Discussion 1
Andy Kress
• Life Cycle Cost is the cost that a project or product will cost from the time it is envisioned to the time it is retired. There are many different steps within this process to include R&D, testing costs, marketing costs, manufacturing costs, storage and distribution costs and reverse logistics and retirement costs. LCC is something that must be examined and weighed at the very beginning of a project and continued to be evaluated through the entire life of the product.
Life cycle costs can be very impactful on businesses and the supply chain as a whole. If a product's cost is only assessed at its birth and an LCCA is not conducted to assess the retirement costs a company could face financial pitfalls when it comes time to phase it out. "Any kinds of economic instability can negatively impact the profitability of companies and confront them with financial risks. Economic slowdown could affect the profitability of the businesses, thus could impact the ability of companies to invest and/or expand their businesses" (Sadaghiani, 2014).
"Life-cycle economic analyses begin with identification of critical parts that warrant investment in reliability analyses. Design and sustainment processes differ:
o Design requires part criticality analyses for candidate parts identified through a functional fault tree analysis to create a rank ordered critical items list from which critical parts are selected.
o Sustainment is based on a critical part's maintenance demand and create the critical items list"(Wessels&Sillivant, 2015).
Ensuring that the organization has considered how the product will be supported in the most efficient manner is important to keeping costs down for the company and in-turn, the end user. Providing this customer service will ensure customers will be retained for the future.
Sadaghiani, S. (2014). Evaluation of External Forces Affecting Supply Chain Sustainability of Oil & Gas Industry by Using Best Worst Method. The Netherlands: Delft University of Technology.
Simchi-Levi, D., Kaminsky, P., &Simchi-Levi, E. (2008). Designing and managing the supply chain: concepts, strategies, and case studies (3rd ed). Boston: McGraw-Hill/Irwin.
Wessels, W. R., &Sillivant, D. S. (2015). Affordable reliability engineering: life-cycle cost analysis for sustainability and logistical support. Boca Raton: CRC Press Taylor & Francis Group, LLC.
Discussion 2
• Rusty Vickers
• Life Cycle Cost (LCC) is the total cost throughout the life of a particular product, resource, contract or piece of equipment or machinery to include planning, design, acquisition and support, maintenance, alterations to existing equipment such as software updates and training for personnel (Hisyam, 2014). Costs associated with LCC include initial costs, operating costs, disposal costs and reverse logistics costs (Hisyam, 2014). These costs have a direct impact on the economy and revenue of a business and the economy of the geographic area of the supply chain due to the inclusion of long-term costs in life-cycle management called life-cycle cost. This impact can be summed up in a simple formula of: Capital + Lifetime Operating Costs + Lifetime Maintenance Costs + Disposal Costs - Residual Value = Life-Cycle Cost (Hisyam, 2014). This greatly impacts supply chain management in numerous ways.
The first effect on supply chain management and the economy is the costs outside of the initial startup costs, the costs that are long-term or recurring like maintenance, transportation and upgrades. Advanced Supply Chain Management techniques require a logistician to see these items and know the long-term effects of a decision. Just because a piece of equipment, contract or decision has low up-front costs does not mean it is the best value. A piece of machinery that was cheap but constantly breaks not only costs the firm more money in maintenance fees but also in lost productivity, possibly doubling the negative impact of the decision. This could have second and third order effects throughout the supply chain that need to be addressed.
Another major aspect pertinent to advanced supply chain management is the ability to identify life cycle costs and their impacts on cost reduction efforts in different areas of the supply chain (Hisyam, 2014). Being able to forecast and see these impacts on the supply chain drives what a business can and should decide to purchase or utilize. This decision tree must also incorporate an estimate that impacts the economy because each purchase, service call, transportation asset, and training program comes from another aspect of the economy to resource from. This includes the decision on when to continue to utilize a system and when to abandon it for a more cost-effective alternative (Chase Shankar and Jacobs, 2015).
References:
Chase, Richard B; Shankar, Ravi and Jacobs, F. R. (2015). Operations and supply chain management. Bew Delhi, India. McGraw-Hill Education.
Hisyam, Mohd (2014). Contemporary strategic management accounting techniques life cycle costing.
Discussion 3
• Ricky Lang
• Supply chain management covers the end-to-end stream of information, services and cash. Therefore, the way they are overseen firmly influences an association's intensity in such zones as item cost, working capital prerequisites, speed to market, and administration discernment, among others. In this unique situation, the best possible arrangement of the inventory network with business system is fundamental to guarantee an abnormal state of business execution. LCC and economic factors affect a company's ability to be competitive in the market. Being perceived as one of the top organizations in your industry in view of your capacity to be first to advertise with new innovation gives you a critical promoting edge. It additionally pulls in new providers that might have the capacity to enable you to make your supply chain more proficient and increment your upper hand. If your organization can offer bigger customers the capacity to get specially designed items that fit in with the customer's details speedier than the opposition that makes your organization an appealing alternative to those sorts of clients. Also being able to adapt easily will help reduce the effects of an economic burden.
References
Christopher Jr., C. (2011). The economic impact of e-commerce - CSCMP's Supply Chain Quarterly.