Total cost of ownership along the supply chain: a model applied to the tinting industry

Abstract

Total Cost of Ownership (TCO) is a consolidated purchasing tool applied across different industries. However, in some cases, existing models are not satisfactory. The paper analyses the tinting industry, where manufacturers of colourant dispensing machines sell products and related services to paint producers, who install them in retail stores to sell the colour paints to the final consumers. Authors develop a TCO model integrating those existing in literature and including the following specifications: (i) all relevant costs along the product life cycle are considered; (ii) both goods and service-related costs are considered; (iii) both explicit and hidden costs are considered; (iv) the model adapts to the perspectives of various actors in the supply chain. The TCO model is tested with real data and provides useful insights on real costs sustained by each actor.