Certified Supply Chain Professional (CSCP) Practice Exam

What is included in landed costs?

1. Product cost only

2. Cost of logistics only

3. Product cost and cost of logistics

4. Storage costs only

The correct answer is: Product cost and cost of logistics

Landed costs refer to the total cost of a product once it has arrived at the buyer's doorstep. This includes not only the initial product cost but also all associated costs required to get the product to that point. These associated costs encompass logistics expenses, such as transportation, freight charges, insurance, customs duties, and any other costs incurred during transportation and handling. By acknowledging both product costs and logistics costs, landed costs provide a comprehensive view of the overall expenditure involved in acquiring a product. This holistic approach is crucial for businesses when setting prices, managing budgets, and assessing supplier options, ensuring that all potential expenses are accounted for in their purchasing decisions. This understanding is vital for effective supply chain management, as it allows organizations to analyze their procurement strategies and negotiate better terms with suppliers based on the complete financial picture.