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HomeProcurementProcurement Considerations for Life Cycle Costing Acquisitions

Procurement Considerations for Life Cycle Costing Acquisitions

Life Cycle Costing Acquisition is a process that acquires item or equipment from another organisation in legal and ethical manner that based on life cycle costing (LCC) i.e. whole cycle of item or equipment of its desired service life. This aspect is worth consideration as it is highly overlooked by stakeholders that may greatly impact on bottom-line.

Life cycle
Content created by Tracy Ong Yeak Ching(2020) and Image taken from https://medium.com/@kenhensley/icebergs-and-spiritual-growth-1a92a490483e

Computing Life Cycle Cost

By using life cycle costing technique, procurement can identify and quantify all costs, the entire cycle is associated with a project or installation over a given period.  This includes material acquisition costs, installation and commissioning costs, operating and maintenance costs, repair costs, service costs, lost production costs during downtime, replacement material or equipment costs and disposal of material or equipment costs. While air compressors equipped with IE3 efficiency class motor may have a higher purchase price as compared to normal class motor, they tend to have lower cycle costs due to less frequency of maintenance activity is required and even no maintenance is required for the first few years that helps to increase cost saving.

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Tracy Ong Yeak Ching, DPSM
Ong Yeak Ching Tracy has several years of experience in the field of procurement, specifically in the automotive industry. She is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Tracy completed Diploma in Procurement and Supply Management (DPSM) on September 2020 at SIPMM Institute.

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