Total Cost Analysis课件

1、Total Cost AnalysisBy Brandon OstlerAgenda Total Cost Analysis defined Nuts and Bolts Brainstorming Exercise Benefits of Total Cost Analysis How it works Real world example Exercise Summary Readings ListWhat is Total Cost Analysis? Total cost analysis (total cost of ownership) is the sum of the cost

2、s related to the acquisition and use of materials, products, or services. The Nuts and Bolts Three main components Acquisition costs Ownership costs Post-ownership costsCommon Acquisition Costs Purchase Price Planning Costs Taxes Financing CostsCommon Ownership Costs Downtime Costs Risk Costs Conver

3、sion Costs Non-Value-Added CostsCommon Post-Ownership Costs Environmental Costs Warranty Costs Product Liability Costs Customer Dissatisfaction CostsThe Big PictureAcquisition CostsOwnership CostsPost-Ownership CostsAsset CostAsset Life CycleQuick PracticeDetermine if the following are acquisition,

4、ownership, or post-ownership costs:1. Tariffs2. Recalled products3. Lost Sales4. Frequently moving Work-in-process inventory5. Contract DeterminationBrainstorming Exercise Why would your organization want to conduct a Total Cost Analysis?Who Benefits? Your firm Service Providers Retailers Manufactur

5、ers The end customerHow It Works1. Find each component cost2. Sum the cost of the three components3. When purchasing, compare total cost from potential suppliers4. If for a process, look for ways to reduce total costReal World Example ABC, a retail store, is deciding whether they should implement a

6、new billing system or upgrade their current system. Both systems are expected to last 3 years and both will need to be un-installed at the end of the third year. What should they do?Real World ExampleNew Billing SystemYear 0Year 1Year 2Year 3TotalAcquisition Costs$4,688$412$0$0$5,100 Hardware$1,067$

7、1,067 Initial Software$2,000$2,000 Initial Training$823$823 Transition Costs$798$412 $1,210Ownership Costs$0$1,713$1,842$1,379$4,934 Subsequent Upgrades $1,000$1,000$500$2,500 Subsequent Training $214$213$149$576 Maintenance $101$220$330$651 Operations $398$409$400$1,207Post-Ownership Costs$0$0$0$1,

8、500$1,500 Un-install system $1,500$1,500Total Annual Costs$4,688$2,125$1,842$2,879$11,534Real World ExampleUpgrade Current SystemYear 0Year 1Year 2Year 3TotalAcquisition Costs$200$0$100$0$300 Hardware Upgrades$200$100$300 Initial Software $0 Initial Training $0 Transition Costs $0Ownership Costs$0$2

9、,152$2,792$3,130$8,074 Subsequent Upgrades $100$100$150$350 Subsequent Training $42$45$38$125 Maintenance $532$1,078$1,567$3,177 Operations $1,478$1,569$1,375$4,422Post-Ownership Costs$0$0$0$1,367$1,367 Un-install system $1,367$1,367Total Annual Costs$200$2,152$2,892$4,497$9,741Real World ExampleNew

10、 billing system total cost: $11,534,000Upgrade current system total cost: $9,741,000ABC should upgrade their current billing system as they will incur the lowest total cost.ExerciseTotal Cost Analysis for Product XYZSupplier ASupplier BPrice Tag$300$150After-sale allowances$50$75Contract Negotiation

11、s$400$550Operations$25$75Inventory Carrying Cost$50$100Customer Service$25$50Which supplier has the lowest total cost? Which supplier has the highest cost of post-ownership?Exercise AnswerSupplier ASupplier BAcquisition Cost$700$700 Price Tag $300 $150 Contract Negotiations $400 $550Ownership Cost$7

12、5$175 Operations $25 $75 Inv. Carrying Cost $50 $100Post-Ownership Cost$75$125 After-sale allowances $50 $75 Customer Service $25 $50TOTAL COST$850$1,000Summary Total Cost Analysis: Three main cost components Can bring out the “hidden” costs. Spotlight the potential cost problems before they become problems Can be used to find cost savingsReadings ListSteven M Bragg. Cost Reduction Analysis: Tools and Strategies.Wouters, M. et al. The Adoption Of Total Cost Of Ownership For Sourcing Decisions-A Structural Equations Analysis.Degraeve, D. et al. The use of total cost of ownership for strate