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Session Title: Total Cost of Ownership (TCO)


Session description:

The concept of total cost of ownership (TCO) refers to capturing all associated costs incurred when purchasing goods or services from external providers. This is essential knowledge for effective cost-to-serve analysis, which helps quantify the cost-service tradeoffs in how your supply chain functions. TCO is hard to implement, as true cost is not always readily discoverable and often hidden in different internal expenses. This makes implementing TCO a resource-intensive endeavor, but one that can yield tremendous dividends.

In this session, we will consider TCO case studies on:

• Ensuring that savings in supplier negotiations are reflected in the bottom line, and not simply transferred to other areas of the organization with the support of TCO analysis.

• How TCO can improve sourcing as well as supplier management operations and performance.

• Identifying areas of opportunity to implement TCO based on data availability and potential savings.

• Encouraging adoption of TCO by embedding it in foundational sourcing processes such as supplier selection, contract negotiations, and performance management.

• Raising awareness of TCO’s value by communicating the savings it enables.

Key takeaways:

• Areas beyond unit price that are often overlooked by leaders in sourcing and procurement.

• How you evolve from a focus on unit price to an end-to-end appreciation of all sources of costs.

• Easily overlooked examples of supply chain complexity that lead to hidden costs.

• Benefits of TCO vs. unit price purchasing