a template if you need to create a
similar trade operation multiple times. This helps to ensure consistency. Trade operation templates contain
information about the supplier, charge lines, reference types, routes, and other related information.
Whenever a trade operation is created by using a template, all this information is copied to the trade
operation. The user can modify the copied information where required.

Oracle SCM Cloud: Cost Management Implementation 19 - 6

Navigation: Navigator > Receipt Accounting > Manage Trade Operation Templates
Users can create multiple trade operation templates depending on business requirements by using naming
conventions, for example, by naming them after a supplier and supplier site.
Trade operation templates can have an end date. This helps users to avoid selecting old and obsolete trade
operation templates when creating a trade operation. For example, if a trade operation template was
created last year based on a purchase agreement that was valid last year, there is a good chance that the
template is invalid this year, because the original purchase agreement is invalid. This slide shows screen
images for creating templates.

Oracle SCM Cloud: Cost Management Implementation 19 - 7

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 19 - 8

Navigation: Navigator > Receipt Accounting > Manage Trade Operations
A trade operation is a logical entity that contains all the charges that are incurred for a shipment or for a
group of shipments that are related. A trade operation is the place where all the charges are collected and
allocated to the PO schedules on which these charges are incurred.
On the Manage Trade Operation page, you can define or edit a trade operation. You can also see the
charges of trade operation, cost details, estimated charges, actual charges, and variances, as shown here.

Oracle SCM Cloud: Cost Management Implementation 19 - 9

Navigation: Navigator > Receipt Accounting > Manage Trade Operations
A trade operation can have multiple charges. All the charges on a trade operation can be assigned to the
same Purchase Order (PO) or different charges can be assigned to different POs. This slide shows a
demonstration trade operation.

Oracle SCM Cloud: Cost Management Implementation 19 - 10

Navigation: Navigator > Receipt Accounting > Manage Trade Operations
One or more landed cost charges can be included on a trade operation to depict the charges that are
incurred on a shipment. These charges can have different charge business units (BUs). The charge basis
and allocation basis allow users to determine how to calculate the charge amount and how to allocate the
charge to different PO schedules.
If a service PO schedule is referenced on a charge line, the amount of the charge is derived from the service
PO schedule.

Oracle SCM Cloud: Cost Management Implementation 19 - 11

Navigation: Navigator > Receipt Accounting > Manage Trade Operations > Create Charge Line

This slide shows a screen image of creating a charge line.

Oracle SCM Cloud: Cost Management Implementation 19 - 12

Navigation: Navigator > Receipt Accounting > Manage Trade Operations > Create Charge Line
The allocation basis tells the landed cost system how you would like to spread a trade operation charge
amount across the purchase order lines associated to the trade operation.
• Equally – spread the charge equally across all the associated purchase order lines
• Quantity – spread the charge across the associated purchase orders based on the ratio of each PO
line quantity divided by the total quantity
• Volume – spread the charge across the associated purchase orders based on the ratio of each PO
line volume divided by the total volume of all PO lines.
• Weight – spread the charge across the associated purchase orders based on the ratio of each PO
line weight divided by the total weight of all PO lines.
• Item Value – spread the charge across the associated purchase orders based on the ratio of each
PO line cost divided by the total cost of all PO lines.
Manual allocation factor - spread the charge across the associated purchase orders based on the ratio of
each user entered “factor” divided by the sum of the “factors” entered for all PO lines. For example if there
were three purchase order lines associated with the trade operation charge and you entered 1, 2, 3 as the
factors of each PO line respectively, then the first PO line would be allocated 1/(1+2+3) of the charge
amount, the second 2/(1+2+3) of the charge amount, and so forth.

Oracle SCM Cloud: Cost Management Implementation 19 - 13

Navigation: Navigator > Receipt Accounting > Manage Trade Operations
Some of the landed cost charges may be taxable. Oracle Fusion Receipt Accounting provides the ability to
flag charges as taxable or non-taxable both at the time of charge definition and when charges are
associated with a trade operation. Oracle Fusion Receipt Accounting also provides the capability to
calculate tax automatically by calling the Tax application. If users do not want to enable automatic tax
calculation, they must deselect the check box “Enable automatic tax calculation.”

This slide shows the location of the Tax Determinants checkbox in the Tax Attributes section of the screen,
and the resulting Tax Determinants attribute selection window.

Oracle SCM Cloud: Cost Management Implementation 19 - 14

Navigation: Navigator > Receipt Accounting > Manage Trade Operations
Purchase Order schedules must be associated to charges so that the charge information can be allocated to
PO schedules. PO schedules can be associated to all the charges in the trade operation at once, or they
can be done for individual charge lines. This slide shows the freight details section of the screen that
appears when selecting Freeze on the Landed Cost Charges screen.

Oracle SCM Cloud: Cost Management Implementation 19 - 15

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 19 - 16

This slide discusses associating landed cost charges with material receipts. The Trade Operation box on
the left includes Supplier Information, Charge Lines, and Reference Type. It feed information to the
sequence of processes on the right: Purchase Orders, PO Schedules, and Material Receipts.

Oracle SCM Cloud: Cost Management Implementation 19 - 17

Navigation: Navigator > Receipt Accounting > Manage Landed Cost Processes

This slide discusses landed cost charge allocation and shows a Manage Landed Cost Processes screen
image.

Oracle SCM Cloud: Cost Management Implementation 19 - 18

The estimated landed cost charges are credited to a landed cost clearing account in Receipt Accounting, as
shown here. Accrual of landed cost charge estimates occurs only if there is a service purchase order and a
material receipt.
Navigation: Navigator > Receipt Accounting > Review Receipt Accounting Distributions > Distributions

Oracle SCM Cloud: Cost Management Implementation 19 - 19

Oracle SCM Cloud: Cost Management Implementation 19 - 20
Schedule: Timing Topic
15 minutes Lecture and Demo
00 minutes Practice
15 minutes Total
Oracle SCM Cloud: Cost Management Implementation 20 - 2
This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 20 - 3

This slide shows the flows involved first in capturing a charge, then performing allocations, and finally in
creating accounting.
The landed cost reference details can be entered on a Payables invoice. When the invoice is interfaced to
Oracle Fusion Landed Cost Management, the application automatically identifies the match between the
trade operation charge line and the Payables invoice based on the charge reference type value.
The application adjusts the allocations based on the landed cost charges from the AP invoice. The
difference in charge amounts is shown as variance. The supplier accrual and the inventory valuation are
adjusted according to the AP invoice amounts.

Oracle SCM Cloud: Cost Management Implementation 20 - 4

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 20 - 5

Some of the Payables invoices can be purely landed cost charge invoices. The figure in the slide shows the
invoice line where LCM can be enabled and the reference values entered. If the same reference value is
provided on the trade operation charge line, this invoice is automatically associated with the corresponding
trade operation charge estimates. Inventory valuation is then adjusted to reflect the true landed cost.

Oracle SCM Cloud: Cost Management Implementation 20 - 6

The screenshot in the slide shows the process that transfers the Invoice information from Oracle Fusion
Accounts payables to Oracle Fusion Landed Cost Management. This process can be run manually or can
be scheduled to run at periodic intervals.

Oracle SCM Cloud: Cost Management Implementation 20 - 7

The slide shows the Run Control page for Oracle Fusion Landed Cost Management (LCM). All the
processes in LCM can be launched and monitored from this page. On the same page, there are processes
that are specific to invoices.
• Prepare invoice data: This process validates and pulls the AP Invoice information into the primary
tables of Landed Cost Management.
• Associate invoices to trade operation charges: This process tries to map the AP invoices to the
trade operation charges based on the reference type value provided. This process also indicates the
match status.

Oracle SCM Cloud: Cost Management Implementation 20 - 8

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 20 - 9

After interfacing the Payables invoices to Landed Cost Management, the invoice information can be
monitored on the Manage Charge Invoice Associations page. On this screen, Landed Cost Management
automatically shows the invoice association status to a particular trade operation. The status can be:
Associated, Deleted, or Rejected.

Oracle SCM Cloud: Cost Management Implementation 20 - 10

Oracle SCM Cloud: Cost Management Implementation 20 - 11
Schedule: Timing Topic
20 minutes Lecture and Demo
00 minutes Practice
20 minutes Total
Oracle SCM Cloud: Cost Management Implementation 21 - 2
This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 21 - 3

The View Item Landed Cost page shows the following information at the PO receipt level:
• Graph of material and landed cost charges
• Graph of recent landed cost trends

Oracle SCM Cloud: Cost Management Implementation 21 - 4

This slide states the topic covered in this portion of the lesson.

Oracle SCM Cloud: Cost Management Implementation 21 - 5

Reporting in Landed Cost Management is primarily driven by analytics which are based on an Essbase
cube, as illustrated here. All the reporting is based on a single source of truth: Receipt Level Allocated
Landed Cost Charges.
Analysis can be done on the following dimensions:
• Business Unit
• Inventory Organization
• Route
• Third Party Supplier
• Charge
• Item Category
• Item
• Time Period

Oracle SCM Cloud: Cost Management Implementation 21 - 6

This slide discusses analyzing landed cost charges, and shows a screen image of the analyze landed cost
charges search results page.

Oracle SCM Cloud: Cost Management Implementation 21 - 7

This slide discusses a summary of the business value of landed cost management.

Oracle SCM Cloud: Cost Management Implementation 21 - 8

Oracle SCM Cloud: Cost Management Implementation 21 - 9