TCO Analysis

SpendEdge’s TCO Analysis estimates the true cost of doing business with the supplier including all indirect costs. 

 

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Overview

TCO analysis is based on the calculation of the overall cost of a product and service throughout its lifecycle, taking into account both direct and indirect costs. The objective of this analysis is to calculate the actual costs of purchasing a product or service from a specific supplier, beyond the basic purchase price paid to the supplier. The focus of procurement is now shifted from managing costs to generating value.

TCO analysis is at the heart of strategic procurement and is used across industries and Procurement Excellence Centers as a sophisticated calculation of the true cost of doing business with a supplier. While every company, industry, geography, and so on leverages different TCO models, the fundamentals remain consistent and are critical in determining a company’s margin, costs, and prices. At SpendEdge we aim to go beyond simply applying the fundamentals of TCO analysis, as we believe every company can generate a workable version of the TCO. Our objective and client experience go further. We focus on achieving maximum value and lowering risks by calculating the most realistic Total Cost of Ownership of a product or service over the lifetime of the product. Through our TCO analysis we aim to empower our clients with actionable information to take to the supplier during the negotiation phase, information to leverage internally for decision points such as whether to outsource or internalize operations, and estimate ROI (return on investment). Our clients know that the quoted price involves not only the cost of obtaining and using the product or service in your supply chain — it also involves other costs associated with that product that the supplier has accounted for. Instead of your company assuming or not knowing what those costs are, we will empower you with that information through the TCO analysis.

TCO in the supply chain

Understanding the true cost of acquiring a product or service is critical to the procurement solutions for a firm. However, organizations looking to generate cost savings and optimize their operations should look into the TCO of their value chains. Understanding and calculating direct and indirect costs throughout the value chain is critical, and SpendEdge can help. We have worked with SMEs on defining their TCO throughout their supply chain. Connect with us today to learn about some of the work we have done in TCO analysis for products and services across the supply chain.

TCO ANALYSIS

Disruption to supply markets during Covid-19 has impacted many SMBs and large corporations. Our Sourcing and Procurment Intelligence service is assisting clients with Covid-19 Impact Assessment.

Testimonials

Very dedicated project management and excellent that the team was chasing the agreed project timeline. Excellent!

Category Manager, Leading European Pharma Company

SpendEdge portal provides us immediate access to information on more than 50 categories. The most attractive feature being Analyst Support. We could ask any question through the portal and have received immediate responses from SpendEdge analysts. This helps us save a lot of time and effort.

Director of Procurement, Leading Packaged Food Manufacturer

Thank you for delivering such comprehensive reports; these are well done. You’ve adequately addressed our questions.

Category Manager, Leading Transportation & Logistics Company

Case Studies

Identifying Improvement Opportunities with the Help of a TCO Analysis: A Case Study on the Global Oil and Gas Industry

The New Paradigm in Procurement: Driving Greater Efficiency and Savings Through a Comprehensive TCO Analysis

Demand Aggregation: How it Helped a Leading Automotive Engine Oil Manufacturer Lower Supply Management TCO

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The right partnerships and suppliers help businesses overcome the multitude of challenges and risks that arise in a market, and ensuring the right choice is made, is imperative to maintaining success in a competitive and challenging industry. As companies grow and expand, their partners’ role becomes increasingly influential, and the ideal partner can help attain more success and sustainable growth. SpendEdge helps companies identify the best partners and suppliers for their business, and provides them with the tools to make the right decisions every time they search for potential partners.

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