Total cost ownership in global sourcing

Abstract

The aim of this thesis was to determine how to calculate the total cost of ownership (TCO) when purchasing valve parts from Asia and Eastern Europe to Europe and the United States. Another goal of the thesis was to help the case company to understand the total cost of the ownership process and the third aim of the thesis was to understand how to use the total cost calculator in the supplier selection process. The fourth aim of the thesis was to find out what are the key cost factors and how they can be defined. The literature review, interviews and data analysis were the foundation for the whole work. The purpose of the literature review was to increase the understanding of the TCO philosophy and to help the reader to understand the research process and its outcomes, which in this case were a TCO calculator and instructions on how to use results in the supplier selection process. The work can be applied to several different aims. The case company can use the results in supplier selection and savings calculations. The results can also help the other case companies to learn how to implement the total cost ownership philosophy in their own organization.