TCO – Total Cost of Ownership

2 days

course code 3.9

What is the course for


Understanding the basic underlying concepts of TCO


Learning the methodology for calculating TCO 


Using TCO as a tool for selecting and managing suppliers

When dealing with issues related to the costs of acquiring goods and services, all companies generally refer to the purchase price and certain other parameters. Over the years, however, it has come to be well understood that while the purchase price is important to the company, even more important is the so-called TCO (Total Cost of Ownership), i.e. the total cost that the company incurs due to the purchase of a specific good or service. If we use purchase price as the sole, or a main, driver for choosing a supplier, we may later have to bear a number of additional costs such as, for example, quality and delivery issues that will eliminate the initial advantage of the lower purchase price. An “extremely economical” supplier may not be able to fulfil our demands in terms of continuous improvement, or in resolving issues that may arise due to the supply of goods or services.

This concept has a much greater impact on the company especially when the purchase of a product or service has a strategic value. Purchasing has a key role in choosing and managing suppliers: TCO is certainly one of the parameters for evaluating suppliers which should not be disregarded.

During the two days of the training course participants will be trained in the basic concepts of TCO and how to verify, using real-life examples and specific software, the impact that correctly calculating the TCO can have on the choice of suppliers and on the company’s management.


  • Understanding the basic underlying concepts of TCO
  • Learning the methodology for calculating TCO
  • Using TCO as a tool for selecting and managing suppliers

Addressed to

  • Purchasing Management
  • All the Departments involved in the supplier selection and operational management (finance, production, quality, logistics, R&D)


The strategic value of switching from purchasing to sourcing and the added value of purchasing

  • The purchasing office, going from a “tactical” to a “strategic” entity: anticipating the company’s needs
  • The added value of purchasing
  • From the search for the lowest price to the search for the best suppliers
  • Making the purchasing team responsible for the quality of the purchased goods and services

Reference to the supplier integration road map

  • What is an Integrated Supplier?
  • Establishing integrated suppliers
  • The steps on the road map
    • Step 1: building and managing the supplier panel
    • Step 2: helping suppliers to progress and improve
    • Step 3: integrating suppliers into product and system development
    • Step 4: integrating suppliers into “day-to-day” management

The concept of price and cost

  • Price and cost
  • The TCO; Total Cost of Ownership
  • Direct costs
  • Management costs: before orders – “operating costs”
  • Risk management
  • Choosing a supplier based on TCO

Performance indicators in selecting and managing suppliers

  • From QCD to SQCD (security, quality, costs, deliveries)
  • The link between indicators and the TCO
  • TCO in the world of production purchasing


  • The introduction of TCO in the world of investments
  • The parameters to be evaluated
  • The “Capex TCO”

Calculation of TCO: the model

  • The TCO calculation model
  • Application of the model

You will experience

  • TCO calculation simulations
  • Possible choices using TCO calculations

Download the in-company training catalogue