What does total cost of ownership (TCO) encompass in logistics?

Total cost of ownership (TCO) in logistics is a holistic framework that considers all expenses associated with a product or service throughout its entire lifecycle. This includes not only the initial acquisition costs but also operational, maintenance, and disposal costs. By analyzing TCO, organizations can make more informed decisions that go beyond just the purchase price. It encourages a broader perspective on cost management, allowing businesses to recognize that lower initial costs might lead to higher overall expenditures in the long run, thus emphasizing the importance of life-cycle thinking in logistics. This comprehensive assessment of costs enables companies to identify areas for potential savings and efficiency improvements across the supply chain.