Assessing total cost of ownership: Effective asset management along the supply chain
Place of Publication
Mathew, J., Lim, C.W., Ma, L., Sands, D., Cholette, M.E., Borghesani, P.
School of Business and Law
Firm purchasing models are an important tool for effectively managing business costs over the different time horizons and business cycles of the organisation. However, there is a lack of a clear understanding of the optimum method for supporting purchasing decisions for businesses and less knowledge of the costs over the entire supply chain of a product or service. Total cost of ownership (TCO) method helps the purchaser to compare different goods or service providers with regard to total cost rather than choosing a supplier due to their lowest initial price alone. The mining industry is an important sector in which to investigate the TCO as it is a valuable sector to the economy and the long-time horizons and large-scale projects require careful planning and management. This paper investigates models for purchasing and assesses the optimal performance issues accorded to purchasing and firm costs in the mining sector by the various methodologies. The notion and use of TCO as a basis for reviewing supplier selection models will be explored and investigated in detail. This review outlines the impediments of feasible TCO analysis execution and reveals common obstacles that must be attentively considered in the supply chain across mining industries assets.