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Total Cost of Ownership

By looking at the total cost of ownership, costs across the supply chain can be evaluated. Important decisions made by a company can then be made based on optimal total cost.

Global value networks multiply the number of options in sourcing, the value a company creates and how customers are supplied. At the same time, the complexity of the supply chain is increasing greatly as a result of the global scope of supply chains.

Many companies move their sourcing to low-cost countries in order to take advantage of more competitive prices. This, however, leads to increasing transportation and inventory costs. Access to information for optimal total cost decisions is crucial.

In order to take advantage of the opportunities presented by global supply networks and to minimize risk, optimal structures and processes need to be identified and configured. With the total cost of ownership approach, costs along the entire value chain can be evaluated for a large number of different scenarios.

The results are cost-optimized solutions for different sourcing, production, or supply decisions. To ensure supply chains not only have lower costs, but are also more robust, flexibility, stability, and time requirements need to be considered.

Benefits of Total Cost of Ownership

Adopting a total cost of ownership approach is not just highly beneficial for a company’s cost structure. 4flow consulting regularly achieves the following results in such projects:

  • Quick cost savings
  • Sustainable supply chain configuration at optimal total cost
  • Selection of robust and cost-efficient supply chains
  • Realistic mapping of key cost drivers and transparent cost structures

Solutions from 4flow

4flow consulting has comprehensive expertise and experience in designing and optimizing logistics networks. Clients get the best support available throughout all project phases when introducing the total cost of ownership approach:

  • Documentation of processes
  • Identification of cost drivers
  • Creation of a total cost of ownership model
  • Preparation of the necessary data
  • Determination of IT requirements for system-based support and implementation of processes and IT tools
  • Development of an organizational structure to establish and stabilize processes for total cost of ownership decisions

4flow consulting supports the implementation of the total cost of ownership approach, from the planning phase to the pilot to the comprehensive rollout. For total cost of ownership projects, 4flow utilizes 4flow vista®, which lets users map, evaluate, and optimize logistics networks.

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