The Development of a Total Cost of Ownership Model for Supplier Selection in the Manufacturing Industry

Research output: ThesisMaster's Thesis

Abstract

Manufacturing organizations rely heavily on the continuous availability of materials to ensure production capabilities, which is why purchasing managers must make well-founded decisions on where goods are sourced from. Academic literature indicates the rise in acceptance that price alone does not fully reflect the actual cost of doing business with suppliers. Therefore, the price cannot be the sole parameter on which supplier selection is based. Total cost of ownership is an existing concept that aims to shift the focus from a price-oriented perspective to a holistic, cost-oriented view. Research shows that there are only a limited number of empirical studies on real-world applications of the model as well as the actual benefits of practical implementation. This thesis aims to determine if the benefits of total cost of ownership, indicated in theory, are valid in the real-world application of the model for supplier selection. This study shows the development and implementation process based on a project at a case company. The data primarily comes from expert interviews, discussions, documentation, and test results. The total cost of ownership analysis tool developed throughout this thesis shows the theoretically based development and implementation process. It provides an empirically-based suggestion for future practical applications of total cost of ownership in manufacturing environments.

Details

Translated title of the contributionDie Entwicklung eines Total Cost of Ownership Modells für die Lieferantenauswahl in der Fertigungsindustrie
Original languageEnglish
QualificationDipl.-Ing.
Awarding Institution
Supervisors/Advisors
Award date17 Dec 2021
Publication statusPublished - 2021