TCO model for seasonal procurement of raw materials in food industry

Abstract

Correct organization of the supply chain and procurement strategy is a very important tool in achieving the goals of many large companies. Among other project management tools, TCO (Total Cost of Ownership) models are used. This method of multi-criteria evaluation allows evaluating various scenarios of cost formation. By taking into account the costs at the start and the costs during the implementation of long-term projects, these models allow finding the best of many possible moments. First applied in IT sphere, TSO models have found their place in logistics, procurement and production. Importance of TCO model for the supply chain of large FMCG (Fast Moving Consumer Goods) companies is shown on the example of seasonal purchases of raw materials in food industry. The final result is final decision on procurement strategy and cost structure.