A More Flexible No License Alternative to NetSuite’s Estimated Landed Cost Template SuiteApp

This article is relevant if your business relies on landed cost calculations to determine true item profitability but has struggled with the limitations of NetSuite’s built-in tools.

Background

Landed costs represent the full cost of acquiring inventory, including expenses like freight-in, tariffs, duties, and insurance, in addition to the purchase price. These costs are crucial for proper inventory capitalization and understanding item-level profitability. Accurately assessing the true cost of goods sold (COGS) allows businesses to evaluate margins effectively and make informed decisions.

While NetSuite provides functionality to associate landed costs with vendor bills linked to item receipts, this model often fails to meet the needs of enterprise companies. These businesses face challenges such as:

• Accounting periods close before landed costs and vendor bills arrive.
• The inability to retroactively update locked costing records.

Consequently, one should not rely on actual landed costs bills and should move toward estimating landed costs as a means of reasonable accrual and capitalization.

In light of the challenge, NetSuite offers a Landed Cost template system that works in very simple scenarios. However, in our practice experience, it falls short of the complex supply chain dynamics our clients encounter.  Many clients who attempted to use NetSuite’s tools independently described their experience as “almost there but ultimately frustrating.”

To address this recurring concern, the Prolecto Resources Operations Practice drew upon years of expertise and existing algorithms to design a simplified, flexible, and effective solution tailored to our clients’ real-world challenges.

Exploration: The Limitations of NetSuite’s Estimated Landed Cost Functionality

NetSuite’s built-in Landed Cost template system is a useful starting point for addressing the all-in costs of inventory acquisition, but it often falls short in complex supply chain scenarios. Clients frequently encounter the following limitations:

1. Overemphasis on Individual Items: NetSuite’s solution is heavily item-centric, which poses challenges for businesses managing diverse product categories. Companies must often apply landed cost criteria based on factors like shipment location, vendor, or specific logistical pattern, not just item attributes.
2. Incompatibility with Advanced Transactions: the native tools do not support landed cost calculations for key records like inbound shipments or transfer orders. This creates significant gaps for businesses with complex supply chains that involve in-transit logistics or inter-company transfers.
3. Rigid Configuration and Application Flexibility: NetSuite’s templates lack the flexibility to express nuanced landed cost criteria, making it difficult to do the following: account for regional differences (e.g., varying tariffs by destination); or calculate amounts dynamically based on formulas, units of measure, or effective dates; or apply costs to a wide range of transactions automatically.

These limitations can lead to incomplete landed cost attribution for enterprise-level businesses, which can increase frustration for accounting and inventory operations teams. To truly optimize their processes, these organizations need a solution that is adaptable and capable of seamlessly integrating with their existing workflows and mental models.

Solution: A Simplified Yet Highly Flexible Landed Cost Estimation Approach

Recognizing the recurring frustrations faced by clients with NetSuite’s rigid Landed Cost template system, our firm designed a solution that prioritizes simplicity, flexibility, and alignment with real-world supply chain complexities. Our approach introduces key innovations that directly address the limitations of the native tools:

1. Landed Cost Rate Cards: this feature enables businesses to define flexible, criteria-based rules for landed cost applications. By reading any attribute on the item receipt, rate cards allow for precise qualification matching, whether based on item categories, locations, vendors, or any other custom attribute. These cards are designed to be extensible, adapting to the unique requirements of each client’s operations.
2. Flexible Formula Expression: unlike NetSuite’s rigid template calculations, our solution supports user-defined variables and expressions to calculate landed cost estimates. This includes advanced scenarios such as unit-of-measure conversions or dynamic cost components, ensuring businesses can model their costs accurately and transparently.
3. Formula Effectiveness Dates: landed cost rate formulas can include effective dates, allowing seamless phase-in or phase-out cost changes. This ensures that estimates remain accurate even as tariff rates, freight costs, or other variables fluctuate over time.
4. Target Line-Level Landed Costs: to maximize flexibility, landed costs are applied at the line level on item receipts. Each line can reference multiple rate cards, enabling businesses to intelligently compound cost applications across different landed cost categories. This granular approach ensures precision and adaptability.
5. Item Receipt Line Explanation Referencing: the solution automatically matches rate cards to item receipt lines and calculates the associated landed costs. Each line includes cross-references to the matched rate cards and a textual explanation of the applied landed costs, ensuring traceability and fostering trust in the calculations.  Once trust is built, no need to pop up the landed cost screen as the explanation says it all.
6. Support for Transfer Order / Inbound Shipment Item Receipts: unlike NetSuite’s native tools, this solution is fully compatible with transfer order and inbound shipment item receipts, making it ideal for businesses managing complex in-transit supply chain logistics. This ensures that landed costs are accurately accounted for, regardless of the movement type or logistical scenario.

Watch the Prolecto Landed Cost Line Application in Action

I interviewed Hector Cardenas, our Operations Practice Leader, to help better understand the capabilities and implementation of the Prolecto Landed Cost Line Application.  The following video (14:55) offers a walkthrough to aid understanding.

Click here to watch the full demonstration and see the tool in action.

Implementation Details: Prolecto Landed Line Costs Implementation Pattern

The Prolecto Landed Line Costs solution follows a structured implementation pattern designed to empower clients to manage their own configurations over time. Businesses can achieve flexible landed cost estimates by leveraging NetSuite’s strengths in sourcing data and creating robust organizational criteria.  Here is the typical pattern to get this live in your NetSuite configuration:

1. Organize Criteria for Landed Cost Estimation: define criteria for estimating landed costs by cost category to minimize the need for individual configurations on every purchase or transfer order. Examples include item categories, vendors, and shipment locations.
2. Ensure Data Sourcing to Item Receipts: use NetSuite’s native point-and-click tools, such as custom fields, workflows, or scripts to populate item receipt records with the attributes required for rate card matching.
3. Build and Test Initial Rate Cards:  our team works with our clients to develop and validate the first few rate cards to ensure operational staff understand how the criteria, calculations, and line-level applications function.
4. Empower Clients to Expand Configuration: once the foundational setup is complete, our clients can work with their teams with our hand-holding to create additional rate cards and refine their models using the demonstrated pattern.

Bottom-line, our leadership helps our client organizations become self-sufficient and confident knowing we have their back.

Other Landed Cost Models and Prolecto Leadership Discussions

While the Prolecto Landed Cost Line Application is an excellent solution for generating landed cost estimates and a superior replacement for NetSuite’s Landed Cost templates, there are additional scenarios where other algorithms from our Landed Cost Library may be more applicable. These models address various business requirements that extend beyond NetSuite’s standard functionality.

Here are examples of our expertise and advanced approaches to solving complex landed cost challenges, which I have previously written about:

1. Purchase Order-Driven Landed Cost Models: automate the estimation of landed costs directly from purchase orders.
2. Apply Purchased Freight Across Multiple Item Receipts: distribute freight costs automatically over multiple item receipts for precise landed cost allocation.
3. Item Consumption for Inventory Capitalization: decrement materials inventory to capitalize costs directly into item receipts, streamlining COGS adjustments.
4. Transfer Order-Driven Landed Costs: automate the calculation and application of landed costs for complex supply chains using transfer orders.
5. Accrue for Actual Freight Expenses: seamlessly update shipping costs and accrue for actual freight expenses to ensure accurate accounting.
6. General Landed Cost Fundamentals and Advanced Discussions: explore foundational concepts and advanced practices, such as addressing late vendor bills.  Another related article helps aid understanding: Offer: Superior NetSuite Landed Cost Practice with Late Vendor Bills.

These articles highlight our ability to innovate beyond NetSuite’s out-of-the-box capabilities, offering tailored solutions for diverse business needs.

Get the Prolecto Landed Cost Line Application Library

A very special thanks to Hector Cardenas, Operations Practice Leader, Aadra A., Senior Business Analyst, and Boban D., Senior Technical Analyst,  for their invaluable contributions to this effort.

By leveraging the Prolecto Landed Cost Line Application, clients can access a flexible, scalable, and easy-to-implement solution that ensures accurate landed cost estimation, whether for purchase orders, transfer orders, or other logistical scenarios. This tool exemplifies our superior approach to NetSuite innovation, where thoughtful planning and practical execution transform complex business requirements into effective solutions.

The Prolecto Landed Cost Line Application is one of many Accelerator Templates available through our Prolecto LABs initiative. These tools are provided to our clients without a license charge, reflecting our commitment to modeling real-world business challenges and overcoming perceived limitations within the NetSuite platform.

At Prolecto, our goal is to build ethical, trusted service relationships with organizations that recognize NetSuite’s potential to drive scalable operations. Our deeper intention is to raise the standard for professional services in this industry. If your business is ready to maximize the platform’s capabilities with innovative and flexible solutions, we can help.

If you found this article helpful, sign up for notifications of new articles as we post them. To explore how our Landed Cost Line Application or other Prolecto LABs tools can benefit your organization, let’s have a conversation.

Marty Zigman

Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

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