Total Cost of Ownership

Maximizing Value, Minimizing Cost

As procurement professionals, we can reduce the essence of everything we do to one single word—cost. 

Just about any enterprising business can negotiate the lowest price. But does the lowest price automatically result in the best Return on Investment (ROI)? In reality, our acquisition cost, or unit pricing, only represents a small proportion of the Total Cost of Ownership (TCO). For those of us focused on the highest efficiency, there is a compelling need to break free from the narrow confines of price analysis and focus instead on achieving the lowest TCO—the sum of all costs associated with every activity of the supply chain. 

TCO is a cost-efficiency strategy associated with the procurement sector of supply chain management to support decision-making that overrides the emphasis on purchase prices. Instead, TCO repositions the focus to evaluate both the direct and indirect costs of a product or service—from acquisition of materials and transportation and storage to the selling and delivery or purchased goods and services. The goal is to provide a more accurate basis for choosing among differing alternatives in a purchasing decision, thereby empowering us to make more strategically advantageous financial decisions. 

Why does TCO matter?

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Discover where and when to connect with Reveal at upcoming webinars and industry events.

MasterClass SAP Supply Chain Bootcamp - Virtual

Nov 2, 2022
Nov 4, 2022
8:30 AM - 12:30 PM CST
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NASCES22 N. American Supply Chain Executive Summit

Sep 12, 2022
Sep 14, 2022
Chicago, IL
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SAPinsider Supply Chain Management 2022

Jul 21, 2022
Jul 22, 2022
Bellagio, Las Vegas, NV
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