The aim of the purchasing department is to lower the procurement costs at all levels. In this context, the TCO method addresses the costs which arise in the following areas outside the company:

• Product
• supplier
• procurement market

The focus of the calculation of these additional costs is on identifying and realistically evaluating all relevant external cost elements with special attention to the cost drivers among them. On the basis of the evaluation a monetary comparison with alternative award options is made. The decision to award contracts is then made on the basis of this decision memo. This results in a branch dependent cost reduction of 10 – 20 %.

THESEN AG accompanies you with an experience of many years during the introduction and implementation of this cost reduction process in procurement. It would however be too time and work intensive if one wanted to do the cost calculation for each separate object. For this reason we work out, in collaboration with you, a systematic approach for grouping individual objects in different categories. Through a continuous product costing analysis and feedback of your experience you can progressively reduce the purchasing costs and increase the accuracy of the calculation.