Tài liệu tiếng Anh thương mại quản lý Chapter 13 Total cost of ownership

Tài liệu tiếng Anh thương mại quản lý Chapter 13 Total cost of ownership

Chapter 13

Total Cost of Ownership

Total Cost of Ownership

• Total cost of ownership is a philosophy for really understanding all

supply chain related costs of doing business with a particular supplier

for a particular good or service (Lisa Ellam, May 1999)

TCO

13-2

Key Concepts

• TCO, Net Present Value Analysis (NPV), and Estimated Costs

• The Importance of Total Cost of Ownership in Supply Management

13-4

Three Components of Total Cost

• Acquisition Costs

• Ownerships Costs

• Post-Ownership Costs

» Non-value added costs

» Supply chain costs

» Environmental costs

» Warranty costs

» Product liability costs

» Customer dissatisfaction costs

TCO

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• Financing Costs

• Non-Value Added Costs

• Supply Chain Costs

13-8

Post - Ownership Costs

• Environmental Costs

• Warranty Costs

• Product Liability Costs

• Customer Dissatisfaction Costs

13-10

TCO, Net Present Value Analysis (NPV), and Estimated Costs

• NPV analysis is frequently incorporated into TCO analyses

• NPV analyzes present values of the initial expenditure along with the

likely future revenue and expenditure streams

• The present value of a sum of future cash flows discounted by a required rate of return

Tangential Reprographics Example

Required rate of return 20.00%

Value Cost of machine including

installation and testing (actual) (120,000) (120,000) Manufacturer required overhaul

Cash inflows generated by using

machine (estimated) 40,000 40,000 40,000 40,000 40,000 40,000 133,020 Cash outflows incurred by using

machine (estimated) (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) (23,279)

Net present value of potential

Total of annual streams (from above) (120,000) 33,000 33,000 24,000 33,000 33,000 40,500

Required rate of return 20% 20% 20% 20% 20% 20%

Sum of present value of annual

streams equals net present value of

Net Present Value Analysis - Copier

Required rate of return 20.00%

Value Cost of machine including

Manufacturer required overhaul

Cash inflows generated by using

machine (estimated) 40,000 40,000 40,000 40,000 40,000 40,000 133,020 Cash outflows incurred by using

machine (estimated) (7,000) (7,000) (7,000) (7,000) (7,000) (7,000) (23,279)

Net present value of potential

Total of annual streams (from above) (120,000) 33,000 33,000 24,000 33,000 33,000 40,500

Sum of present value of annual

streams equals net present value of

TCO Formula

n

i = 1

P.V = net present value

Ti = training costs in year i

Oi = operating costs in year i

Mi = maintenance costs in year i

PVA Incorporated into a TCO Analysis

PVA Formulas

• PVAnnuity = CF [ 1/r – 1/r(1+r) t ]

year)

• PV = FV / (1 + r)t

year)

Importance of TCO in Supply Management

Service and Retail Providers

service business

generate a profit

» TCO analysis of recurring material costs are often overlooked and can yield great savings

» TCO analysis of the labor base can reap lower per person costs, greater benefits, and improved morale

» TCO analysis of equipment purchases may help reduce the expenditures for maintenance and

parts over the lives of the investments

Activity Based Costing

• A major problem in TCO analysis of manufacturers is accurate allocation of

Supply Chain/Supply Networks

of:

» Manufacturability

» Infrastructure

» Outsource decision

» Analysis of suppliers beyond tier one

» Structure of foreign and domestic

tariffs/duties/taxes

» Costs of delivery

» Foreign regulations

» Foreign political/economic stability

» Foreign exchange risk

» Language/communication requirements

» Volatility of end-customer demand

» Inventory carrying costs

» Inventory risk

» Quality costs

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Concluding Remarks

• TCO is an analytical tool and a philosophy

• Accurate estimation of total costs requires a cross-functional approach

• Supply management is a critical member of such a cross-functional

approach

• TCO is also applicable in one’s private life enabling better

decision-making

END