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Analyzing Costs Using TCO

Using the Total Cost of Ownership Approach to Identify and Reduce Costs

In this course, learners use the Total Cost of Ownership (TCO) framework to identify a cost analysis project that has the potential to return significant value. They’ll learn how to evaluate possible projects, assemble a cross-functional TCO project team, and map process activities to find cost areas requiring analysis.

Participants will learn how to:

  • Calculate Total Landed Cost, with consideration for tariffs, countervailing duties, and more use TCO methods to conduct competitive bid analysis, including global sourcing contracts
  • Create a cost database
  • Estimate costs by applying the 3 As–Actual, Approximate, and Assumption

The course also explores the value of working closely with suppliers to develop should cost models in order to better understand pricing strategies and improve how the the organization negotiates with its suppliers. Analyzing Costs Using Total Cost of Ownership offers an important set of tools for creating competitive advantages.

Download the Course Overview

Learners Will:

  • Understand basic financial principles involved in calculating TCO components
  • Learn how to identify TCO projects that have the greatest potential to impact the company’s bottom line
  • Use the 3 As—Actual, Approximate and Assumption—to model costs when faced with imperfect data
  • Learn how to create and manage a useful cost database

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Developed in partnership with:


Topics:

  • Supply Chain Leadership Academy

Authors:

Rob Handfield

Bank of America University Distinguished Professor of Operations and Supply Chain Management


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