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Total Cost of Ownership
Achieving optimal total-life cost and performance for assets and services
Overview
K Consulting deliver a process for establishing the total investment cost and performance profile for products and services throughout their life or usage time span. Working with all stakeholders we define detailed baseline costs and performance by combining the costs of acquisition, maintenance, ongoing management and disposal. We manage the complete process from initial data collection and business purpose analysis to strategy, procurement negotiation, scenario analysis and implementation.
Typically we would then define and create supplier service level agreements (SLAs) that guarantee the cost of assets and services over the full-life of the contract whilst allowing for a degree of scalability and flexibility to suit the business needs. This process can be delivered as a one-off stand-alone exercise, be a component of a wider procurement project, or be implemented as an ongoing process that can be utilised to manage this aspect of the procurement function over time.
Key Steps
Define scope with initial diagnostic
Establish service specification and business needs
Quantify baseline and best in class performance: capital and revenue costs over the life of the asset or service
Agree procurement strategy for assets or services
Perform market analysis and negotiation in partnership with stakeholders
Build scenarios and select assets/ services to meet business needs
Award contracts with service level agreements in place and penalties / rewards for performance levels
Communicate decisions internally (client organisation) and externally
Roll-out training for ongoing process management
Benefits
- Improved Stategic Decision Making - made with full knowledge of all costs and performance profiles
- Savings - better terms for guaranteed enhanced performance
- Measurable Performance - with management tools for accurate measurement of performance over time
- Return on Investment - aim to deliver ROI on project in 1 year or less
- Incentivise Suppliers - to design products and services aligned to overall costs rather than just acquisition cost
