To read this content please select one of the options below:

Total cost of ownership: an analysis approach for purchasing

Lisa M. Ellram (Arizona State University, Tempe, Arizona)

International Journal of Physical Distribution & Logistics Management

ISSN: 0960-0035

Article publication date: 1 October 1995

22139

Abstract

Total cost of ownership is a methodology and philosophy which looks beyond the price of a purchase to include many other purchaserelated costs. This approach has become increasingly important as organizations look for ways to better understand and manage their costs. Examines case studies of 11 firms which use total cost of ownership concepts in purchasing. Based on the case study data and the literature, barriers and benefits associated with the total cost of ownership approach are discussed. The total cost of ownership models used by the case study firms are classified by type as dollar‐based or value‐based, and an example of each is shown. The total cost of ownership models are then further classified by their primary usage: supplier selection or supplier evaluation. This cross classification reveals a strong relationship between model type and model usage. Concludes with a comparison of the models, recommendations for practitioners and a discussion of future research directions.

Keywords

Citation

Ellram, L.M. (1995), "Total cost of ownership: an analysis approach for purchasing", International Journal of Physical Distribution & Logistics Management, Vol. 25 No. 8, pp. 4-23. https://doi.org/10.1108/09600039510099928

Publisher

:

MCB UP Ltd

Copyright © 1995, MCB UP Limited

Related articles