Difference between Charge code in Procurement & Sourcing and Cost in Landed Cost

(4) Share

Report

Posted on by PT-01100339-0

364

I'm now researching about more complicated business processes in Procurement and Sourcing function. In that, there is a requirement to buy goods/services overseas.

I wonder what aspects make Landed Cost more useful than the use of Charge cost? Are there some cases that we should use Charge code instead?

I have the same question (0)

All responses (3)

Answers (1)

Suggested answer

Chetan Rajpurohit 163 on at

Like (1)

Report

Hi

The charge code are generally used for the domestic purchase cases when for the extra charges ( like transportation) needs to be added in PO. When these charges does not have very high value compared to purchase order amount.

In the overseas purchase, generally the cost involved like Sea freight, custom clearance. If we add these costs, the amount of costs have substantial amount. Like Goods are purchased for 5000 USD ( 500 EA*10Unit price) but the cost amount is 3500 USD ( 3000 Sea freight + 500 Custom clearance). In this case, we would like these cost to be add in the item cost amount. Moreover, the FOB delivery terms being used mostly in overseas purchase. In this term, purchase invoice needs to be posted when goods are shipping in the ship and there is still take 1 or 2 month to receive the goods at destination. For that, goods on transit function of landed cost can be used.

Was this reply helpful? Yes No
Verified answer

sagar_patil 918 Super User 2025 Season 2 on at

Like (1)

Report

When Landed Cost is More Useful:

a) Landed Cost is ideal for managing complex international shipments with multiple vendors, numerous cost elements, and various legs of transportation.
b) If you need to track goods while they are being shipped and manage containers or multiple stages of transportation, Landed Cost is more useful.
c) Landed Cost excels at giving precise visibility into the full cost of imported goods, especially if the costs are incurred at different stages and need to be dynamically allocated.

When Charge Codes are Useful:

a) Charge codes are useful when the procurement process involves fewer additional costs or when the costs are simpler to apply (e.g., fixed freight charges or a percentage-based insurance fee).
b) If you are buying goods locally and there is no need to manage the complexity of customs duties or multi-leg shipping, Charge Codes are often sufficient.
b) For scenarios where costs are easy to allocate (e.g., flat-rate charges or simple percentage-based charges), Charge Codes work well and are easier to implement.

Note:Please help verify answer(s) if they guide you in right direction so other community members can also benefit from your question with verified answer.

Was this reply helpful? Yes No
PT-01100339-0 364 on at

Like (0)

Report

They're well explained!!

Thank you so much!!!

Was this reply helpful? Yes No

Join the conversation

Community site session details

Difference between Charge code in Procurement & Sourcing and Cost in Landed Cost

Helpful resources

Quick Links

Responsible AI policies

Neeraj Kumar – Community Spotlight

Congratulations to the November Top 10 Community Leaders!

Leaderboard > Supply chain | Supply Chain Management, Commerce

Featured topics

Product updates

Community site session details

Difference between Charge code in Procurement & Sourcing and Cost in Landed Cost

Helpful resources

Quick Links

Responsible AI policies

Neeraj Kumar – Community Spotlight

Congratulations to the November Top 10 Community Leaders!

Subscribe to this forum!

Select categories

Leaderboard > Supply chain | Supply Chain Management, Commerce

Featured topics

Product updates