Never talk to a leasing
professional about buying a new car.
A long discussion will commence about acquisition
cost, discounts, anticipated mileage, maintenance costs, length of ownership, residual
values, brand perception and market appetite and you'll feel more like you’re
buying a small aircraft.
In reality, these factors are relevant to purchases of any kind, and the fact that the leasing industry calculates their rates based on these very considerations means that any procurement professional should at least be aware of them and consider taking account of them in their purchasing decisions.
In reality, these factors are relevant to purchases of any kind, and the fact that the leasing industry calculates their rates based on these very considerations means that any procurement professional should at least be aware of them and consider taking account of them in their purchasing decisions.
Purchases of large plant and machinery are perhaps a more
familiar area for such considerations, but there are a wide range of items with
a potential future resale value that should at least be factored in to total
cost of ownership calculations. For instance, the 5 year resale value of IT
equipment is generally low as a percentage of original cost, but Apple
equipment bucks this trend and retains a greater proportion of its original
purchase price (and arguably justifying this higher initial price).
In addition, procurement managers
now have to consider the sustainability of their purchasing decisions. Instead
of running equipment until end of life then scrapping it, more sustainable
alternatives have to be found. These may include renting or leasing instead of
buying (though be aware the profit of these organisations is associated with
managing the above factors), sale of owned assets prior to their end of life,
or even internal redeployment.
Many large companies use asset management
software for internal asset re-deployment; as easy as you think it would be to
let someone else in your organisation know that you have surplus assets, it
takes a managed system to handle this effectively and fully take advantage of
the potential savings.
So what is the best way to go
about calculating these factors for yourself and evaluating a true cost of
ownership? Much of the information may already be within your company (records
of previous purchase costs, maintenance, annual usage etc) while the potential
resale value will take a little more work. One source is auction companies that
publish their sales prices for a period of time, in addition online forums are a great place to find out
about brand perception of certain manufacturers.
Above all, make sure the
product you purchase matches your company’s requirements; sometimes you just a car with the biggest boot!
Photo Credit: The Library of Virginia via Compfight cc
Photo Credit: The Library of Virginia via Compfight cc
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