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Packaged Food Manufacturers Guide To Reducing Total Delivered Cost


Packaged Food Manufacturers Guide To Reducing Total Delivered Cost
With profit margins being squeezed for packaged food manufacturers, operations managers need to make a robust business case to secure additional capital expenditure. Traditionally, manufacturers have considered Total Cost of Ownership (TCO) in their procurement analysis when purchasing equipment. However, a stronger financial calculation is to quantify how new technology such as product inspection equipment can contribute to reducing the Total Delivered Cost (TDC) of packaged food.
Total Cost of Ownership versus Total Delivered Cost
TCO is made up of all costs directly relating to the piece of equipment, such as the capital expenditure of the product inspection device plus the ongoing maintenance and running expenses. TDC, meanwhile, is the sum of TCO and all operational costs including the physical product, packaging, labor for production and quality checks, waste product, waste packaging and transport ....

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FNB News - Well-established metric in the industry for mfgrs is Total Cost of Ownership


Saturday, 06 March, 2021, 08 : 00 AM [IST]
Neil Giles
Managing successful packaged food production lines often requires manufacturers to be able to operate within tight financial margins. For this purpose, a well-established metric in the industry is Total Cost of Ownership (TCO).
In simple terms, TCO takes into consideration the purchase price of a piece of equipment, as well as the operational costs it incurs overtime. TCO is often used in procurement analysis when preparing business cases to secure additional capital expenditure to update food production lines, as TCO focuses on all costs directly related to the piece of equipment itself.  
However, packaged food manufacturers are increasingly considering another metric to measure the overall productivity and effectiveness of their production lines: Total Delivered Cost (TDC).  ....

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