Cost/Price Minimization: Total Cost of Ownership

Functional Area:
Procurement

Hours:
2

$99.00 $108.90

Proficiency:
Intermediate

Abstract:
Understanding the true cost to do business with a supplier, of an outsourcing decision, or of a process is critical in determining whether your organization is making the best decisions. This Online Self-Study explores the concept of total cost of ownership and how to understand and manage hidden costs in order to reduce overall costs and enhance value.

Description:
The goal of total cost of ownership (TCO) analysis is to develop an understanding of your true costs of doing business, so these costs can be understood, managed, and non-value costs can be reduced or eliminated. The total cost of ownership approach combines the value you want with understanding the true cost of what is being purchased. It does not necessarily advocate buying whatever is cheapest. Rather, it encourages you to clearly specify what you are looking for, and then determine the best overall value that meets your needs. Understanding the true cost to do business with a supplier, of an outsourcing decision, or of a process is critical in determining whether your organization is making the best decisions. There are many hidden costs — costs not accounted for in the purchase price — that can change a very good purchase price into a very bad deal overall. Hidden costs may include administrative costs, usage and disposal costs, and elements of the purchase price itself. To make the best overall decision for a purchase, you need to identify and analyze these hidden costs. This Online Self-Study explores the concept of total cost of ownership and how to understand and manage hidden costs in order to reduce overall costs and enhance value.

Learning Objectives:
At the end of this module, you will be able to:

• Explain the total cost of ownership concept and when it applies
• Analyze key issues within each of the phases of total cost of ownership analysis
• Identify total cost of ownership barriers and how to overcome them

Agenda:
The following topics are included in this module:

• Introduction
• Prepare for Analysis
• Map the Process
• Identify Relevant Costs
• Gather Data
• Prepare Analysis

Conclusion
Activities are integrated into the module to aid the learning process. An assessment at the end of the module enables the learner to measure progress.