Total Cost of Ownership
The Total Cost of Ownership (TCO) method is a set of related concepts that allow for the quantification of costs for every activity along the supply stream. TCO takes into consideration all costs related to the acquisition, transportation, storage, and selling of purchased goods or services, so that sourcing decisions may be made strategically. Use of the traditional Piece-Part Variance method of costing has been shown to underestimate these visible and hidden costs by more than 15%.
