Analytical Tools in Sourcing - total cost

Analytical Tools in Sourcing - total cost - Analytical...

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1 Analytical Tools in Sourcing Total Cost of Ownership
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2 Cost-related Concepts A cost is a resource sacrificed or forgone to achieve a specific objective A cost object is anything for which a separate measurement of costs is desired. Examples include: Product Service Project Department Others
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3 Cost Object Examples Examples of cost objects for FedEx: Product -- aviation fuel Service -- vehicle wash Project -- construction of a new corporate headquarters Customer -- all costs associated with fulfilling the requirements of a given customer Internal – Aircraft Operations Division (AOD), Vehicles, Facilities External -- L.L. Bean
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4 Cost-related Concepts A cost driver is any factor that affects costs. A change in the cost driver will cause a change in the total cost of a related cost object Sourcing specialists need to be cost managers!
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5 Cost Behavior Cost behavior refers to the way costs change with respect to a change in an
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Analytical Tools in Sourcing - total cost - Analytical...

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