|
|
Article: Total cost of ownership models: an exploratory study.(purchasing)(Statistical Data Included)
- Article from:
- Journal of Supply Chain Management
- Article date:
- June 22, 2002
- Author:
CopyrightCOPYRIGHT 2002 National Association of Purchasing Management, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
INTRODUCTION
The concepts of total cost (Cavinato 1991, 1992), life cycle costing (Jackson and Ostrom 1980), product life cycle costs (Shields and Young 1991), and total cost of ownership (Ellram and Siferd 1993, 1998; Ellram 1993, 1994, 1995) are all related. These concepts all suggest that supply managers adopt a long-term perspective, not a short-term, initial-price perspective, for the accurate valuation of buying situations. Three ideas support all of these procurement valuation constructs. First, cost must be examined from a long-term perspective and should include elements other than initial purchase price. Second, supply managers must consider the impact ...