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Implementing Landed Cost along with OTM in Oracle Applications: Things to Consider Before Getting Started vs. Get Started.

Are you thinking of implementing Landed Cost in Oracle Cloud Applications? Apps Associates has been providing Oracle cloud implementation solutions to customers across various modules for over five years. Businesses that purchase material from different countries and import to the United States or any other country incur different kinds of costs on top of the material cost. Landed Costing in Oracle Cloud Applications helps businesses calculate and manage their actual landed cost. These costs are significant and must be added to the material cost. This blog provides details on implementing Landed Cost along with OTM integration involving a middleware tool.

Oracle ERP: Oracle Purchasing is the place businesses create purchase orders(PO). As per Oracle ERP design, once a PO is approved then the user should start creating all possible trade operations and add the charge lines along with the supplier, supplier site and estimated amount. This is where it can get tricky and some of these questions can arise:

  • Who will create trade operation?
  • How does a business know which charges they are going to incur?
  • Who is the service provider and how much of the amount will they incur?

Apps Associates provides an innovative way to address these questions, and reduce challenges faced by utilizing Oracle Transportation Management (OTM) and the integration tool, as well as Oracle Integration Cloud (OIC).

Oracle Integration Cloud (OIC): This is the middleware tool used to integrate ERP and OTM for Landed Costing. This integration tool helps businesses create the trade operation and add charge lines. When a PO is approved then OIC will create trade operation. Once the trade operation is created, OIC adds all possible charges in that trade operation based on a template which is inside OIC. All charge lines will have a Dummy Supplier and a Dummy Site with an estimated amount as zero dollars. This is an innovative way to include the supplier and the site when these are unknown when PO was approved. OIC also sends the approved PO to OTM.

Oracle Transportation Management (OTM): OTM is a transportation management application for planning for inbound and outbound shipments. For the sake of this blog we will review an inbound shipment. While performing inbound shipment planning, OTM provides the carrier as well as the carrier’s rate. Once a PO is entered, OTM sends the carrier along with the estimated amount to OIC. In turn OIC sends the update back to the ERP with the trade operation and charge lines for that carrier and an estimated amount.

After service is rendered by the carrier, OTM then sends the actual voucher which signals to create an AP invoice using OIC Integration. This integration will also populate the charge reference on the invoice line for the Landed Cost. Within ERP, the estimated amount will then be replaced with the actual cost. Below please see a diagram depicting the transaction.

Oracle Transportation Management

Conclusion: Utilizing OIC and OTM increases efficiency and reduces errors by automating the landed cost. By using the above approaches, we were able to implement Landed Costing successfully along with OIC and OTM. In this example, our customer had a high volume of purchase orders created in the ERP. By using Oracle OTM and OIC we were able to create trade operation and charge lines in a fast, efficient manner. By having OIC integrations between the ERP and OTM the process of having landed cost was automated and thereby reduced errors through any manual processes.

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