Evaluation of Supply Chains by a Transaction Based Total Cost Approach

The management of the interface between manufacturers and suppliers requires a systematic cost oriented tool to design and control the transactions. The Total Cost of Ownership (TCO) approach considers all these costs and is therefore the most promising approach. Based on transaction cost economics an instrument was developed to analyze the qualitative and quantitative structure of a supplier-manufacturer-relation. It allows identifying and evaluating potential possibilities of the cost-effective outsourcing of products or services to a supplier. The results enable the participating organizations also to focus the optimization on the most valuable processes.