Total Cost of Ownership Estimator™

What is the Total Cost of Ownership Estimator?
The Total Cost of Ownership Estimator is a complimentary tool that enables aggregation of all cost and risk factors into one cost for simpler, more objective decision making.

Most companies make sourcing decisions based on price alone, resulting in a 20 to 30 percent miscalculation of actual offshoring costs. With the Total Cost of Ownership Estimator, users account for all relevant factors when determining their total cost of ownership including overhead, balance sheet, corporate strategy and other external and internal business costs.

Once your unique data is input into the calculator, you will receive your total cost of ownership analysis complete with:

  • Calculations of each source’s cost
  • An accumulation of all costs into cost categories
  • A grand total cost
  • Line charts showing each source’s current price, total cost of ownership and 5-year forecast
  • Line charts showing your cumulative cost by category

Benefits of the Total Cost of Ownership Estimator:

  • Calculations are based on your unique data. (The only data supplied by the system are freight and duty rates.)
  • Users may skip values that are not essential
  • Provides a total cost for each source, enabling direct comparisons
  • Incorporates 29 cost factors
  • Automatic calculation of freight rates for 17 countries
  • Automatic duty rate calculations for parts or tools
  • Provides the current total cost of ownership value, as well as a 5-year forecast based on the user’s forecast of wage and currency changes
  • User-friendly with explanations and references for values and an available instruction manual
  • Cost calculation formulas are shown on the output page
  • Free to use

Who should use the Total Cost of Ownership Estimator?
The Total Cost of Ownership Estimator is a user-friendly software designed for businesses of all sizes and capacities. From companies currently or considering offshoring and local suppliers competing with offshore sources to salesmen or economic development groups advising on the benefits of reshoring, the Total Cost of Ownership Estimator™ allows users to determine which sources best meet their company’s profitability and strategic objectives.

  • Supply chain managers
  • Accounting
  • Manufacturing management
  • Industrial engineering
  • Line management
  • Salesmen
  • Economic development groups
  • Government

Tips for using the Total Cost of Ownership Estimator:

  • Group parts or products into families of parts with similar characteristics
  • Select one part from each group
  • Start with parts that have delivery, quality or IP problems
  • Complete as many of the fields as possible (Some items will require estimates.)
  • Estimates should be consistent (e.g. products with the highest IP risk should also be assigned a higher IP risk cost; products with frequent design changes should be assigned a higher innovation cost; politically less stable countries should have a higher political stability risk)
  • Email or call us for help

Important Notes:
The Total Cost of Ownership Estimator is written for calculating the total cost of outsourced parts or products (e.g. offshore vs. U.S.). If your sources are in-house instead of outsourced, you will need to take the following steps:

  • For offshore: Use the transfer price from offshore instead of the “price.” Confirm that the transfer price produces the targeted profitability offshore.
  • For U.S.: Use your company’s standard domestic cost. (The objective is that the local operation recognizes the extra costs associated with offshoring.)

The Total Cost of Ownership Estimator is meant for online use only.

Data may be saved as you go. When you save your data, you will be able to return to your unique form at a later date to complete the analysis and download the final output. Your data will be used in calculating aggregate trends in pricing and costs for domestic and offshore sources. Neither your unique data nor your identity will be shared.

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