Building a Total Cost of Ownership model to support manufacturing asset lifecycle management

Abstract

This paper proposes a methodology to build a Total Cost of Ownership (TCO) model aimed to support decision-making for manufacturing asset lifecycle management. Existing challenges for TCO adoption in industry are identified through literature review and through an explorative multiple case study involving eight manufacturing companies. Based on it, a general methodology is proposed for building a novel asset-centric performance-driven TCO model. The methodology is based on an integrated modelling approach that puts together technical performance analysis and economic analysis, enabling the asset users linking their knowledge about asset performance with offers specifications by the asset providers. In this way, the TCO model becomes a decision-making tool for the asset users that can also guide the relationship with providers. An application case within a chemical production company is described, showing how challenges are addressed through the proposed methodology, within a real context.

Keywords:

• Total Cost of Ownership
• life cycle cost
• manufacturing
• asset life cycle management
• product-service systems

Acknowledgements

This paper originates from the research path that we shared with our mentor the late Professor Marco Garetti and is presented in his memory.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Irene Roda

Irene Roda is Assistant Professor at the Department of Management, Economics and Industrial Engineering at the Politecnico di Milano. She has a PhD in Industrial Engineering, specializing on physical asset management. She is co-director of the Observatory on Technologies and Services for Maintenance of the School of Management of Politecnico di Milano. She is Teaching Assistant in the MSc course on Asset Lifecycle Management. She is lecturer in the Executive Master in Maintenance and Industrial Asset Management (meGMI) and in the International Master in Industrial Management at the MIP Politecnico di Milano Graduate School of Business. Her research interests are in industrial engineering, with special concern to asset management and operations and maintenance management.

Marco Macchi

Marco Macchi is currently Full Professor at Department of Management, Economics and Industrial Engineering of Politecnico di Milano. His teaching and research regard industrial technologies, asset lifecycle management, operations and maintenance management. Serving the scientific community, he is currently Vice-chair of the IFAC TC 5.1 Manufacturing Plant Control, and Chair of the IFAC Working Group A-MEST (Advanced Maintenance Engineering, Services and Technology), WG affiliated to the IFAC TC 5.1; he is Member of the IFIP WG 5.7 Advances in Production Management Systems and the IFAC TC 5.3 Enterprise Integration and Networking; besides, he is Book Reviews Editor and Editorial Board Member of the International Journal Production Planning & Control: The Management of Operations, Taylor & Francis.

Saverio Albanese

Saverio Albanese is Maintenance and Technical materials Executive at Versalis SpA. Versalis is the Eni S.p.A chemical company, leading the market in a host of businesses such as plastics and rubbers. Since July 2016, he is President of the Italian Maintenance Society (A.I.MAN.) and he is Chair of the UNI (Italian National Unification body) Maintenance Commission.