Logistics & Supply
- Overview: Acquisition Logistics
- Overview: Supply Management
- Life-Cycle Sustainment
- Performance-Based Logistics
- Sustainment Metrics
- Life-Cycle Sustainment Plan (LCSP)
 
- 12 Step Product Support Process
- Acquisition Logistics Support Guidance
- Availability
- Blanket Order System
- Commercial off-the-Shelf (COTS)
- Contractor Logistics Support (CLS)
Core Capability & Planning Analysis
- Cross Functional Teams
- Data Management Strategy
- Data Management System
- Depot-Level (D-Level) Maintenance
- Depot Maintenance Analysis
- Diminishing Manufacturing Sources
- Flexible Sustainment
- Future Logistics Enterprise (FLE)
- Government Furnished Equipment
- Interim Contractor Logistics Support
- Integrated Logistics Support (ILS)
- Integrated Product Team (IPT)
- Inventory Classification
- Item Unique Item Identification (IUID)
- Just-in-Time (JIT) Inventory
- Key Logistics Program Documents
- Level of Repain Analysis (LORA)
- Life-Cycle Signature Support Plan
- Logistics Contract Characteristics
- Logistics Demonstration (LD)
- Logistics Laws and Regulations
- Maintainability
- Maintenance & Sustainment Strategy
- Materiel Availability
- Non-Developmental Item (NDI)
- Performance-Based Agreements (PBA)
- Performance-Based Product Support
- Performance-Based Logistics (PBL)
- Product Support
- Product Support Manager (PSM)
- Product Support Strategy (PSS)
- Public-Private Partnership (PPP)
- Quality in Supply Management
- Reliability
- Standardization
- Supply Alliances
- Supply Chain Management
- Support Concept
- Supportability
- Supportability Analysis
- Sustaining Engineering
- Systems Contracting
- Total Ownership Cost
- Total Quality Management (TQM)
- Warranties
 
 
 
Logistics & Supply Management
Total Ownership Cost
 

The Total Ownership Cost (TOC) is the summation of the cost of acquiring and owning or converting an item of material, piece of equipment, or service and post-ownership cost, including the disposal of hazardous and other manufacturing waste.  It also includes the cost of lost sales as a result of a reputation for poor product quality causes by defective materials or purchased services that are incorporated in the end product or service. [1]  

DoD Definition: Total ownership cost includes the elements of a program's life-cycle cost, as well as other related infrastructure or business processes costs not necessarily attributed to the program in the context of the defense acquisition system. Infrastructure is used here in the broadest possible sense, and consists of all military department and defense agency activities that sustain the military forces assigned to the combatant and component commanders. Major categories of infrastructure are support to equipment (acquisition and central logistics activities), support to military personnel (non-unit central ["school-house"] training, personnel administration and benefits, and medical care), and support to military bases (installations and communications/information infrastructure). [3]
 

The best time to reduce total ownership cost and program schedule is early in the acquisition process.

 
Reduce Total Ownership Cost (R-TOC) Program in the Department of Defense
The Department of Defense (DoD) wide effort to reduce total ownership costs (R-TOC) grew out of numerous reviews and discussions at Program Executive Officers/Systems Command (PEO/SYSCOM) Commanders' conferences, the Defense Science Board, and others. The R-TOC program was established in response to longstanding concerns about the adverse impact of defense budgetary and operational trends on force structure and readiness. Declining procurement funds are resulting in a rapidly aging (and potentially inefficient and unsupportable) inventory. Rising operations and support (O&S) costs can consume higher portions of defense budget and leave even less available for modernization. [2]  

The DoD focus on three (3) general R-TOC approaches:
  1. Reliability and maintainability (R&M) improvements
  2. Reduction of supply chain response time and reduction of logistics footprint
  3. Competitive product support

AcqTips:
- Life-Cycle Cost is also referred to as Total Cost of Ownership

AcqLinks and References:
- [1] Burt, Petcavage, and Pinkerton, “Supply Management” McGraw-Hill 2010
- [2] DoD Reduction in Total Ownership Cost
- [3] Defense Acquisition Guidebook (DAG) - Chapter 3.1.5
DoD Memo to Reduce-Total Ownership Cost
- Article: Reducing Total Ownership Cost in DoD



 

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