Total Cost of Ownership. We know why it matters and we’ve got a foundation for how to do it. Now it’s time to secure the resources that can get you on the road to effective TCO analysis.
One such resource is Market Intelligence (MI), specifically ProcurementIQ's Procurement research. Designed especially for you, the procurement practitioner, it’s aligned to the purchasing process to help you navigate the world of procurement. While ProcurementIQ's reports are crafted to help you achieve your goals and realize a return on investment, we’re going to focus on the TCO section of the reports and how they’ll benefit you.
ProcurementIQ's TCO section is invaluable because it provides three primary benefits:
Nearly every product or service has some level of additional and/or hidden costs associated with it. ProcurementIQ's reports list out these costs for your consideration, so you don’t have to spend hours researching yourself. Also, you can let your prospective or incumbent vendor know that you know what the additional and hidden cost are, in case they neglect to mention them during the purchasing process.
For example, let’s say you’re in the process of purchasing promotional products, such as company branded coffee mugs or notepads. And you’re purchasing thousands of them. As a result, it’s highly likely that a hidden cost is going to be storage (assuming you don’t have any). ProcurementIQ's report on Promotional Products lists storage, among other cost considerations, as part of the market’s high TCO. Armed with this knowledge, you can go into the purchasing process with the ammunition you need to get the best deal.
Whether you’re new to procurement or you’ve been in the field for years, it is understood that the lowest price option isn’t always the cheapest option in the long run. That’s why TCO analysis needs to take a lead position in organizations. Procurement departments that use ProcurementIQ reports can conduct TCO analyses and make smarter decisions because they’ll be considering all the likely costs, not just the price in front of them.
Take our example above regarding storage costs associated with promotional products. A vendor that provides storage may not quote the lowest price out of all the bidders, however, the total cost may end up cheaper than you sourcing the storage facilities yourself. Having access to this type of knowledge strengthens the position of the procurement department as a trusted source within an organization.
Having a solid idea of additional and hidden costs associated with a product/service puts you miles ahead of the game and allows for effective budgeting. You can continue through the purchasing process with a better idea of how much the particular product/service is going to cost the organization and plan for those costs accordingly. Having access to ProcurementIQ research places that knowledge at your fingertips … on over 1,000 different product and service markets.
Returning to our earlier example, if it turns out you do need to organize storage facilities for your promotional products, you know to include that cost early in the process. Thus, it won’t come as a surprise later down the line.
If you’ve been doing TCO analysis on your own or not at all, now would be a good time to get some resources behind you. TCO analysis isn’t some fad or trend in the world of procurement, it’s a real cost cutting, cost saving, credibility building component of the purchasing process that your organization should be focusing on right now. Let ProcurementIQ be the resource that guides your steps down the TCO path and check out what we have to offer today!
Sign up to our newsletter
Three Reasons to Consider Mexico for Your Next IT Outsourcing Project
Procurement professionals looking to make a change in their IT sourcing strategy, particularly small and midsize companies, should consider Mexico for several reasons. Learn more …
Lessons Learned from Three Major Procurement Blunders
When a procurement mistake occurs, it can be an opportunity to learn how to do things better next time. To proactively prevent future mistakes in your organization, learn and grow from others’ mistakes.
3 Procurement Success Stories to Inspire Your Business Strategy
Studying the success stories of other procurement departments can give you a fresh perspective or an encouraging story to show just how much is possible.