Achieving Landed Costs and Product Line Net Margin

Achieving Landed Costs Challenges Solution(s) Benefits Case study: Litehouse

the original cost of the item all brokerage and logistics fees promotional spending complete shipping costs customs duties tariffs and taxes insurance currency conversion crating costs handling fees AND overhead Defining Landed Costs Landed Cost is the total cost of a product once it has arrived at the buyer’s door. This list can include: Not all of these components are present in every shipment, but might be considered part of the landed cost.

Charity Hegel Director of Finance Derek Christensen Director of IT Kim Olesen Senior Category Analyst The players

Litehouse  Litehouse manufactures refrigerated produce dressings. They offer the best quality, value and freshness in dressings one can buy.  Litehouse is listed in the top 100 privately held companies in the U.S. by Entrepreneur magazine.  Runs an ERP called Ross Systems, and has well more than a dozen data sources in its data warehouse.  Using rebranded TARGIT Decision Suite as business intelligence solution.

Differing goalsDiffering grainMultiple data sourcesDifferent timingTying out to the GLSecurity concernsProject cost benefit analysis Challenges in Landed Costs

Differing goalsDiffering grainMultiple data sourcesDifferent timingTying out to the GLSecurity concernsProject cost benefit analysis Solution(s) – 1 st example

Tying out to the GL Actual Coupon Spend: $121,423 { Spread to Location, Product Line Ex. $12,142 to NW and Dressing GL Coupons $125,000 $125,000 GL - $121,423 Actual $3,577 Spread $358 to NW and Dressing

1. What if we have spend but no Location? 2. What if we have spend but no Product Line? 3. We can use history (as a guide) but what if it is a new product? 4. What if the president likes this method but the VP of Sales doesn’t? 5. What if the moon really is made of green cheese? Tying out to the GL – GOTCHAS!!

Differing goalsDiffering grainMultiple data sourcesDifferent timingTying out to the GLSecurity concernsProject cost benefit analysis Solution(s) – 2 nd example

Added costs of donated and damaged material Found granular data No material benefit Internal freight Spread by weight? Spread by value? Changes SKU level GM GL Tie Out Finance = sales BUT now wait to end of month Ultimate buy in Project Cost Benefit Analysis

Up and to the right – how GM should go!!

Data, data everywhere 10 different data sources

Categories and Detail

Differing goalsDiffering grainMultiple data sourcesDifferent timingTying out to the GLSecurity concernsProject cost benefit analysis Challenges in Landed Costs

Benefits Margins increased on average 8-10% Project has saved $50,000+ in the first six months in man hours alone Waste and expired product dropped 6x Strategic decisions at WARP speed Profitability at customer, product line levels!

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MRP Lite – Purchasing Horizon – Reorder Point Analysis March 13 th at 1:00 EST Dan Cowan, Contact Information