Total Cost of Ownership Driven Methodology for Predictive Maintenance Implementation in Industrial Plants

Part 4: Product and Asset Life Cycle Management in Smart Factories of Industry 4.0International audienceThis paper proposes a methodology to drive from a strategic point of view the implementation of a predictive maintenance policy within an industrial plant. The methodology integrates the evaluation of system performances, used to identify the critical components, with simulation and cost analysis. The goal is to evaluate predictive maintenance implementation scenarios based on alternative condition monitoring (CM) solutions, under the lenses of Total Cost of Ownership (TCO). This allows guiding the decision on where in the industrial system to install diagnostic solutions for monitoring of asset health, by keeping a systemic and life cycle-oriented perspective. Technical systemic performances are evaluated through Monte Carlo simulation based on the Reliability Block Diagram (RBD) model of the system. To validate the methodology, an application case study focused on a production line of a relevant Italian company in the food sector is presented

Cost of ownership of spare parts under uncertainty: integrating reliability and costs

In capital-intensive organizations, decisions regarding capital costs play an important role due to the significant amount of investment required and the expected return on investment. Spare parts management is crucial to those ends, as spare parts management can constitute a significant portion of OPEX. Companies must implement a trade-off analysis between stock levels and assets’ availability. Decision-making supports mechanisms such as the Level of Repair Analysis (LORA), Integrated Logistics Systems (ILS), and life-cycle costing (LCC) models have been developed to aid in equipment selection, implementation, and decommissioning. Nowadays, these mechanisms appear to be integrated with risk-management models and standards. This paper proposes a long-term costing model that integrates a capacity analysis, reliability functions, and risk considerations for the cost management of logistics activities, particularly in MRO structures. The model is built upon Time-Driven Activity-Based Costing (TD-ABC) and incorporates the volume of activities generated by MRO needs. It also addresses uncertainty through the integration of a cost-at-risk model. By integrating spare parts, activity-based cost models, and risk measurement through Monte Carlo simulation, this study offers powerful insights into optimizing spare parts logistics activities. The proposed model is a novel approach to include the risk of cost in spare parts management, and its matrix-activity-based structure makes possible the development of sophisticated mathematical models for costing and optimization purposes in different domains.(undefined

MODERNIZATION OF VERKKOPALKKA IDENTITY MANAGEMENT AND USER ADMINISTRATION: TOTAL COST OF OWNERSHIP AND RETURN ON INVESTMENT ANALYSIS

In technology management field, Web-based technologies are becoming very popular within different kind of business domains. Actually, Web-based solutions are facing big challenges mainly related to proper and secure user’s identity management and role delegation operations. The value of improving user’s authentication and management flexibility across multiple organizations has been lately an important concern in order to provide business advantage. Verkkopalkka is a Web-based solution developed within Aditro Oy to process payslips generated from different systems and organizations. These organizations are granted with Verkkopalkka accounts and different kind of privileges to log into the system and perform user operations. Once Verkkopalkka started to grow in complexity and amount of users, limitations and disadvantages related to user’s identity management demanded a better and more flexible solution to handle user’s authorization and delegation operations. The new Verkkopalkka solution required a big investment in terms of budget and resources that was distributed in different areas. Creating technology and business advantage is meant to introduce a more competitive product into the market. The integration of technologies that create more business value to Aditro Oy through a better and improved Verkkopalkka application, are based on a well-defined technology strategy as a set of decisions intended to confer advantage from different angles, reduce costs and potentially increase revenue. The main scope of this thesis is analysing the total cost of ownership against the return on investment related to the modernization and improvement of Verkkopalkka application through the integration of a reliable identity management technology, such as Ubisecure. This analysis has been validated within a well-defined sensitivity analysis that considers variations of total cost of ownership and benefit, as well as, worst and best case scenarios.fi=Opinnäytetyö kokotekstinä PDF-muodossa.|en=Thesis fulltext in PDF format.|sv=Lärdomsprov tillgängligt som fulltext i PDF-format

Supplier's total cost of ownership evaluation: a data envelopment analysis approach

Supplier Total Cost of Ownership (TCO) is a widely-known approach for determining the overall cost generated by a supplier relationship, but its adoption is still limited. The complex calculations involved - and in particular the activity-based costing procedure for computing the cost of managing the relationship - pose a major obstacle to widespread TCO implementation. The purpose of this work is to formulate a Data Envelopment Analysis application (denoted 'TCO-based DEA') that can act as a proxy for TCO, and to test its ability to approximate the results of TCO with less effort. The study is based on the analysis of two categories of suppliers (74 in total) of a medium-sized Italian mechanical engineering company. The results show that TCO-based DEA is able to significantly approximate the outcomes of TCO, for both the efficiency indexes and rankings of suppliers, whilst requiring substantially less effort to perform the analysis. To our knowledge, this is the first study to develop a DEA-based tool for approximating TCO and to test it in a real-world setting. The research shows significant potential within the supply chain management field. In particular, TCO-based DEA can be used for analysing suppliers' performance, rationalising and reducing the supplier base, assisting the negotiation process

Compras spot de equipamentos com base no TCO : o caso da empresa Alpha Alimentos

Orientador : José Eduardo Pecora Jr.Monografia (especialização) - Universidade Federal do Paraná, Setor de Ciências Sociais Aplicadas. Curso de Especialização MBA em Gerência de Sistemas LogísticosInclui referênciasResumo: As grandes empresas que possuem participação mundial no mercado em que atuam estão constantemente em busca de formas de redução de custos de forma a se manterem competitivas num mercado cada vez mais globalizado e competitivo. Empresas benchmarking em processos de compras utilizam metodologias estruturadas para a compra de itens considerados estratégicos e que possuem grandes oportunidades de ganho, onde uma dessas metodologias é o custo total de propriedade (TCO – Total Cost of Ownership). Este estudo teve por objetivo apresentar o processo atual de compras spot de equipamentos de uma empresa de porte multinacional do ramo alimentício e propor um modelo de utilização da metodologia TCO para tais processos de compra. A empresa está estruturada com uma central corporativa e diversas unidades fabris espalhadas pelo país. Esta configuração exige da área de Suprimentos grandes volumes de negociações spot demandadas por compras de equipamentos para atender o plano de crescimento de produção da empresa assim como para manutenção de seu patrimônio. Para um entendimento inicial foi apresentada uma breve fundamentação teórica sobre o processo tradicional de compras e a metodologia do custo total de propriedade, ou TCO. Esta metodologia estrutura o processo de compra de forma a permitir tomadas de decisões mais assertivas, pois passam a considerar também melhorias de desempenhos dos equipamentos além das oportunidades de redução de custos. Para um melhor resultado na implementação do custo total de propriedade também é recomendado a formação de uma equipe mais focada nas análises do TCO e menos ocupada com tarefas operacionais

Applying Costing Models for Competitive Advantage

Making good supply management decisions is essential to competing in the global market, as these decisions often account for more than 60% of the average company\u27s total costs. The purpose for this single case study was to explore the strategy that a large manufacturing firm in northeast Ohio used to identify costs when making effective purchasing decisions. The total cost of ownership (TCO) theory was the conceptual framework for the study. The data collection included a semistructured interview with a senior level supply manager and a focus group consisting of mid-level supply managers. Member checking provided verification of the interpreted participants\u27 responses. Methodological triangulation included 2 company documents pertinent to the supply management department that resulted in 4 emerging themes: identifying total costs, tools for implementing TCO, supplier rating and management, and detailed recordkeeping. The findings of this study revealed a simpler approach to capturing and organizing data than was acknowledged in the literature reviewed. The findings showed TCO supported purchasing decisions that often resulted in domestically or regionally purchased products rather than offshore buys. Therefore, reassessment of true total costs by senior manufacturing supply managers might impact social change as more procurement decisions forego sourcing offshore and bring manufacturing of products back to local communities

TOTAL COST OF OWNERSHIP IN SALES AND MARKETING

Background: There is an internal belief within Axis that despite their products’ relatively high initial price, the total cost of ownership (TCO) of an Axis camera solution is lower than that of other brands. However, there is no internal research or tools to verify if it is true. Without this, Axis is unable to communicate their belief in an educated and quantifiable way, which is desired in sales and marketing situations. Purpose: The purpose of this master thesis is to create a TCO analysis framework for a network based video surveillance solution from a seller perspective. The framework is then to be applied on Axis’s solutions to identify and weigh the most important parameters that affect the TCO. Based on this, a TCO analysis model that can be used by Axis’s sales force is to be developed. Methodology: The overall methodology used in the project is action research in combination with descriptive, exploratory and problem-solving approaches depending on the specific research question. The theoretical methodologies have been integrated with a TCO development and implementation framework, which has formed the research process. Conclusions: Existing literature offers a range of TCO frameworks, but little research has been done regarding TCO from a seller perspective. A TCO analysis is very case specific, why generic models are not appropriate. A new framework for the development of a TCO sales tool is therefore proposed, which is adapted and provides detailed guidelines to the network camera surveillance industry. Using this framework, more than 50 cost factors that affect the TCO of a camera solution have been identified and categorised. These were then implemented into a sales tool that can be used to analyse and demonstrate costs and benefits. The significance of the cost factors affecting the TCO for a camera solution varies a lot. For sales and marketing purposes, the parameters that the company can influence and that differentiate a product from another should be emphasised. The benefits for companies to utilise TCO in sales and marketing are several, even though there are some distinct barriers to overcome. For Axis, the developed TCO sales tool can be a strategic resource to help convince its customers to shift their focus from a low-price mind-set to a pursuit of low-cost solutions