There are a few different ways that you are probably familiar with for tracking and managing your actual cost of goods, with some being more exact than others. Maybe you calculate everything manually, or maybe you’re adding the same markup percentage across the board to cover all the factors that go into getting the product into your inventory (your landed costs). Maybe you have software in place that works for you, that gets the job done and gives you a number you’re happy with. Is the number accurate? Even a 1% variance can cause a massive headache and a potential loss of profit down the line. So, now you’re wondering what you can do to improve your odds and give you the best and most accurate result. Good, because we are about to show you.
First, whether you are aware of it or not, it is important to bring you up to speed with “Landed Costs”. Landed costs are the total cost of a product, or inventory item once it has arrived at your facility. This means it includes the original purchase price of the item, the shipping costs, customs, duties, taxes, and really any fees that are incurred during the process of getting the item from the seller to the buyer. If you are not tracking your landed costs, then you are most likely losing money as a business, and that is something that you will want to fix. It is impossible to know the true valuation of your inventory without tracking landed costs.
Manual tracking of landed costs is a viable solution, though it can end up being extremely time consuming and allows for plenty of errors when attempting to figure out the true landed costs associated with each unit received. These errors can end up causing you to lose money if you’re marking-up a product without having an accurate idea of all the Landed Costs. That’s something we are trying to avoid. The less manual processes here, the better.
Some companies may find they have had good results by adding an average mark-up across the board, on all their products to cover the incurred fees/costs, a tactic that is ultimately better than nothing, though it is still not giving the accurate numbers that you as a company need to be looking for.
The best and most accurate way to track your landed costs is with landed cost tracking software. Blue Link’s landed cost tracking software allows you to account for all the costs associated with getting inventory to your warehouse — your true valuation of inventory. By using Blue Link’s landed cost tracking software, you completely eliminate all manual processes, and use a fully automated system that accurately tracks true product costs per each individual item, which gives you the ability to make informed pricing decisions that reflect the true costs of product at any given time. This puts you in the best situation possible and gives you the most accurate and informed view of your inventory.
Once you have decided to move away from an archaic form of tracking your real cost of goods, and onto a system that can accurately and efficiently give you the correct numbers, you’ll be able to see the real profits when a product is sold, where you weren’t before. With Blue Link ERP you will end up with a system that you can rely on, with automated results that improve your workflow and better manage your business as a whole.
Landed Costs Whitepaper: Why Landed Cost Tracking Matters