IMPORTANCE OF THE TOTAL COST OF OWNERSHIP CONCEPT IN THE CORPORATE SOURCING PRACTICE

The total cost of ownership was introduced in the corporate praxis in the late 80s by the Gartner Group. A huge number of mathematical methods and IT applications have been developed to improve the transparency of enterprise processes from the point of view of costs. Within the frame of this paper authors focus on the importance of the total cost of ownership concept in the corporate sourcing practice. They summarise the TCO costs of the early Gartner model and show some improved methodologies (real cost of ownership, predictive cost modelling, corporative economic normalisation technology study, etc.). As main factors of total costs of ownership the following costs are suggested to taken into consideration for raw material procurement processes: raw material costs, infrastructure costs, processing costs and compliance costs.