1. Total Cost of Ownership Presentation
Tyson Foods, Inc.
Total Cost of Ownership Presentation

2. Total Cost of Ownership Concept
“The cost of owning an item goes far beyond the initial purchase price of that item. It includes the initial cost of purchase as well as all related and ongoing costs of purchasing, operating, maintaining, and disposing of the item.”
“Often the cost of ownership and operation far outweigh the purchase price of the item”

3. The Key: Value Value includes : Price (What did it Cost?)
Service: (What did the seller do beyond the sale?)
Quality: (Did the item perform as represented?)
Time: (Is the seller Simple to do Business With?)
Cost of Operation: (Cost of Supplies, Maintenance, Service, Etc.)

4. Purchasing Philosophy
Buy Value !
Pay a fair price for the quality of the item purchased.
Manage Value !
Aggressively manage the costs related to the operation, supply, and maintenance of the particular item.

5. Example: Car #1 Total 5 Yr. Cost: $37,500 Car #2
Initial Cost: $25,000
Value at end of life: $10,000 (5 yrs)
Operating Costs: Annual x 5 years ($4,500x5 Yrs)
Insurance $1,000
Taxes $250
Interest $750
Fuel $2,000
Repair/Maint. $500
Car #2
Total 5 Yr. Cost: $40,000
Initial Cost: $15,000
Value at end of life: $5,000 (5 yrs)
Operating Costs: Annual x 5 years ($6,000x5 Yrs)
Insurance $1,500
Taxes $100
Interest $400
Fuel $3,000
Repair/Maint. $1,000

6. Items Often Overlooked as Value
Payment Terms
Knowledgeable Service Staff
Residual Value or Cost of Disposal at Life End
Information provided about associated costs
Simplicity of Dealing with the Supplier
Training provided to users
Energy Consumption of the item