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Total Cost of Ownership in the Services Sector: A Case Study
Author(s) -
Hurkens Krisje,
Valk Wendy,
Wynstra Finn
Publication year - 2006
Publication title -
journal of supply chain management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.75
H-Index - 92
eISSN - 1745-493X
pISSN - 1523-2409
DOI - 10.1111/j.1745-493x.2006.04201004.x
Subject(s) - total cost of ownership , business , key (lock) , identification (biology) , service (business) , industrial organization , operations management , marketing , computer science , economics , accounting , botany , computer security , biology
SUMMARY Few detailed studies exist of the trade‐offs to be made when developing a comprehensive, strategically focused total cost of ownership (TCO) model. Moreover, most studies of TCO have been conducted in manufacturing firms, with little or no TCO research directed toward service organizations. This research presents the results of a study conducted at a leading vehicle glass repair and replacement organization. The results show how TCO information can be used for strategic decision making regarding the allocation of volumes. This information can also be used in the identification of improvement areas for preferred suppliers by introducing a limited number of key performance indicators that have a significant impact on the TCO of supplier offerings. The paper highlights some of the trade‐offs required in designing such a model. It fills an existing literature gap that allows service organizations to better understand the development and implementation of total cost measurement systems.