I’m thrilled to sit down with Dominic Jainy, a seasoned IT professional whose deep expertise in cutting-edge technologies like artificial intelligence, machine learning, and blockchain has made him a trusted voice in the industry. Today, we’re diving into a critical aspect of supply chain management—landed cost—and exploring how Microsoft Dynamics 365 Finance & Supply Chain Management transforms this complex process. In our conversation, Dominic shares insights on the significance of understanding total costs, the risks of miscalculation, and the powerful tools within Dynamics 365 that help businesses gain clarity and control. We also touch on best practices for leveraging this technology and the tangible benefits of getting it right.
Can you explain what landed cost means in simple terms and why it’s so crucial for businesses?
Absolutely. Landed cost is the total cost of getting a product from a supplier to your doorstep. It’s not just the price you pay the supplier; it includes extras like shipping, insurance, customs duties, taxes, and handling fees. For businesses, especially those dealing with global supply chains, understanding landed cost is vital because it gives you the real picture of what you’re spending. Without it, you might think a product is profitable when it’s actually costing you more than you realize, which can hurt your bottom line and mess up your financial planning.
What are some of the hidden or additional costs that typically make up landed cost?
There are quite a few costs that sneak in beyond the purchase price. Freight is a big one—whether it’s shipping by sea, air, or truck, those charges add up. Then there’s insurance to cover potential loss or damage during transit. Customs duties and taxes, like tariffs or VAT, often apply when goods cross borders. You’ve also got handling costs, which cover things like loading, unloading, or storage if there are delays. Each of these can vary widely depending on the route, the product, or even geopolitical factors, so they’re easy to overlook if you’re not tracking them carefully.
How does having an accurate landed cost help businesses make smarter decisions?
Knowing your true landed cost is like having a clear map for decision-making. It helps you set prices that actually cover your expenses and protect your margins. It also lets you compare suppliers or shipping methods based on total cost, not just the upfront price. For instance, a cheaper supplier might end up costing more if their shipping fees or duties are higher. Plus, it ensures compliance with import regulations by tracking taxes and duties properly, which avoids costly penalties. Ultimately, it builds confidence that your financial and operational choices are grounded in reality.
What risks have you seen when companies fail to calculate landed cost accurately?
The risks are pretty significant. When landed costs are off, your inventory valuation gets distorted, which means your financial reports aren’t telling the true story. That can mislead stakeholders or even affect compliance. I’ve seen cases where companies underestimate costs and set prices too low, thinking they’re making a profit when they’re actually taking a loss. It can also mess up sourcing decisions—choosing a supplier based on a low purchase price without factoring in high shipping or customs costs can backfire. Over time, these missteps erode profitability and create operational headaches.
How does Dynamics 365 Finance & Supply Chain Management help address these challenges compared to traditional methods like spreadsheets?
Dynamics 365 is a game-changer compared to manual methods like spreadsheets, which are prone to errors and can’t scale with complex supply chains. The system automates tracking and calculating landed costs, pulling everything into one platform. It gives you real-time visibility into shipments and associated expenses, so you’re not guessing or waiting for updates. Unlike spreadsheets, it integrates with other business processes like procurement and finance, ensuring data consistency. This cuts down on manual work, reduces mistakes, and lets teams focus on strategy rather than number-crunching.
Can you tell us about voyage records in Dynamics 365 and why they’re such a useful feature?
Voyage records are a standout feature in Dynamics 365. Essentially, they’re digital logs that group together items, containers, and costs for a specific shipment. Think of it as a centralized hub where you can see what goods are in transit, where they are in the process, and what expenses are tied to them. This visibility is huge because it helps you monitor everything in real time and catch issues early—like unexpected delays or cost spikes. It also simplifies reporting and ensures nothing slips through the cracks, which is critical for managing global shipments.
How does the ability to compare estimated versus actual costs in Dynamics 365 improve business planning?
Comparing estimated to actual costs in Dynamics 365 is incredibly powerful for refining how you plan. When you set up a purchase order, you can input estimated costs for things like freight or duties. As the shipment moves along and real invoices come in, you update those numbers, and the system shows you the differences. This helps you spot patterns—like consistently underestimating shipping fees—and adjust your forecasts. Over time, your estimates get sharper, budgeting becomes more accurate, and you can negotiate better terms with suppliers or carriers based on hard data.
What flexibility does Dynamics 365 offer in allocating costs for shipments, and why does this matter?
Dynamics 365 gives you a lot of flexibility in how you allocate costs across items in a shipment, which is essential because not all businesses operate the same way. You can split costs based on weight, value, or other factors—say, allocating higher shipping costs to heavier items or customs duties based on item value for luxury goods. You can even set up custom rules tailored to your operations. This matters because it ensures costs are assigned fairly and accurately, reflecting the true expense of each product. That precision improves inventory valuation and pricing decisions.
What are some of the broader benefits for a business when they master landed cost management with Dynamics 365?
When you get landed cost management right with Dynamics 365, the benefits ripple across the organization. First, your inventory valuation becomes spot-on, which makes financial reporting reliable and gives leaders trustworthy data for decisions. Sales teams can set competitive yet profitable prices because they know the true cost of goods. Operations can optimize shipping routes or methods by comparing total costs. Plus, it reduces compliance risks since duties and taxes are tracked systematically. Overall, it’s about gaining control over your supply chain and turning hidden costs into actionable insights.
What advice do you have for our readers who are looking to implement or optimize the Landed Cost module in Dynamics 365?
My advice is to start with a structured approach. Begin by categorizing costs clearly—separate freight, duties, insurance, and so on—so they’re easy to track. Always record estimates when setting up voyages and update them with actuals as soon as you get invoices; this tightens your forecasting over time. Break costs into detailed types, like splitting freight into ocean versus air, to uncover where expenses are highest. And don’t skip training—make sure everyone, from procurement to finance, understands their role in the system. Finally, leverage the integration between modules in Dynamics 365 to keep data flowing smoothly. It’s the human element combined with the tech that really drives success.