Hiller Associates is pleased to announce its first article in SupplyChainBrain! As usual, it’s on a most fascinating of topics… well at least to us: Tariffs and their effects on your products.
Here’s a teaser: (but, if you’re just impatient, click here)
Total cost of ownership (TCO) was popularized by Gartner in the 1980s. The basic idea is that the value derived from a product involves more resources than what you pay the supplier.
TCO is essentially a consumer-facing concept, but another term, total cost of acquisition (TCA), has more of a supply-chain and procurement application. In the past, it was less important in the U.S., as the nation gravitated toward free-trade pacts such as the North American Free Trade Agreement (NAFTA). That has changed under the current administration. In addition, because of automation and the development of manufacturing sites in other countries, TCA is regaining importance in the U.S.
Today, a manufacturer might have multiple choices of suppliers within overwhelmingly complex supply chains. How does the modern purchasing professional sort out which option is best?
Let’s break it down to three steps:
- What? Understand the supply-chain options strategically.
- How much? Populate the numbers for each assumption tactically.
- What does it mean? Quantify the total and understand where the costs are.
Curious? Yes, you are. To learn how tariffs can impact your Total Cost of Acquisition / Ownership, read more here!