Total cost of ownership an analysis approach for purchasing

Total cost of ownership an analysis approach for purchasing Total cost of ownership is a methodology and philosophy which looks beyond the price of a purchase to include many other purchaserelated costs. This approach has become increasingly important as organizations look for ways to better understand and manage their costs. Examines case studies of 11 firms which use total cost of ownership concepts in purchasing. Based on the case study data and the literature, barriers and benefits associated with the total cost of ownership approach are discussed. The total cost of ownership models used by the case study firms are classified by type as dollar‐based or value‐based, and an example of each is shown. The total cost of ownership models are then further classified by their primary usage: supplier selection or supplier evaluation. This cross classification reveals a strong relationship between model type and model usage. Concludes with a comparison of the models, recommendations for practitioners and a discussion of future research directions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Physical Distribution & Logistics Management Emerald Publishing

Total cost of ownership an analysis approach for purchasing

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Publisher
Emerald Publishing
Copyright
Copyright © 1995 MCB UP Ltd. All rights reserved.
ISSN
0960-0035
DOI
10.1108/09600039510099928
Publisher site
See Article on Publisher Site

Abstract

Total cost of ownership is a methodology and philosophy which looks beyond the price of a purchase to include many other purchaserelated costs. This approach has become increasingly important as organizations look for ways to better understand and manage their costs. Examines case studies of 11 firms which use total cost of ownership concepts in purchasing. Based on the case study data and the literature, barriers and benefits associated with the total cost of ownership approach are discussed. The total cost of ownership models used by the case study firms are classified by type as dollar‐based or value‐based, and an example of each is shown. The total cost of ownership models are then further classified by their primary usage: supplier selection or supplier evaluation. This cross classification reveals a strong relationship between model type and model usage. Concludes with a comparison of the models, recommendations for practitioners and a discussion of future research directions.

Journal

International Journal of Physical Distribution & Logistics ManagementEmerald Publishing

Published: Oct 1, 1995

Keywords: Cost management; High technology; Ownership; Purchasing; Supplier evaluation; USA

References

  • Total Cost of Ownership in Purchasing
    Ellram, L.M.
  • The nature of the firm
    Coase, R.H.

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