Total Cost of Ownership - en papperstiger
En studie av svenska industriföretags beslutsunderlag inför sourcing
Total Cost of Ownership Sourcing Value chain Value Chain Analysis Purchasing maturity Low Cost Country Sourcing.
Evaluating and choosing suppliers based on price alone, has traditionally been the dominant strategy for supplier selection within the purchasing function. With the origin of the Total Cost of Ownership (TCO)-concept in the early 1990s, a new philosophy dawned that promoted the importance of knowing the effects of supplier performance on the buying firm?s internal costs. Since then, scholars have been arguing the case of TCO as a viable model for making purchasing decisions and conducting supplier evaluation. Still, after two decades little is known about its penetration and impact on the practices of buying corporations, leaving the questions of which costs are included in the purchasing organisations? decisions unanswered, and even more importantly why certain costs are considered and others not. In this paper the authors address this gap in the TCO literature in a Swedish industrial context, the purpose being to elaborate on the applicability of TCO and barriers to its implementation. This paper finds that the concept of TCO is almost non existent among six of Sweden?s largest industrial corporations with global sourcing. Today, conventional costs such as price and transportation still determine the choice ofsuppliers. Among the findings, no relationship is recognized between purchasing organization maturity and TCO usage. However, increased purchasing maturity does imply increased cost awareness. Further it is concluded that the purchasing organization?s performance measurements have to be aligned with TCO in order to avoid inconsistency. Also, the importance of solid research before LCC-sourcing, cross-functional communication and information systems when using TCO is highlighted.