Landed Cost: The Hidden Key to ERP Optimization

Roger Pujol, CPIM, CSCP
15 hours ago
2 min read

man looking at spreadsheets — Even with capable, fully integrated modern ERP systems, many companies are still managing landed costs through offline disconnected spreadsheets.

At Champion Business Solutions, we help manufacturers and distributors optimize operations by making complex concepts—like landed cost—actionable inside your ERP.

ERP teams often prioritize core modules like finance, inventory, and sales first. Because landed cost requires integration across procurement, logistics, and finance, it’s seen as “too complex” for early-phase implementation. So, it’s often skipped to “go live faster,” with plans to revisit later—which rarely happens.

What Is Landed Cost?

Landed cost is the total expense of acquiring a product, including:

• Purchase price

• Shipping and freight

• Customs duties and tariffs

• Insurance and risk coverage

• Handling, storage, and overhead fees

It reflects the real cost of doing business across borders—and it's often underestimated.

What Does a Landed Cost Module Do?

An ERP landed cost module automates the capture and allocation of these hidden costs across inventory. Key capabilities include:

• Multi-factor cost allocation: Distributes costs by weight, volume, value, or quantity.

• Vendor invoice matching: Reconciles expected vs. actual charges from freight forwarders and brokers.

• Real-time cost rollup: Updates item cost as charges are received, improving margin accuracy.

• Audit trail and compliance: Tracks every cost component for financial transparency and customs reporting.

Why It Matters in ERP Projects

If your ERP system skips landed cost, you risk:

• Misjudged profit margins

• Poor pricing decisions

• Budget overruns

• Compliance issues with tariffs and duties

That’s why Champion includes a landed cost audit in every ERP Health Check.

How to Calculate Landed Cost

Here’s a quick formula:

Example:

A $10 item + $2 shipping + $0.20 customs + $5.40 insurance + $2 overhead = $19.60 landed cost per unit.

How ERP Helps You Control It

We help clients:

• Embed landed cost fields into purchase and inventory modules

• Benchmark suppliers and carriers

• Automate customs and tariff calculations

• Optimize fulfillment and warehouse strategy

Lack of Ownership

No single department owns landed cost:

Procurement focuses on the unit price
Logistics tracks shipping
Finance handles duties and taxes

This fragmentation leads to gaps in accountability. Without a champion pushing for landed cost visibility, it gets deprioritized.

Landed Cost vs. FOB: Know the Difference

• FOB (Freight on Board): Costs up to the supplier’s dock

• Landed Cost: Covers delivery to your facility

Your ERP must recognize both to ensure accurate costing and support vendor negotiations.

Ready to reduce hidden costs and improve compliance?

Champion Business Solutions offers vendor-neutral ERP strategies to help you turn cost visibility into a competitive advantage.

Let’s Talk: Schedule a Consultation

If you would like to discuss your situation, please schedule a free, no-obligation consultation with us by using the link below.

Schedule A FREE ERP Consultation

Roger Pujol, CPIM, CSCP, the founder of Champion Business Solutions, LLC, is an ERP consultant & advisor specializing in ERP Business software for the manufacturing and distribution industries. He shares insights and experiences on assisting small and medium-sized businesses (SMBs) to enhance their operations.

BUSINESS SOLUTIONS, LLC