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Total Cost of Ownership (TCO)

Total cost of ownership serves as a key mean by which to analyse and evaluate indirect costs (van Weele, 2010).

Information about Total Cost of Ownership (TCO)

There are many factors that have contributed to organisations adopting a more strategic approach to purchasing and supply management in recent years. For example, these can include a greater need to raise the quality of purchased materials and services, increased global competition and supply base rationalisation (Hurkens et al., 2006).

Purchasing decisions frequently contribute a substantial part of an organisation’s total costs. This is true not only with respect to direct acquisition costs but also incorporates indirect costs such as inventory management, quality assurance, administration and payment (Hurkens et al., 2006). For these reasons, TCO serves as a key direct and indirect costs analyses and evaluation method (Ellram, 1993; van Weele, 2010).

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Whole Life Costing (WLC)

WLC takes account of the total costs of making or purchasing and then owning (or leasing), operating, maintaining and managing the requirement (including its end of life, whether that...

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Whole Life Costing (WLC)

WLC takes account of the total costs of making or purchasing and then owning (or leasing), operating, maintaining and managing the requirement (including its end of life, whether that...

Find out more