Research Of Purchasing Total Cost Management In T Company Based On TCO

With the commerce globalization, the market competition is getting more and more sever, Both international and domestic enterprises is under the pressure to shorten the delivery, improve the quality level, reduce the cost and improve the customer service. The enterprises need to reduce the cost by digging into more about the internal potential, especially at the time that there is no obvious break through about the product and process technologies.When we talk about the purchasing cost, it is normally refer to the cost with in the supply chain. Actually, only TCO could really cover the all visible/invisible cost within the whole value chainThe main purpose of the thesis is to introduce the concept of TCO as well as the purchasing total cost management(TCM), the tools which will be used for implementing the TCM , and how to set up the proper purchasing procedure to manage the total cost, evaluate the risk and potential associated, and how to maximize the value added step.Cost model for different level will be helpful for company T understand the supplier cost structure, as well as the detailed costs, so that it can provide the sufficient information to support the sourcing decision. Typical sub commodity cost model is also helpful to provide the quick and accurate information to support the company new bidding.Total cost management based on TCO will help to identify the obvious/hidden cost, and management, so that reducing the purchasing risk.As for the low cost country sourcing strategy Various difference make the sourcing decision more and more complicate. Purchasing value chain will be helpful to identify all the value added step. Cost model will helpful to understand the cost difference, Total cost management based on TCO will provide full information, and quantify it, to make the sourcing decision much easier.Regarding the global supplier reduction/integration, Purchasing value chain will be help to identify the major value added step. And do comparison base on it. Cost modeling those major value added step will be helpful to analyze and understand the cost different. And finally make sourcing decision base on the total cost comparison.