Total Cost of Ownership (TCO) refers to the comprehensive assessment of all direct and indirect costs associated with acquiring, operating, and maintaining inventory or supply chain assets. This includes purchase price, transportation, storage, handling, obsolescence, and disposal costs.Understanding TCO helps companies make more informed decisions beyond just the initial purchase price by factoring in ongoing expenses and risks. In inventory optimization, considering TCO ensures that inventory policies and sourcing decisions align with long-term profitability and supply chain sustainability, avoiding costly surprises.
