A company evaluating supply chain options compares the lower costs associated with moving to a geographically distant area to the increased costs associated with achieving smooth, consistent, and timely flow of material. The company is determining:
A company evaluating supply chain options compares the lower costs associated with moving to a geographically distant area to the increased costs associated with achieving smooth, consistent, and timely flow of material. The company is determining:
The company is determining the total cost of ownership (TCO). TCO involves considering all the direct and indirect costs associated with every activity of the supply stream, including acquisition, operation, and maintenance, over the entire life cycle. This aligns with the company's evaluation of lower costs of relocating to a distant area against the increased costs for maintaining a smooth material flow.
(TCO)–In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership.
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Total Cost of Ownership (TCO) concept involves considering all the direct and indirect costs associated with the acquisition, operation, and maintenance of a purchase or decision over its entire life cycle.