Business Intelligence

Understanding Total Cost Ownership Issues From A Value Analysis Perspective

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Executive Summary

Commodity industrial products are no longer self-selling ticket items for manufacturers. Such manufacturers need to assess their value chain from a total cost ownership perspective for both their outsourced and in-house parts needed to assemble the commodity product in order to better compete in the market place. The key question becomes what procedures should manufacturers follow to understand cost and mark-up behavior patterns and their documentation procedures for such parts? In order to identify and eliminate waste at the inter-firm and intra-firm levels a case study using value analysis was conducted for a commodity product manufacturer that outsourced its component parts to independent suppliers.

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