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Total Cost of Ownership (TCO) is a method for quantifying the costs for every activity along the supply stream, including acquisition, transportation, storage, and selling of goods. TCO allows strategic sourcing decisions to incorporate social costs, which historically have been difficult to assess. The working session also introduces a TCO calculator, which allows a side-by-side comparison of up to four suppliers and the analysis of multiple sourcing scenarios.
The Total Cost of Ownership allows companies to account financially, for each activity along the supply chain including costs associated with the acquisition of materials, transportation, storage, and the selling of purchased good or services. The goal is to equip companies to make strategic sourcing decisions.
The TCO Calculator, a key tool available only to participants of the MEP Supply Chain Optimization program, facilitates a side-by-side comparison of suppliers, analyzing multiple sourcing possibilities on a global scale. TCO helps minimize total costs while maximizing value to the customer.