In our last column, we discussed how “total cost of ownership” (TCO) could reveal the hidden costs of offshoring and quantify the real profit and loss impact of reshoring or offshoring. Now, we will take an in-depth look at the free online Total Cost of Ownership Estimator software—the basics, how it works, and how TCO analysis can positively impact a company’s reshoring or offshoring decisions.
Most companies make sourcing decisions based solely on price, often resulting in a 20 to 30 percent understatement of offshoring costs. The TCO Estimator guides companies through a comprehensive system for recognizing and adding all the costs associated with offshoring and reshoring. The relevant cost factors must be fully accounted for to provide a complete picture of total cost.