Cogs Tracking

2. Freight Per Unit

• Total shipping cost from Nepal to Asheville ÷ number of units in shipment
• Varies significantly by shipment method (air freight ~$8-15/kg, sea freight ~$2-5/kg)
• Stored in products.freight_per_unit
• Updated each time a new shipment arrives with actual costs

3. Duty Rate

• US import duty varies by product category and HS code
• Stored in products.duty_rate (decimal, e.g., 0.05 for 5%)
• HS codes stored in products.duty_hs_code
• Key rates for our categories:
  • Incense: Generally duty-free or minimal (HS 3307)
  • Prayer flags (textiles): ~5-12% (HS 6307)
  • Singing bowls (metal): ~2-5% (HS 8306)
  • Statues (religious articles): Often duty-free (HS 9703 for handmade art)
  • Thangkas (paintings): Duty-free if original art (HS 9701)

4. Processing Per Unit

• FBA prep costs (if applicable): labeling, poly-bagging ($0.50-2.00/unit)
• Quality inspection costs
• Typically $0-2 per unit, often absorbed into overhead

COGS Confidence Levels

Every product has a cogs_confidence enum:

Phase 1 target: Move all products from "estimated" (category averages) to "confirmed" (actual invoices) within first 90 days. The operations-manager's Nepal team provides invoice data; ceo validates.

Category-Level Estimates (Fallback)

Until SKU-level COGS are confirmed, use these category averages from the financial model:

Low-confidence categories (singing bowls, statues, painted thangkas) have wide variance — individual items can range ±15% from the average. Prioritize getting confirmed COGS for these categories.

Workflow: Recording a New Supplier Invoice

1. operations-manager provides invoice details (supplier name, items, quantities, NPR amounts)
2. Record in supplier_payments table with NPR amount, exchange rate, USD equivalent
3. Calculate per-unit purchase price: total_usd / total_units
4. Update products.cogs_confirmed for each SKU on the invoice
5. Update products.cogs_confidence to "confirmed"
6. Recalculate products.freight_per_unit if this invoice includes freight costs
7. Log the update to skill_invocations with full context

Workflow: Monthly COGS Review

Run monthly (1st of month). For each product:

1. Check if cogs_confidence is still "confirmed" — has anything changed?
2. Check if exchange rate has moved >5% since last COGS update
3. Check if freight costs have changed with new shipment data
4. Flag any products where margin has dropped below margin_floor_by_channel
5. Generate report for ceo with COGS changes and margin implications

Exchange Rate Handling

Nepal supplier payments are in NPR. The NPR/USD rate fluctuates.

• Record the exchange rate at time of each payment
• Use the payment-date rate for COGS calculations (not current rate)
• If rate moves >5% since last purchase, flag for margin review
• Source exchange rate from a reliable API (e.g., exchangerate-api.com)

Output

{
  "sku": "TS-INC-NADO-HAPPINESS",
  "cogs_components": {
    "purchase_price_usd": 2.15,
    "freight_per_unit": 0.45,
    "duty_amount": 0.00,
    "processing": 0.00,
    "total_landed_cost": 2.60
  },
  "confidence": "confirmed",
  "last_updated": "2026-03-15",
  "margin_at_current_price": {
    "shopify": 0.74,
    "etsy": 0.68,
    "amazon": 0.58
  }
}