"We had no visibility into the true cost of our imported goods. Freight, duties, and handling fees were scattered across departments and spreadsheets. It wasn't until we implemented a centralized landed cost system that we realized how much margin we were losing." – Supply Chain Manager
This kind of confession from a supply chain director isn't unusual. For companies navigating today's volatile global trade landscape, there's a sobering reality: Landed costs can account for 40 percent or more of the total cost of each imported item. Yet many businesses struggle to track them accurately.
In a global economy defined by tariff flux, the ability to capture, allocate, and analyze these costs has become a competitive differentiator. This is where NetSuite's Landed Cost functionality becomes transformative as a foundational piece for resilient global operations.
Landed cost represents the total expense of getting a product to its destination. This includes not only the purchase price, but also freight, tariffs, duties, insurance, brokerage, and handling fees—all of which affect margin and pricing decisions. NetSuite's Landed Cost feature automates the allocation of these charges directly to inventory items, ensuring accurate cost of goods sold (COGS), real-time margin insights, and audit-ready financial records.
The real-world cost of incomplete visibility
We see a familiar pattern of challenges for many businesses we work with:
- A specialty food importer discovered that ocean freight surcharges varied by 11% between shipping lanes, but their pricing strategy treated all routes equally
- A manufacturing client making sourcing decisions based on unit price alone, only to discover that duties and compliance costs negated apparent savings
- A retail client whose month-end close extended by three additional days due to manual reconciliation of customs broker invoices
These challenges can affect pricing strategies, financial accuracy, and operational efficiency. We typically find that 45-55% of our clients' total landed costs are either misallocated or completely untracked at the SKU level.
NetSuite's Landed Cost: The framework for financial clarity
NetSuite's Landed Cost module allows businesses to address these challenges through several key capabilities:
- Comprehensive cost capture: Beyond purchase price, NetSuite tracks freight, tariffs, duties, insurance, and handling fees—attributing them directly to inventory value.
- Flexible allocation methods: The system supports distribution based on quantity, weight, value, or custom formulas to mor accurately reflect how costs behave.
- Automation through templates: Preconfigured templates help streamline complex cost structures, ensuring consistency across thousands of transactions.
- Multi-entity support: For businesses operating across borders, costs can be distributed with precision across location-specific subsidiaries.
From concept to reality: How real businesses implement landed cost
The technical capabilities matter only when they're aligned with operational realities. Here's how we've helped clients bring these concepts to life:
Crafting the right cost categories
Riveron helps define and map relevant Landed Cost Categories (e.g., Tariffs, Duties, Freight, Insurance) to specific GL accounts. This ensures proper expense classification and visibility at both the transactional and financial reporting levels. For example, a manufacturing client with frequent ocean freight exposure created categories for Fuel Surcharge and Port Handling to track trends in shipping costs over time.
Building automation through templates
By building Landed Cost Templates, Riveron enables clients to automatically apply cost structures based on supplier, region, or product type. For a CPG importer, we created templates that apply customs duties based on item value and freight costs by weight. These templates are triggered at the item receipt or vendor bill stage—removing manual data entry and ensuring consistency.
Transaction-level execution
Costs can be entered at two key stages:
- Item receipts: Estimate costs early for real-time inventory valuation and COGS accuracy.
- Vendor bills: Enter actual landed costs once supplier invoices are available, automatically truing up inventory cost adjustments.
Riveron supports clients in determining the right workflow based on industry need. For example, a fresh produce importer applied estimated duties at receipt and reconciled to actuals when the final customs bill arrived.
Operationally aligned allocation logic
Depending on business context, landed costs may be best distributed by:
- Quantity: A company importing boxes of identical parts may spread handling fees evenly per unit.
- Weight: A supplier of heavy goods, like metal pipes, may apply freight costs based on item weight.
- Value: A retailer importing high-end electronics may allocate import duties by the item's value.
- Manual entry: A manufacturer may manually assign costs when they occur, like surprise inspection fees.
Riveron configures these allocation rules per category, ensuring businesses are not just capturing costs—they're capturing them the right way.
When landed cost clarity matters most
Properly implemented landed cost management becomes especially invaluable during key business inflection points:
- Margin pressure: When competitors force price reductions, granular cost understanding becomes the difference between sustainable and unsustainable concessions.
- Sourcing decisions: Accurate total cost modeling allows businesses to evaluate the true financial impact of switching suppliers or regions.
- Audit and compliance: With increasing regulatory scrutiny, having system-enforced documentation of all import-related payments provides considerable peace of mind.
- Product Rationalization: When determining which products to discontinue, accurate landed cost data prevents cutting profitable items whose base cost misrepresents their true contribution.
The path forward: Implementing for impact
Effective landed cost management isn't implemented overnight. Based on dozens of successful implementations, we've developed a phased approach that balances quick wins with long-term sustainability:
- Assessment: Evaluate current cost capture, allocation methods, and reporting gaps
- Process Design: Develop landed cost workflows that reflect your specific business operations
- System Configuration: Configure NetSuite's technical capabilities to support the designed process
- Data Migration: Establish historical baseline for meaningful comparative analysis
- Training and Enablement: Develop cross-functional understanding of landed cost impacts
Looking ahead: From cost tracking to strategic advantage
The most sophisticated clients are now moving beyond basic landed cost tracking to predictive modeling. By analyzing historical patterns, they're forecasting duty impacts, optimizing container utilization, and modeling the financial implications of sourcing shifts before making commitments.
In a distributed trade environment where complexity is the only constant, this evolution from reactive cost tracking to proactive cost management represents the next frontier for competitive advantage.
Whether you're navigating tariff changes or reevaluating supply chain costs, refining landed cost processes can be a valuable step toward greater financial clarity and operational control.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
