TOCO total assessment tool for decision-making on IP supplier selection

According to the Total Cost of Ownership concept (TOCO), the selection criterion of international procurement suppliers can be classified into two levels, namely Macroeconomic decision-making level and Microeconomic decision-making level. In this paper, a new quantitative method is put forward to accomplish the task of total assessment on the Microeconomic level which analyses all of the quantitative and qualitative factors with regard to the supplier selection. A Microsoft Excel based new application kit named TOCO Total Assessment Tool is introduced. It can calculate the direct cost and the indirect cost conveniently and can help to evaluate the performance of candidate suppliers. To use the tool, the first module called Total Cost Analysis Module is introduced to calculate the total cost of supplier selection, and then the second module named Supplier Evaluation Module is used to evaluate the performance of each supplier. Finally, the results from these two modules are transferred to the Final Comparison Module to get the final decision-making results. In this paper, the supplier selection related factors are discussed; the method of using the tool is illustrated in detail. It is shown that scientific usage of the TOCO Total Assessment Tool can make the decision-making processes of supplier selection in international procurement transparent, easily calculated, and objective. At the end, a practical case is given to clarify the procedure of using the tool.