GlobalTCO

Total Cost of Ownership for Global Sourcing and Manufacturing (GlobalTCO) is a CTI-funded research project led by ETH Zurich.

Initial Situation

Outsourcing of manufacturing capacities from Western Europe to countries commonly known as low-cost countries like Eastern Europe, China, India and the ASEAN countries is a widespread phenomenon with increasing impact on Swiss companies. The main reasons for outsourcing are cost savings, the need for market development and technological requirements.

However, especially regarding cost savings, companies realize that they cannot turn over the frequently praised lower purchasing costs in the expected way. Especially when outsourcing manufacturing capabilities for components that are after-wards delivered to Western Europe for final assembly, companies struggle a lot and often miss predefined targets. Unfortunately, this conclusion is often drawn too late and leads to relocation projects and high financial implications in a lot of cases.

Motivation

Today, enterprises are aware of the fact that the total cost of ownership (TCO) for manufacturing and sourcing of components in low-cost countries is increasing. On the one hand well identified costs like transport costs and personnel costs are raising and on the other hand companies become more aware of the additional costs that are hidden in the overhead costs.

However, companies often find it difficult to identify and document these TCO in a binding and comprehensible manner. Even big companies with a lot of experience in manufacturing and sourcing in e.g. Asia or Eastern Europe are interested in a methodology for a systematic identification of these costs. The project “Total Cost of Ownership for Global Sourcing and Manufacturing” will develop this methodology.

Objectives

The aim of the project GlobalTCO is to support industrial companies with a methodology to outsource the right products and components to the right regions in the world and to collaborate with the right business partners in a sustainable manner.

Based on the approach of total cost of ownership microeconomic and macroeconomic aspects of decision-making for global sourcing and manufacturing are considered. Examples of results are:

• Methodology supporting TCO analysis (microeconomic aspects)
• Methodology supporting regional assessment (macroeconomic aspects)
• Implementation methods and processes for regional assessment and for TCO calculation
  
  

  Network of Global Sourcing and Manufacturing