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Total Cost and Dispute Mitigations

In: Global Sourcing and Supply Management Excellence in China

Author

Listed:
  • Marc Helmold

    (Gloucestershire University)

  • Brian Terry

    (Regents University)

Abstract

The TCO methodology must be the key principle in any supply management organisation. TCO compiles all involved cost from the supplier selection until the end of the after sales service. TCO includes all direct and indirect costs, which are related to the supply of goods. Emmett and Crocker define total cost elements as a costing philosophy or concept, which includes all values and benefits for the customer, which are related to the supply (Emmett S, Crocker B, Excellence in supplier management. How to better manage contracts with suppliers and add value. Best practices in supplier relationship and supplier development. Cambridge Academic, Cambridge, 2009). Hofbauer et al. (Lieferantenmanagement. Die wertorientierte Gestaltung der Lieferbeziehung, 2nd edn. Oldenbourg Verlag, Munich, 2012) emphasises that the TCO principle is a key in supply management. Figure 8.1 shows the total cost including the elements. The elements are based on a real comparison: Fig. 8.1 Cost comparison including supplier development cost (Adapted from Hofbauer/Helmold (2012/2013)) 1. Piece price, recurring and nonrecurring cost 2. Logistics cost of supply period 3. Supplier development cost or qualification cost

Suggested Citation

  • Marc Helmold & Brian Terry, 2017. "Total Cost and Dispute Mitigations," Management for Professionals, in: Global Sourcing and Supply Management Excellence in China, chapter 8, pages 131-145, Springer.
    • Handle: RePEc:spr:mgmchp:978-981-10-1666-0_8
    DOI: 10.1007/978-981-10-1666-0_8
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