What does total cost of acquisition (TCA) encompass?

Total cost of acquisition (TCA) encompasses all costs associated with sourcing and obtaining a product or service. This comprehensive approach goes beyond just the purchase price, recognizing that several additional factors contribute to the overall expense incurred by an organization when acquiring goods or services.

TCA includes aspects such as transportation costs, handling fees, storage costs, and maintenance expenses, as well as any potential costs related to training staff on the new product or service. By considering all these factors, organizations can make more informed purchasing decisions, ensuring they understand the full financial impact of their acquisitions.

This is crucial for effective procurement and supply chain management, as it enables businesses to identify opportunities for cost savings and better manage their budgets. Understanding TCA helps in evaluating suppliers not only on price but also on their ability to deliver value throughout the entire lifecycle of the product or service.