Efficiency in Import and Distribution: Landed Cost, Release Times, Double Stock

In import, the gap between profit and loss sits in three places that do not appear in the accounts: costs never landed onto the SKU, a release time treated as a surprise, and stock recorded twice. All three are measurable, and all three are fixed without replacing a system.

Landed cost: why the number in the system is wrong

At most businesses a SKU carries the supplier price, and the associated costs sit somewhere else entirely: sea or air freight, insurance, the customs broker's fee, duty and port charges, storage, and inland haulage from the port.

As long as those costs are booked as general expenses rather than landed onto the SKU, two errors occur in parallel. First: a heavy, cheap product looks more profitable than it is, because its share of freight is large. Second: a small, expensive product looks less profitable than it is. Both lead to wrong pricing and wrong purchasing decisions.

How to land costs without a project

What matters is not choosing the theoretically "correct" basis but the basis matching what you were actually charged on. Allocating freight by value when the carrier billed by volume produces a figure that looks precise and bears no relation to reality.

How costs are recorded in the books is a question for the accountant. What is described here is the management side - what you need to know in order to price.

Release time is data, not a surprise

The familiar pattern: the shipment leaves, reaches the port, and then is "stuck in customs" - and nobody knows for how long. In reality, release time is the sum of stages, each measurable: arrival, filing the customs entry, inspections where required, payment, release, and haulage to the warehouse.

A business recording the dates of those stages for every shipment has, within six months, a real range per supplier and per product type. That range is what turns ordering from guesswork into planning, and it is also what lets you tell a customer when stock will land without inventing a date.

The documents that set the pace

• Bill of lading - comes from the carrier, and without it there is no release.
• Supplier invoice and packing list - the basis for the declaration.
• Certificate of origin - relevant to trade agreements, and comes from the supplier.
• Standards or licensing approvals - product-dependent, and the big delayers.
• Customs entry - filed by the customs broker.
• Release confirmation - what lets you schedule haulage.

The fourth item causes most of the long delays, because it is the only one on the list that may require approaching a third party after the goods have already arrived. A business that identifies in advance which products need such an approval moves the waiting to before the order, and that is the whole difference.

Double stock: the single source

The moment there is a warehouse and a shop, or a warehouse and a second warehouse, a simple question gets a complicated answer: how many units are there. If each location holds its own count, one week of unrecorded transfers is enough for the numbers to diverge.

What solves this is not a new system but a definition: one location is the record, and every movement between locations is a document. Even if the document is a row in a spreadsheet, what matters is that a transfer cannot happen without being recorded - because an unrecorded transfer is exactly what creates the gap.

The commercial consequence is immediate: inaccurate stock at a distributor means a delivery promise that will not be kept, and that surfaces in front of the customer. The broader side of stock management is covered in inventory in an ERP against a spreadsheet.

Distribution: what changes when there are retail customers too

An importer who also distributes carries an extra problem: the same SKU sells at several prices - to a distributor, to a chain, to a single shop and sometimes direct to a consumer. When the cost price is inaccurate, there is no way to know which channel is actually profitable.

It gets worse where there are commercial incentives: volume discounts, returns, advertising contributions. Each lowers the effective price without appearing on the price list, so profitability calculated from the list is higher than the truth.

The simple check is to calculate, once a quarter, the actual net selling price per channel - total revenue from that channel divided by units - and compare it to landed cost. In many cases that is the first time it becomes clear that one channel is subsidising another.

What to measure in the first quarter

1. Actual landed cost per SKU, against the supplier price alone.
2. Time from order to available stock, per supplier.
3. The number of times a date was promised to a customer and missed.
4. The gap between a physical stock count and the record, as a percentage.

The third number is the only one customers feel, so it is the one worth starting from. The first two explain it, and the fourth tells you whether the answers can be trusted at all.

Sources

• Israel Tax Authority - Customs
• Israel Shipping and Ports Authority
• When to move to an inventory system
• Book a call