Componentsoverview • Thare are 5 components (rawmaterial, packagingmaterial) in The Fresh Connection • Make anoverview of the most important characteristics: • Direct purchasingcosts • Transportation costs • Value per pallet • Weekly volume in pallets • Batchsize in pallets
Product characteristics are important for designing a supply chain configuration How does thisinfluenceinventory policy andsupplierselection?
Product characteristics and policy Volume/week Trasnportationhandling and warehousing 100 Price and availability 10 Transportation and availability 1 100 1000 500 Value/pallet In factthis is allabout Total Cost of Ownership
What is Total Cost of Ownership? • In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership (APICS Dictionary, 12th edition) • In other words: quantifying all procurement related costs of a supplier or a component
What is Total Cost of Ownership? (cont) • Whatrelatedcostscanyoumentionfor the Fresh Connection componentsbesides direct purchasingcosts?
What is Total Cost of Ownership? (cont) • Whatrelatedcostscanyoumentionfor the Fresh Connection components? • Direct purchasingcosts • Transportationcosts • Qualitycosts • Interest • Inventory & paymentterms • Handlingcosts • Administrationcosts • Warehousecosts Explore TFC Calculate this costs for one of the components in % How to influence this costs What does this mean for your supplier policy