Automated Landed Cost Allocation Engine

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Solution Overview

Problem

Existing landed cost allocation systems are inefficient and prone to errors, as they rely on manual techniques and fail to accurately allocate costs in real-time, especially when dealing with multiple service providers and varying accounting standards.

Innovation Solution

A computer-based landed cost allocation system that automatically calculates and allocates landed costs, including purchase prices, secondary costs, and inventory values, using a processor and non-transitory computer-readable storage medium to generate journal entries and update inventory values based on actual invoices and accounting rules.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Adaptability or versatility

If manual techniques are used to allocate landed costs, then flexibility in handling different accounting system requirements is maintained, but accuracy and efficiency deteriorate due to human error and time consumption

Engineering Contradiction:

Improveadaptability to accounting system requirementsVSAvoidaccuracy of landed cost allocation

Core Design Contradiction:

Adaptability or versatilityVSReliability

Solution Approach 1:

The patent replaces manual mechanical allocation techniques with an automated computer-based system that calculates and allocates landed costs using predefined accounting rules, eliminating human error while maintaining adaptability through configurable rule sets for different accounting standards

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The system allows dynamic adjustment of allocation parameters and accounting rules to adapt to different accounting system requirements, while the automated calculation engine ensures consistent and accurate application of these parameters across all allocations

Inventive Principle:

Principle #35Parameter changes

2Device complexity

If manual techniques are used to allocate landed costs, then system simplicity is maintained, but productivity deteriorates due to high manual effort and time consumption

Engineering Contradiction:

Improvesimplicity of allocation systemVSAvoidspeed of landed cost allocation

Core Design Contradiction:

Device complexityVSProductivity

Solution Approach 1:

The system performs self-service by automatically calculating, allocating, and updating landed costs without requiring manual intervention, thereby dramatically improving productivity while the underlying architecture remains conceptually simple and easy to operate

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The automated system enables continuous real-time allocation of landed costs as materials are received and processed, eliminating the discontinuous batch processing inherent in manual systems and significantly increasing overall productivity

Inventive Principle:

Principle #20Continuity of useful action

3Measurement precision

If real-time allocation based on multiple service providers is implemented, then accuracy of cost allocation is improved, but system complexity increases due to integration of multiple data sources

Engineering Contradiction:

Improveprecision of landed cost allocationVSAvoidcomplexity of multi-provider integration

Core Design Contradiction:

Measurement precisionVSDevice complexity

Solution Approach 1:

The system segments the complex multi-provider allocation problem into distinct modular components, each handling a specific service provider or cost element, allowing precise tracking and allocation while managing complexity through structured modularity

Inventive Principle:

Principle #1Segmentation

Solution Approach 2:

The patent introduces an intermediary allocation engine that standardizes data from multiple service providers into a unified format, enabling precise real-time allocation without requiring complex direct integrations between all providers and the core system

Inventive Principle:

Principle #24Intermediary (Mediator)

4Reliability

If inventory values are updated based on actual landed costs, then financial accuracy is improved, but time consumption increases due to recalculation requirements

Engineering Contradiction:

Improveaccuracy of inventory valuationVSAvoidtime for inventory value recalculation

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The system performs continuous real-time updates of inventory values as landed costs are allocated, eliminating the need for separate batch recalculation processes and maintaining financial accuracy without significant time loss

Inventive Principle:

Principle #20Continuity of useful action

Solution Approach 2:

The system performs preliminary calculation and allocation of landed costs before final inventory valuation is required, so that when inventory values need to be updated, the calculations are already complete and can be applied immediately

Inventive Principle:

Principle #10Preliminary action

Data Source

PatentUS12125112B2Allocation of landed costs

Publication Date: 2024.10.22 SAP SE

AI summary

Computer-based methods and systems are provided for allocating landed costs. A planned landed cost of materials is calculated based on various planned landed costs. Landed costs are separated into an allocation document to generate a permanent record for cost allocation. When actual landed costs are received the allocation is applied based on different sets of accounting rules and one or more journal entries are generated and persisted based on application of the allocation document and the applied different sets of accounting rules.