Achieving Landed Costs and Product Line Net Margin

Achieving Landed Costsand Product Line Net Margin

Achieving Landed Costs

Challenges

Solution(s)

Benefits

Case study: Litehouse

the original cost of the item all brokerage and logistics feespromotional spendingcomplete shipping costs customs duties

tariffs and taxes insurancecurrency conversion crating costshandling feesAND 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 HegelDirector of Finance

Derek ChristensenDirector of IT

Kim OlesenSenior 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 goals

Differing grain

Multiple data sources

Different timing

Tying out to the GL

Security concerns

Project cost benefit analysis

Challenges in Landed Costs

Differing goals

Differing grain

Multiple data sources

Different timing

Tying out to the GL

Security concerns

Project cost benefit analysis

Solution(s) – 1st 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 goals

Differing grain

Multiple data sources

Different timing

Tying out to the GL

Security concerns

Project cost benefit analysis

Solution(s) – 2nd 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 goals

Differing grain

Multiple data sources

Different timing

Tying out to the GL

Security concerns

Project 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!

Founded in 2005 to supply companies with BI solutions rather than tools

Focus on Business to make a Business Intelligence Solution

Focus on best of breed solutions that fit customers

Company Overview

MRP Lite – Purchasing Horizon – Reorder Point Analysis

March 13th at 1:00 EST

www.businessimpactinc.comDan Cowan, dcowan@businessimpactinc.com919-357-3545

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