Purchasing on Total Cost of Ownership
According to a recent MAPI survey of nearly 70 senior operations and purchasing executives, over a third of respondents (39%) have a methodology defining TCO when purchasing equipment, supplies, or repair parts. Compared with their peers that don't have a TCO methodology, these companies are:
- Twice as likely to enter into pay-for-performance agreements with suppliers
- Nearly twice as likely to realize 90% or more of savings promised by a supplier
- More than seven times as likely to receive supplier offers with a TCO component
Still, the majority of respondents receive TCO offers on less than 25% of supplier offers. According to one respondent, a chief procurement office from a multi-billion dollar diversified industrial, “Getting an analysis from a supplier on how they will reduce our TCO is very common amongst more sophisticated suppliers who have developed an understanding of the competitive landscape.” Members: click here for the full report.