TCO Calculator
Overview
The TCO Calculator provides comprehensive Total Cost of Ownership analysis for supplier evaluation and sourcing decisions. It captures acquisition costs, operating costs, risk costs, and lifecycle implications to enable informed supplier selection and comparison.
Capabilities
- Acquisition Cost Modeling: Price, shipping, duties, taxes calculation
- Operating Cost Estimation: Maintenance, quality, support cost analysis
- Risk Cost Quantification: Disruption, inventory, obsolescence cost modeling
- Quality Cost Analysis: Defects, returns, rework cost calculation
- Lifecycle Cost Projection: Multi-year total cost forecasting
- Supplier Comparison Matrices: Side-by-side TCO comparison
- Sensitivity Analysis: Key cost driver impact analysis
- TCO Reporting and Visualization: Executive-ready TCO reports
Input Schema
tco_request:
suppliers: array
- supplier_id: string
unit_price: float
lead_time: integer
payment_terms: string
item_specifications:
annual_volume: integer
unit_of_measure: string
lifecycle_years: integer
cost_factors:
shipping: object
duties_tariffs: object
inventory_carrying: float
quality_metrics: object
support_requirements: object
risk_factors:
disruption_probability: float
geographic_risk: object
Output Schema
tco_output:
supplier_comparison: array
- supplier_id: string
acquisition_costs: object
operating_costs: object
risk_costs: object
quality_costs: object
total_tco: float
tco_per_unit: float
cost_breakdown: object
sensitivity_analysis: object
recommendation: object
visualization_data: object
Usage
Supplier TCO Comparison
Input: 3 supplier quotes with varying prices and lead times
Process: Calculate full TCO including logistics, inventory, quality costs
Output: TCO comparison revealing lowest total cost supplier
Make vs. Buy Analysis
Input: Internal manufacturing costs vs. outsource quotes
Process: Model full costs including overhead, capital, flexibility
Output: TCO-based make vs. buy recommendation
Geographic Sourcing Decision
Input: Domestic vs. offshore supplier options
Process: Include tariffs, logistics, quality, risk in TCO
Output: Total cost comparison with risk-adjusted view
Integration Points
- Financial Systems: Cost rates, overhead factors
- Quality Systems: Defect rates, warranty costs
- Logistics Systems: Freight rates, lead time data
- Tools/Libraries: Financial modeling libraries, cost templates
Process Dependencies
- Supplier Evaluation and Selection
- Strategic Sourcing Initiative
- Category Management
Best Practices
- Use consistent cost factor assumptions across comparisons
- Include all relevant cost categories for fair comparison
- Apply appropriate discount rates for lifecycle analysis
- Document assumptions and data sources
- Update cost factors periodically
- Consider qualitative factors alongside TCO