Do you use Life Cycle costing in your sourcing strategies? Do you know what it is?
Life-Cycle Costing is a procurement technique which considers operating costs , maintenance costs, acquisition price, and other costs of ownership in the award of contracts to ensure that the item acquired will result in the lowest total ownership cost during the time the item’s function is required. Also considered in life-cycle costing is the sum of all recurring and one-time (non-recurring) costs over the full lifecycle or a specified period of a good, service, structure, or system. This includes purchase price, installation cost, operating costs, maintenance costs, upgrade costs, and remaining (residual or salvage) value at the end of ownership or its useful life.
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