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The use of total cost of ownership for strategic procurement: a company-wide management information system

Author

Listed:
  • Z Degraeve

    (London Business School)

  • F Roodhooft

    (Katholieke Universiteit Leuven
    Vlerick Leuven Gent Management School)

  • B van Doveren

    (Katholieke Universiteit Leuven)

Abstract

We present a general company-wide management information system for defining procurement strategies. We believe that existing practices for determining purchasing strategies can be improved and a new approach developed. The system uses total cost of ownership information. We argue that mathematical programming models should be used for exploiting this information, when evaluating the firm's strategic procurement options. As an example, we show how we have successfully applied our approach to develop a decision support system at Usinor, a European multinational steel company.

Suggested Citation

  • Z Degraeve & F Roodhooft & B van Doveren, 2005. "The use of total cost of ownership for strategic procurement: a company-wide management information system," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(1), pages 51-59, January.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:1:d:10.1057_palgrave.jors.2601832
    DOI: 10.1057/palgrave.jors.2601832
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    References listed on IDEAS

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    1. Z Degraeve & F Roodhooft, 1998. "Determining sourcing strategies: a decision model based on activity and cost driver information," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 49(8), pages 781-789, August.
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    Cited by:

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    2. Aries Susanty & Hery Suliantoro & Arfan Bakhtiar & Diana Puspitasari & Affandirahmat, 2015. "Critical Success Factors for Implementing SNI in Public Procurement," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 1(3), pages 78-88.
    3. Baller, Reinhard & Fontaine, Pirmin & Minner, Stefan & Lai, Zhen, 2022. "Optimizing automotive inbound logistics: A mixed-integer linear programming approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).
    4. Andrea Bacchetti & Stefano Bonetti & Marco Perona & Nicola Saccani, 2018. "Investment and Management Decisions in Aluminium Melting: A Total Cost of Ownership Model and Practical Applications," Sustainability, MDPI, vol. 10(9), pages 1-36, September.
    5. Henn, Nicolas & Lohwasser, Todor S., 2020. "The advances of community cloud computing in the business-to-business buying process," Discussion Papers of the Institute for Organisational Economics 6/2020, University of Münster, Institute for Organisational Economics.
    6. Mauro Lizot & Flavio Trojan & Paulo Afonso, 2021. "Combining Total Cost of Ownership and Multi-Criteria Decision Analysis to Improve Cost Management in Family Farming," Agriculture, MDPI, vol. 11(2), pages 1-20, February.
    7. Visani, Franco & Barbieri, Paolo & Di Lascio, F. Marta L. & Raffoni, Anna & Vigo, Daniele, 2016. "Supplier’s total cost of ownership evaluation: a data envelopment analysis approach," Omega, Elsevier, vol. 61(C), pages 141-154.

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